Allied-Lyons ahead at pounds 606m: 'Baptism of fire' for Carlsberg-Tetley joint venture holds advance to 20%

SLUMPING profits at Carlsberg-Tetley marred an otherwise resilient performance at Allied-Lyons, which reported a 20 per cent increase in pre-tax profits to pounds 606m for the year to 5 March.

Two months ago, Allied forecast profits of pounds 604m with its rights issue to help pay for the pounds 739m acquisition of Pedro Domecq Group, the Spanish drinks producer.

Excluding exceptional items, normalised pre-tax profits grew by 17 per cent to pounds 636m. The dividend is 5.7 per cent higher at 22p with a final of 14.9p.

Tony Hales, chief executive, said underlying earnings from the brewing joint venture, set up 18 months ago with Carlsberg of Denmark, fell by 14 per cent on the back of a 6 per cent fall in beer volume, compared with a market decline of 2 per cent. Regulatory changes caused half the fall in volume.

Mr Hales said Carlsberg- Tetley had a ' baptism of fire', but had turned the corner during the second half, and both volumes and wholesale price discounting - a widespread industry problem - were showing signs of stabilising. Analysts suspect Allied's 50 per stake in Carlsberg-Tetley will eventually be sold but not before the Government's next review of the beer pub tie in 1997.

Michael Jackman, chairman, referring to Allied's 70 per cent gearing, said the company's programme of disposals would continue. After the sale of Allied's coffee business earlier this year, observers believe there may be more sales from its pounds 1bn food manufacturing business, which improved profits slightly from pounds 86m to pounds 87m.

Hiram Walker, Allied's spirits and wine operation, lifted profits by 5 per cent to pounds 434m. Destocking in the US, which Grand Metropolitan said could cost it pounds 40m this year, together with reorganisation of its European distribution, reduced profits by pounds 15m. Sales were flat although shipments fell by 2 per cent.

Allied's retail profits rose by 7 per cent to pounds 209m despite a near-10 per cent drop in pub numbers to 4,279. Takings from each managed house rose by 7 per cent led by a 14 per cent increase in food takings.

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