Geest Plc has warned investors that annual profits are unlikely to meet city expectations.
The fresh prepared foods and produce business has seen poor supermarket trading at Sainsbury’s and Safeway have a knock-on effect on its own business.
Prior to the warning analysts had pencilled in pre-tax profits of £42 million, but following the news they were revising their forecasts downwards.
Geest expects operating profit for the first of 2004 to be around £2m below the same period in 2003, although it aims to give further guidance in September.
The company’s actions to improve the overall efficiency of its operations by £15m - £20m remain on track. This year it is expecting a £7m improvement from specific price increases and other commercial activity, and a £7m improvement from purchasing initiatives.
In addition, by the end of 2005 Geest anticipates a four per cent productivity improvement worth around £16m. By the end of May, the company had achieved more than £6m improvement in cost savings. The board remains confident that its various efficiency programmes will deliver considerably more in the second half. This is expected to result in broadly stable margins in the core UK prepared foods business.
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