Sims value cut by 30% after profits warning

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The Independent Online
THIRTY per cent was wiped off the stock market value of Sims Food yesterday after a profits warning, writes Robert Cole.

The butcher is set to record a loss for the year ended 31 March. It made pounds 9.3m of pre-tax profits in the previous 12 months.

Brian Ford, chief executive, said that profits before tax and exceptional charges would be pounds 6m, but there would be pounds 6.5m of one-off restructuring costs.

The shares fell from 182p to 129p. At the start of last year they were trading above 300p.

The company also said it would cut its total dividend by one-third to 7.5p.

At the time Sims published its interim results last November gearing was 40 per cent. Mr Ford would not give an update on borrowing levels yesterday.

Sims has been hit hard by overcapacity in the supply of red meat. Supermarkets, which dominate food shopping, are also cutting suppliers' profit margins.

Sims is not the only one with problems in the red meat market. Hillsdown Holdings, the largest player, made a pounds 92m provision for reorganisation when it announced 1992 profits in March.

Since sterling's devaluation last year British beef and lamb have become cheaper for overseas buyers but lower export prices have increased prices at home.