Allied Domecq yesterday signalled its willingness to get involved in further restructuring of the global drinks industry.

Sir Christopher Hogg, chairman, said the merger of Guinness and Grand Metropolitan to form Diageo, with twice the sales of Allied, would heighten competition. While Allied would not be panicked into action, it was looking at merger options with other big drinks groups.

He was speaking as Allied reported a 6 per cent rise in annual pre-tax profits to £607 million sterling, before exceptionals.

He also rekindled speculation over a possible de-merger of the group, which includes a large British pub estate and franchise operations such as Baskin Robbins ice cream parlours and Dunkin' Donuts.

"It is an idea that has not yet come and may not come," he said. "But the board's issue is that it is more a matter of pragmatism than of principle."

Allied's profits were at the top end of expectations, and the shares rose 27p to 508p.

But with more than half its turnover outside Britain, the group was hit by the strength of sterling.

Turnover, down 2 per cent to £4.45 billion for the year to August 31st, would have been up 3 per cent at constant exchange rates. The appreciation of the pound knocked £28 million off pre-tax profits. Allied expected a £50 million reduction in 1997-98.

Sir Christopher confirmed Allied's interest in acquiring Dewar's, the number one scotch whisky in the US, which Guinness and GrandMet have offered to shed to secure regulatory approval for their merger.