Borthwicks issues warning

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The Independent Online

Borthwicks, the food flavourings maker, has warned that profit for the year to the end of March will not be as high as last year's £1.7m, as a result of difficulties in its US and Asian businesses.

City analysts are forecasting pre-tax profit of £900,000, compared with previous expectations of £1.8m. The company plans to maintain its dividend. Last year's turnover was £30m.

Borthwicks announced at the time of its interim statement that its US business had lost two significant clients. It had hoped the traditionally strong fourth quarter would compensate.

However, the company said new business gains had not reached the expected levels.

As a result the US business will contribute £400,000 less this year. The US loss will be compounded by a £200,000 reduction in profits from Broadland, the company's Birmingham-based operation.

The company's business in Asia will make a small loss, but this was anticipated.

The UK operation has turned in a resilient performance.

The shares fell 9p to 35.5p, but one analyst said that the company was still on a high rating for the food sector.

Peter Brackenridge, chief executive, said: "We believe this year in the US has been a blip. New business has now been secured and we expect recovery to normal levels of business in the next year."

Mr Brackenridge added: "The company had identified the causes of the problem and had taken action to put them right."

The dividend payment will have to be £750,000 to match last year's. Analysts expect post-tax profits to be £640,000, leaving the dividend uncovered.

The company has £6m in unutilised tax losses as a result of losses in previous years, which will be available to set off against future profit streams.