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Kenwood shares hit by profits warning

Shares in Kenwood tested their all-time low yesterday after the kitchen appliances group warned shareholders at their annual meeting that results for the first half would fall short of the same period last year.

Kenwood chairman Harold Mourgue told investors that difficult trading conditions in Europe, combined with a continuing tendency for the core business to be "more second-half weighted", were responsible for the shortfall.

But with new products due to be launched in the second half and the prospect of improved conditions in Europe, Mr Mourgue said Kenwood remained confident about the outcome for the full year.

He added that trading in the UK continued to show improvement on last year "with a good uplift in turnover" but pricing and changes in product mix "continue to put margins under pressure".

The news caused Kenwood's shares to ease 12.5p to 195.5p, a whisker above their record low of 189p a fortnight ago.

Floated at 285p four years ago, the shares have struggled to perform against the backdrop of sluggish consumer spending, high raw material prices and competition from the Far East.

Kenwood's fall from grace began two years ago with the rights issue-funded acquisition of Ariete, an Italian appliance maker, which has led to rising debtor levels.

Sentiment towards the stock has also been affected by talk of another paper-funded acquisition. Last year Kenwood lost its chief executive, Tim Parker, to the privately run shoes group, C & J Clark.