Uniq, which sells ready meals and sandwiches to supermarkets including Marks & Spencer, has been forced to scrap its dividend following "significantly harsher" market conditions and admit its turnaround plan has hit delays.
The food group's shares slumped by a fifth yesterday, as disappointed investors reacted to the news announced at its full-year results presentation. The Uniq chairman Ross Warburton said: "During 2007, the economic environment has become significantly harsher, and we now expect the recovery to take longer than originally envisaged."
The company is now expected to complete the turnaround in 2010, rather than at the end of this year as envisioned when the overhaul was announced in 2005.
Mr Warburton added: "Reflecting this and to facilitate further investment in the business, the board has decided to recommend not paying a final dividend."
Andrew Saunders, at Panmure Gordon, had expected a dividend of 4.5p, and said: "This will provide little cheer for those investors dug in for long-term recovery."
Uniq was hit last year by the unusually wet summer, the rising cost of raw food materials, and the uncertainty over consumer demand in the run-up to Christmas. Mr Warburton said: "The scale of change required in our business has been so extensive that it has taken longer than we would have liked to build the essential foundations for sustained recovery."
Investors would also be concerned over Uniq's outlook. The company is bearish over the prospects for this year, saying it expects economic conditions in 2008 to be worse than 2007, and added that maintaining its profits in the UK would become increasingly challenging. The shares closed 27.5p lower at 107.25p.
The group announced a small pre-tax profit of £1.9m beating some analyst forecasts of small losses. The company announced that revenues were up almost 3 per cent to £736.1m.
Marks & Spencer, which represents 27 per cent of the group's sales, is undertaking a review of its suppliers, and Uniq has already won business for the supermarket's "food to go" range. The review continues, however, and Uniq fears that bad news "could have a significant impact on our UK business". Mr Saunders said the comments "do not instill great confidence".Reuse content