Shares in the UK-based wines and spirits group, Allied Domecq, fell by 10% after the profit forecast in its trading statement issued yesterday fell below market expectations. The company said it was expecting year-end profits in line with last year at around £480m, while City analysts had been predicting around £520m. The shares fell 34.5p to a three-year low of 309p.
Allied attributed the lack of year-end profit growth to non-trading reasons such as a pension shortfall and currency exchange losses but also said its profits in Spain had been hit by de-stocking.
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The investment bank, Schroder Salomon Smith Barney (SSSB), reduced its rating Allied Domecq from “outperform” to “in-line” following the statement and said it had cut its price target on Allied shares from 450p to 345p.
“Unfortunately, the statement suggests that despite underlying progress in most markets, the group’s profit results will be well below expectations,” SSSB said in a research note. The investment bank, Goldman Sachs, also said on Wednesday that it had lowered its rating on Allied Domecq from “outperform” to “in-line”.
A grim day for the Allied board was completed at yesterday’s AGM, with which the trading statement was aimed to coincide, when institutional investors criticised CEO, Philip Bowman, over the £1.26m pay-off given to former chief executive, Tony Hales, and levels of executive pay in general.
Allied chairman, Gerry Robinson, described the criticisms as “unbelievable nit-picking”, an observation which itself also attracted criticism. A spokesman for the national association of pension funds said: “Shareholders have no objections to high levels of reward except for low levels of performance. He seems to have forgotten that shareholders own companies. To accuse them of nit-picking is to effectively criticise the owners of the business”.
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