UK drinks giant Allied Domecq has said it expects to earn an extra �110m this year from Mexican excise duty rebates.

The forecast follows a change in Mexican excise rules which makes it easier to predict how much cash the taxman will hand back at the end of the year, the company said.

The Mexican tax rebate is expected to partially offset the impact of the US economic slowdown, which, Allied warned, "will hold back top line performance".

But the company reassured investors that its profits for the six months to April this year will meet expectations despite "challenging and uncertain" business conditions.

There was better news in Europe, where strong UK sales over the Christmas period and steady growth in Spain are expected to boost the bottom line.

Investor caution

Allied Domecq shares closed down 7p at 388p on Friday.

Analysts said there are signs that Allied, the world's second biggest drinks company, is lagging further behind top-placed Diageo.

The company is planning to combat the US slowdown with a new range of malt-based drinks based on its best-known spirits brands.

The new drinks, which will have an alcohol content of up to 5% by volume, are to be launched in the US later this year in partnership with the Miller brewing company.

They are designed to compete with Diageo's popular vodka-based drink Smirnoff Ice.

In October, Allied Domecq announced plans to trim costs in response to the post-11 September slowdown.

Two years ago, Punch Taverns bought Allied's chain of UK pubs for �2.75bn after a protracted bidding war with brewer Whitbread.