Allied bosses warned to stop rot in profits

Allied Domecq's new chairman Sir Christopher Hogg has given the spirits to pubs group's senior management a stark ultimatum: improve profits at what has been one of the FT-SE 100's worst performers or face the consequences.

Tony Hales, chief executive, underlined the pressure being placed on them by Sir Christopher, saying: "We have no illusions that a return to earnings growth is the priority, and that this management team will be judged on that basis. We are determined that our strategy should deliver sustainable profits recovery."

He was speaking as Allied confirmed the profits warning it made at February's annual meeting, its second gloomy trading statement in little over half a year. Profits in the six months to February tumbled 24 per cent to pounds 317m (pounds 416m), thanks mainly to a slump in profits at the group's spirits and wine operation.

Despite plenty of warning, the shares slipped another 5p to 497p as the City digested a dividend of 9.44p for the six month period and the broad hint that the payout would remain largely unchanged at about 23.6p for the full year to August.

Attention was firmly focused on Sir Christopher's strategy for the future. Great faith has been placed by investors in his ability to reverse the underperformance of Allied's shares in recent years with expectations aroused that he would replicate the successful demerger of Courtaulds from its textiles arm.

Investors have questioned for some time the logic of combining a global spirits marketing operation with a retailing division that takes in UK pubs and American food outlets such as Baskin Robbins and Dunkin Donuts and advocates of a demerger have put a value of up to 670p a share on the break up.

Sir Christopher refused to be drawn, saying only that demerger was always an option that a "responsible management" would consider. He also played down the danger to senior management jobs, saying: "I am very much in support of what management is doing to make Allied work better."

The company also declined to comment on recent speculation that it might be close to disposing of its 50 per cent stake in the Carlsberg-Tetley brewing venture to Bass. Having lost its top spot to Scottish & Newcastle, following their purchase of Courage, Bass is understood to be keen to forge a deal.

During the six-month trading period, spirits and wine continued to suffer from the flat world-wide market for spirits. Volumes of Allied's brands slipped 3 per cent and the division's margin fell from 21 per cent to 18 per cent.

Investment column, page 18

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot