Photo-Me slumps 30% on warning over 'material losses'

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The Independent Online

Photo-Me International, the beleaguered photo-booth operator, yesterday issued its second profit warning in two months, sending its shares down 30 per cent to 14.25p.

The company blamed the loss on a number of factors across its main markets in the UK, Japan and France. As a consequence, Photo-Me said it would suffer a "material loss" in the year ending 30 April. The company, which has net debt of £47m against a market capitalisation of £62m, has renegotiated covenants with its banks.

It said an increase in competition in its core UK market, where rivals have taken photo-booth sites from Photo-Me by offering retailers higher commissions, had reduced its own market share.

Japan had been hit by the recession, which had put a number of shops where it has booths out of business. Turnover in the country has fallen by 23 per cent, including a 10 per cent drop due to the depreciation of the yen against the pound.

Robert Lowes, the Anglo-French company's secretary, said: "Our underlying cash flow is very strong." But the company said that in view of this year's "disappointing result", there would be no dividend this year.

Photo-Me has also had problems in its American market, where orders for its photo-processing labs have fallen as clients, including Kodak, have been hit by the economic downturn after the 11 September terror attacks.

Mr Lowes said there had been a "very severe downturn" in America after the attacks on the World Trade centre. The company has also been hit by the introduction of the euro in Europe because it took a number of weeks to change photo booths from accepting one currency to the new one.

The company hopes to pick up a considerable amount of business when it introduces a version of its mini-lab in the Autumn, which is meant to process pictures twice as fast as its current model.

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