Photo-Me shares fall after profit warning

Shares in Photo-Me International, the company whose management was earlier this month forced out by angry shareholders, collapsed yesterday as it cut profits forecasts for the year.

Photo-Me said "difficult market conditions" had resulted in a serious shortfall on previous profits forecasts at its KIS minilab business and its wholesale laboratories unit. Photo-Me shares fell 27 per cent to 36.75.

Thierry Barel, in charge of Photo-Me's minilab unit, is to become chief executive of the company, joining David Young, the company's new chairman. Both were appointed after a shareholder revolt over Photo-Me's plans to sell its vending division. The sale of the photo booth business, the most profitable part of the company's activities, was cancelled, and Vernon Sankey and Serge Crasnianski, respectively chairman and chief executive, resigned.

Charles Peacock, an analyst at Seymour Pierce, described Photo-Me's announcement as a "surprise", warning that it had been "brief but blunt". The broker has rated the company as a buy, but suspended that recommendation yesterday.

Mr Barel is due to become chief executive next month, when Photo-Me unveils its results for the first half of the current year. The company operates 25,000 photo-booths, and earlier this year warned that the boardroom turmoil over the proposed sale of this business had hit first-quarter profits.