Jackaman leaves Allied Domecq with falling profits bombshell

JOHN SHEPHERD

Michael Jackaman yesterday shocked investors with his final address as chairman of Allied Domecq, one of the world's leading spirits and retailing combines, by warning that the company's first-half profits were set to fall by around 20 per cent.

Allied's already underperforming share price dropped 8p to 507p, and analysts slashed full-year pre-tax profit forecasts by almost 9 per cent to pounds 580m after Mr Jackaman dropped the bombshell at the company's annual shareholders' meeting.

"It seems that every time Allied announces something there is a downgrade of profit projections," said one analyst who summed up the bad news in recent years as "shambolic."

Analysts also said privately that the pressure was now on Tony Hales, chief executive, to justify the changes he has pushed through at Allied, which rapidly sold its Lyons food businesses to focus on branded drinks and retailing.

They added that Sir Christopher Hogg, who will succeed Mr Jackaman, will have to act fast to restore the company to favour in the City. "A swift sale of the Carlsberg Tetley brewing business would help, but today's problems are not just Carlsberg Tetley," an analyst said.

Mr Jackaman said that Allied's main problems were caused by drinks wholesalers in the US carrying too much stock, consumer resistance to price increases, and the continued plight of the Mexican peso, which was depressing the conversion of profits into sterling.

His attempts to put some gloss on the news by saying that his management team had achieved a great deal in his five years as chairman fell flat.

Since Mr Jackaman assumed the chair in 1991, following Allied's notorious foreign exchange dealing disaster, the company's shares have underperformed the FT-SE 100 index by 38 per cent. The shares have lagged the index by almost 20 per cent over the last year.

This sustained lacklustre performance is now rapidly spawning rumours that Allied could fall prey to a hostile takeover bid, or that the company may be driven inexorably down the path to demerger.

Allied's businesses neatly fall into two halves, both packed with leading brand names such as Teachers and Ballantine's whisky, Courvoisier Cognac, Tetley pubs, Baskin-Robbins ice cream, Dunkin' Donuts, and Victoria Wine shops.

Analysts said the spirits side was probably worth more as a single business than the current pounds 5.24bn market value of Allied, but returning value to shareholders from the retailing operations could only be achieved by individual sales of businesses.

Investment Column, page 18