Outlook: Allied may have to file for divorce
Wednesday 12 November 1997
The market's desire for change is understandable. You would have to look pretty hard to find a worse corporate performance than Allied Domecq's over the past five years, a period in which profits have stagnated, shareholders' funds have dwindled by a fifth and the share price, down 20 per cent in absolute terms, has underperformed the rest of the market by more than 50 per cent.
It is quite some indictment of one of Britain's biggest companies that its management can stand up and boast that its return on capital is now marginally ahead of its cost. Let's face it, this is hardly fling-your- hat-in-the-air good news.
Sir Christopher none the less managed to call it a turning point yesterday, even if he did look uncomfortably like a man who could think of better ways to wind up a previously successful career. For someone who created so much shareholder value by breaking up Courtaulds and who has overseen the rise and rise of Reuters, the shilly-shallying over what to do with Allied has left him looking tired and out of touch.
Despite the fanfare, yesterday's figures were nothing very special. Strip out the pounds 47m benefit of unwinding an unfavourable beer supply agreement with Carlsberg Tetley and underlying profits were down a bit in spirits, up a bit in pubs. Scratch the surface and this is still a group going steadily sideways.
But the figures are a sideshow. More important yesterday was the tacit admission that the merger of Guinness and GrandMet to form Diageo means Allied can no longer afford to sit around hoping everything turns out all right in the end. Allied may sell more hard booze than anyone other than Diageo, but its brands are second division and its claimed global spread is so much wishful thinking. If it is to stand a chance of competing with its new rival it needs to find a partner and quickly. Demerging may in itself do nothing for shareholders, but if a quick divorce is the only way to get someone else up the aisle, so be it.
- 1 Chelsea victory parade mocked on Twitter as 'tens of fans' pack the streets of London
- 3 Johnny Depp facing 10 years in jail for illegally bringing dogs to Australia
- 4 US warned by Chinese media to stop meddling or 'war will be inevitable'
- 5 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
Australian man punched in the face for defending Muslim women from abuse on train
Johnny Depp facing 10 years in jail for illegally bringing dogs to Australia
US warned by Chinese media to stop meddling or 'war will be inevitable'
Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
A nation of inequality: How the UK is failing to feed its most vulnerable people
iJobs Money & Business
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...
£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...
£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...