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
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement