The company, owner of the Beefeater, Malibu and Ballantine's spirit brands, said trading profits were up sharply at the end of its financial year on 31 August.

Investors welcomed the news, and Allied Domecq shares ended the day up 12.75p at 393p.

Allied said its US operations had put in the strongest performance, while sales in the Asia Pacific region had held up well despite the Sars outbreak earlier this year.

In Europe, sales flagged because of sluggish economic growth and changes in the Spanish wholesale market.

Takeover talk

Allied added that its wine business - set up in January 2002 - had performed well, and was on track to hit its financial targets.

Elsewhere, the firm's fast food businesses Dunkin' Donuts and Baskin Robbins also had a good year.

Allied Domecq is due to unveil its full year results on 21 October.

The company, one of several second-tier drinks firms battling for a share of the market not already controlled by Diageo, has been the subject of persistent takeover speculation in recent weeks.

Analysts say the firm's relatively low market value and good growth prospects make it an attractive target.