Shares: Announcement may add some sparkle to Allied Domecq's flat figures

Allied Domecq has been in the last-chance saloon for so long it should be suffering from alcoholic poisoning.

Indeed, its presence there has taken on such an air of permanency its shares have become one of the stock market's most glaring underperformers. Just ahead of one of its twice-yearly profit presentations, hopes inevitably rise that the drinks group has at last turned the corner.

Tomorrow, Allied has another chance to offer encouragement when it rolls out its yearly results. Unfortunately they are not expected to be sparkling, but the accompanying comments may provide a little cheer.

The drinks giant was once Britain's biggest brewer, taking in a host of highly regarded names. It has now abandoned its brewing heritage. The final link with the beerage was severed when Carlsberg of Denmark, rather dismissively, said it did not need Allied to help it out over Carlsberg- Tetley (CT), the third-largest brewer which Margaret Beckett, President of the Board of Trade, refused to let Bass swallow.

Her decision left Carlsberg with no option but to struggle on. It could have demanded Allied pay pounds 33m for a 15 per cent CT stake. But the Danes decided sole ownership of the struggling brewer represented their best course.

Allied has appeared to lag behind other drinks industry giants, prepared to follow rather than lead. It has had some disasters; a pounds 147m foreign exchange fiasco and a pounds 700m Mexican takeover just before the peso went into free-fall.

The arrival of Sir Christopher Hogg as chairman seemed to offer a chance of redemption. Perhaps the man famed for splitting Courtaulds into stand- alone chemical and textile groups would work the same magic at Allied.

But no. He decided against a demerger. So Allied remains a rather odd cocktail of pubs, various franchised catering concepts and a portfolio of brands which make it a world-leading spirit player.

The merger of Grand Metropolitan and Guinness, despite the handicap of the Diageo handle, represents yet more pressure for the Beefeater and Teachers group.

There are suggestions it may be forced to link with Seagram, the Canadian giant, which is the other big spirits influence, to counter the threat. Indeed, there must be a chance the new challenge will force Sir Christopher to reconsider his objection to a two-way split. Perhaps the spirit sides of Allied and Seagram could merge? That could leave Allied with, say, a half share in a new spirits outfit and free to concentrate mostly on its pubs and other retail activities.

Another possibility is that Allied will buy Diageo's Dewars brand, the top-selling Scotch whisky in the US. A series of joint ventures is also on the cards. So is the acquisition of some second-line spirit groups. What is clear is that Allied cannot ignore Diageo.

Armed with the results of a strategic review, it is hoped Sir Christopher will offer some pointers about the group's direction with the figures.

Allied must escape from the last-chance saloon if its present management is to survive. City institutions are known to be fed up with such a persistent underperformer. They are putting pressure on the board to improve results.

Tomorrow will probably be the last time Allied will be able to get away with flat figures. Around pounds 595m is expected against pounds 575m. The dividend should, however, remain unchanged at 23.59p, giving the shares the much- needed support of a 5.5 per cent yield.

Burton reports on Thursday. It is due to hive off its Debenhams department stores chain, the subject of a furious takeover battle 12 years ago. Full- year profits, the last for the combined group, should emerge at pounds 185m against pounds 151.6m.

Last week Footsie had another unsettling run, falling 79 points to 4,764.3. Bob Semple, the arch bull who called the market right at the start of the year, is still looking for a mundane performance for the rest of the year. But the NatWest strategist, despite recent events, remains bullish.

He says: "We do not believe UK equity valuations are over-demanding. To be bearish investors have to assume that either earnings are about to collapse, as the UK is going into recession, or there will be an outbreak of inflation, pushing gilt yields well over 7 per cent. Neither scenario is on the cards." He expects Footsie to climb to new highs next year - 5,600 points is his guess for September - and go to 7,000 by the millennium.

Another reporting on Thursday is Railtrack. It should remain on the express line with interim figures, before exceptionals, of around pounds 170m against pounds 150m. NatWest is looking for a year's figure of pounds 330m. Utilities continue to contribute with Energy Group likely to offer little- changed interim figures of pounds 144m on Wednesday and South West Water tapping in with six- month profits of pounds 70m against pounds 65m.

Today Cable & Wireless should dial up interim profits of pounds 690m (pounds 673m) and BAA is expected to achieve around pounds 320m at its half-way stage, up from pounds 304m.