Investment: High spirits at Allied Domecq look short-lived
Wednesday 28 October 1998
That's the only explanation anyone could give for the euphoric way in which the market yesterday received Allied's humdrum full-year results.
The Ballantines to Baskin Robbins group has trailed the market by more than 20 per cent since Guinness and Grand Met tied the knot two years ago, and shareholders are getting fed up of waiting for it to do something similar.
This is a tad unfair on Sir Christopher Hogg, Allied's chairman, whose quest for consolidation has been hampered by the reluctance of potential partners, such as Seagram, to play ball.
Still, if new finance chief Philip Bowman, who is also the new chairman at Liberty and has a reputation for getting things done, can pull off some kind of deal he will have more than earned his salary.
Yesterday's results underlined Allied's need for substantial cost savings to boost its bottom line.
In a market where its main rival was distracted by a mega-merger, Allied's spirits division produced volume growth of just 4 per cent. Sales of Ballantines, its key brand, were flat.
On the retail side, sales and profits were little changed, and the outlook is far from buoyant.
High street pub chains are reaching saturation level, so Allied is scaling back expansion of its Firkin brand.
A few new concepts, such as late-night Latin American bars, are being developed but they are still in their infancy.
Brokers now predict that profits this year will be flat at pounds 615m putting the shares, up 49p to 520p yesterday, on a forward earnings multiple of 12.
That's a 25 per cent discount to Diageo. But unless Allied can pull off a kind of a deal the gap will not narrow. Avoid.
- 1 Porn block in India: hundreds of sexual websites banned, internet outraged
- 2 Malaysia issues arrest warrant for Gordon Brown’s sister-in-law after she publishes stories on leader Najib Razak's financial affairs
- 3 Gamers confess the worst things they've done in The Sims
- 4 Sex with robots will be ‘the norm’ in 50 years
- 5 Barack Obama turns 54: The US President's best put downs to celebrate his birthday
Jackie Chan climbs to second place in Forbes' Highest Paid Actors list after magazine includes actors working outside US movie industry
Malaysia issues arrest warrant for Gordon Brown’s sister-in-law after she publishes stories on leader Najib Razak's financial affairs
Gwen Stefani and Gavin Rossdale divorce: One of music industry’s most enduring couples announce split after 12 years of marriage
Giant Minion terrorises drivers in Ireland as 40ft inflatable blocks traffic on Dublin road
Dutch King Willem-Alexander declares the end of the welfare state
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Chris Leslie: Jeremy Corbyn's anti-austerity agenda will harm the poor, says Labour shadow Chancellor
Landlords renting properties to illegal immigrants to face up to five years in prison
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Labour leadership race: Jeremy Corbyn could be the next Prime Minister, says Ken Clarke
iJobs Money & Business
£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...
£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...
£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...
£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...