Allied Domecq absorb triple blow

Drinks giant Allied Domecq today said strong trading in three of its core regions had helped it absorb the impact of a triple blow to profits.

The company warned in February that its results would be affected by higher pension costs, unhelpful currency movements and the impact of destocking of inventories by Spanish wholesalers.

Despite the problems, half-year figures from Allied showed pre-tax profits before one-off items rose 2% to £256m (€369m) in the six months to February 28.

Stripping out the three negative factors, Allied – best known for Beefeater Gin and Tia Maria – said underlying earnings grew 20% during the period.

Chief executive Philip Bowman hailed strong trading in the United States, Asia Pacific and Latin America as the reasons for the improved showing.

He added: “This was an excellent performance delivering brand growth at the high end of our expectations.”

Allied said it was also benefiting from changes at the group after deals added winemaker Montana and coconut rum Malibu to the company’s drinks collection.

Mr Bowman said: “The robust strength in the trading performance reflects the strategic choices and investment made in the past three years.

“The brand portfolio is now better oriented towards more rapidly growing categories such as vodka, rum, cream liqueurs and premium wine.”

However, the overall performance for the European division was weak, with trading profits down 51% because of higher advertising and marketing costs and the changing buying patterns of Spanish wholesalers.