Geest shares wilt by one-third as weather hits salad sales

Shares in Geest slumped by nearly a third yesterday after the food processor warned that a lack of sunshine had hit sales of its prepared salads as consumers failed to embrace summer eating patterns.

In a trading update, it said that "unseasonably poor weather" in May and June meant salad sales were 12 per cent lower than the year before.

The news, which exposed Geest's vulnerability to fluctuating weather patterns, wiped £143m off the value of the company. The shares closed down 192p at 571p.

"For people to kick into the summer eating patterns they need a switch in their head to say 'summer has arrived'," Mark Pullen, the finance director, said.

"[Before this] the salad market had been growing at 18 to 20 per cent for the past five to seven years."

The profits warning sparked controversy because it came less than four weeks after Geest's chairman, Ian Menzies-Gow, netted £1.2m by selling his remaining stake in the company at 780p a share.

"Ian is very upset that the timing has turned out to be what it is," Mr Pullen said.

He added that Mr Menzies-Gow, who is retiring in September, had only a brief window to sell his shares in ahead of the company's close period in July in order to benefit from the capital-gains tax loophole that encourages people to sell shares before retiring.

"Geest has been regarded as the one safe pair of hands in the UK small-cap food sector. This profit warning is therefore totally unexpected and very bad news," analysts at CSFB said.

Mark Hughes, at Numis Securities, said the warning revealed that Geest was "massively geared toward the summer salad market".

Previously the company had steered the market to believe that the growth in prepared salads was driven more by general lifestyle changes such as healthy eating and work-related time pressures. Mr Hughes downgraded pre-tax profit forecasts for 2002 to £40m from £46.5m.

Geest said that total operating profit for 2002 was expected to be "not less than last year's", bolstered by strong sales growth in the rest of the fresh prepared foods market. Sales of ready meals and pizzas rose by 20 per cent and 13 per cent, the company said.