Bulmer's future in doubt after warning

The future of HP Bulmer looked increasingly untenable last night after the struggling cider maker issued its starkest profits warning yet.

The group, which is in talks with its bankers to renegotiate its lending covenants, said pre-tax profits for the year to April 2003 would be almost wiped out by a combination of trading disasters, accounting issues and pension costs. It also scrapped last year's dividend payout, which had been postponed pending a review by its auditors, and poured cold water on the prospect of a payout this year.

The news, which follows the ousting of the chief executive, finance director and international operations director, knocked a further 35 per cent off Bulmer's share price. The stock, which traded at 442p a year ago, closed down 69p at 126.5p, valuing the maker of Strongbow cider at £67m.

Bulmer said a review by its acting chief executive, Colin Brown, had unearthed a £14.5m shortfall in this year's profits. Analysts had been forecasting about £21.5m for the group.

On top of this, Bulmer added it would write off a further £4.7m relating to money spent developing new products, such as Strongbow Spice, one of its unsuccessful attempts to muscle in on the alcopop market. An additional as yet unquantified amount would be written off with regard to its unfortunate foray into the US, it said.

Analysts reacted badly to the company's fifth profits warning of the year, with many predicting that its days as an independent company were numbered. Any potential buyer is unlikely to bid for the whole business, given the group's poor overseas operations, they added.

Bulmer said it had appointed John Darlington, a turnaround specialist who worked on the Millennium Dome, to help oversee the reorganisation while it searched for a chief executive to replace Mike Hughes.

Will Samuel, the chairman, said Bulmer was still reassessing previous decisions taken by Mr Hughes and Alan Flockhart, the former finance director. It is still not clear whether the men were aware of the extent of the company's problems when they signed off last year's accounts in July.

Bulmer said £4.1m of its profit shortfall was due to its decision to cut back on production to tackle overstocking. A further £2m related to the dismal welcome its Bambao cane spirit and lime alcopop product got from UK drinkers and to poor sales of its schnapps chaser, Sidekick, in Australia. It lopped £4.6m off its expectations for profitability in the UK this year and added that increased pension costs would hit it by another £2m.