DIAGEO,THEWORLD'SBIGGEST SPIRITS group, is set to become the latest of our big exporters to suffer a currency hangover on Tuesday. Chief executive Paul Walsh is due to deliver a pedestrian set of trading results despite the continuing sales successes of top brands such as JohnnieWalker,Smirnoff,Captain Morgan and Bushmills.

With about 93% of output going to overseas markets and 40% of profits coming from the US alone, analysts caution that that group will be doing well to report a sales increase of much more than 4% in sterling terms for its opening half-year to end December. Pre-taxprofitswillstruggletokeep pace.

While currency experts say the pound is now overvalued, our accompanying tabledemonstratesthereislittle prospect of immediate relief for Diageo with further strengthening since the start of 2007.

But the chief executive is likely to confound pessimists with a confident statement on future prospects, after achieving his target of organic sales growth of 6% for the six-month period.

And some believe he will back his view by announcing another massive share buy-back programme of up to £1.5 billion.

Previoussharepurchasesare expected to result in anincrease in earnings per share of approaching 10% for the opening half, although brokers believe underlying pre-tax profits will show only a modest rise from £1.25bn to around £1.3bn.

The increase in the earnings per share figure should enable the group to boost theinterimdividendfrom12pto around 12.6p.

Despitethecurrencyproblems,a number of heavyweight brokers such as Deutsche Bank and JP Morgan are tipping the shares at current levels. This is basedonhopesthatdirectorswill increase organic profit growth guidance to above the 7% level as the group continues to win market share fromits rivals in the US and emerging markets.

In contrast, analyst Matthew Webb at Cazenove says the shares are over-valued and is advising clients to steer clear, cautioning that they could fall to 900p from current levels of around £11.

A major factor in the medium term is the group's ability to continue winning share in the US market, which has been showing signs of slowing down after previous good growth.

At the half-year, brokers believe this sideofthebusinessshouldhave boosted profits to around £512 million onsome£1.4bnsales,helpedbya surprisingly strong performanceby Guinness-whichhasdisappointed elsewhere-and its fellow Irish import Bushmills.

Few are expecting much good news from Europe, which is expected to show a dip in profits to around £485m on static overall sales of around £1.38bn, despite the relatively stable exchange rate for the euro at the tail-end of last year.

The figures are expected to suffer from a continuing decline of Guinness in the UK and Ireland together with a drop in whisky sales in themature Spanishmarket,thoughRussiaand Germany are expected to show good growth.

Analysts at Deutsche Bank believe thatthegroup'semergingmarket division could benefit from particularly goodfigures from the Far East and Africa to star with a 12% lift in profits to around £415m on £1.3bn sales. However, there are concerns about the likely impact of recent political and currency upheavals on the important Venezuela market.

Diageo, which controls about one-third of the Scotch whisky industry, could get a further boost at the end of this month, when the Indian government is expected to bow to pressure from the European Union and reduce its penal taxation on imported spirits.

But sales growth could take time to work through into profitss because of the need for heavy marketing expenditure tocombatlocalbootleggerswho account for more than half the subcontinent's current market for "Scotch" whisky.