The group, the world’s biggest spirits business, warned last September that it expected the strong pound to knock its annual profits by £150 million in its current financial year.
But City analysts believe the weakening of sterling over several months as the prospect of a UK interest rate rise has faded mean the hit will be less.
Phil Carroll, drinks analyst at Shore Capital, said: “Diageo earns about 40 per cent of its profits in North America, so it will benefit from the fall in sterling because it will be able to sell more product there in dollars. I now expect the currency impact over the full year for the company to be between £30m and £40m less.
“In addition, I think Diageo will say the performance in emerging markets will be still negative, but improved. This could be the nadir of the down-cycle for Diageo.”
ShoreCap has forecast flattish full-year earnings of £2.83 billion compared with £2.80bn last time. Ivan Menezes, Diageo’s chief executive, will be quizzed on any further planned sell-offs at the company, which last year divested the lion’s share of its wine business and the Gleneagles Hotel. The year before it sold Bushmills whiskey.
Scotch whisky represents a quarter of Diageo’s net sales, down 5 per cent last year.
However, 80 per cent of the decline was due to destocking in the likes of south-east Asia.
Carroll said he expected the interim results to show “pockets of good growth”.