The company, which uses the techniques of biotechnology to develop healthier animals that yield better quality meat, said that a glut of pig meat in world markets had forced farmers to cancel orders for its pigs and caused a sharp decline in sales.
This "extraordinary downturn in the global hog cycle" meant that interim operating profits would be 50 per cent lower than the pounds 14.3m posted in 1997.
The profits warning prompted a slide in the shares of PIC, formed this summer from the remnants of the Dalgety food empire. The stock fell over 30 per cent to 52.5p soon after the announcement before recovering to close at 67.5p, an all-time closing low. City analysts sliced more than 40 per cent from their earnings forecasts for the full year, bringing them down to around pounds 16m from pounds 27m.
Phil David, the chief executive, said that prices for pig meat were at the lowest level for 40 years in Europe and for over 25 years in the US.
The collapse was unprecedented even in the highly-cyclical pig industry, he said. It had been caused by an "unusually large increase in production" in previous years, especially in Europe.
Industry experts said that pig farmers had added capacity in the past two or three years in the hope that the BSE crisis for beef and an outbreak of swine fever in Holland would increase the demand for pork. However, the expected surge in demand failed to materialise, leaving farmers with surplus pig stocks.
Mr David said he was confident that PIC would weather the downturn, adding that a planned restructuring of its western European farms would curb costs.
The plans, which involve 50 redundancies in a number of farms, are expected to yield savings of pounds 600,000 this year and pounds 1.3m in 1999.
City analysts remained sceptical on the chances of any near-term improvement in the pig market. "It is going to be grim for at least the next six months, with overcapacity still taking its toll," one specialist said.Reuse content