Real Good Food shares turn sour on profit warning

1st Apr 2015 12:06

Shares in Real Good Food plunged over 14% on Wednesday, after the ingredients group issued a profit warning.The AIM-listed company said it expected its full-year adjusted profit to miss targets on the back of falling sugar prices, adding that it was in talks over its Whitworths sugar business.The group's Napier Brown and Garrett Ingredients have been hurt by a decline in sugar market prices within the European Union, the company said.The former, which operates under the Whitworths brand, has returned to profit in the second half of the year but its performances have remained below expectations, Real Good Food said on Wednesday.The company's Renshaw and Haydens businesses performed strongly, though that was offset by significant one-off transaction costs and legal expenses in relation to the discussions with the UK and EU Competition Authorities.Analysts at Shore Capital said they were reviewing their forecasts on the Real Good Food, adding the group would benefit from a potential transaction involving its Napier Brown division."Such a transaction, if successfully concluded, would enable the Real Good Food to significantly strengthen its balance sheet and focus on more stable earnings growth going forward," they said in a note on Wednesday.Real Good Food shares were down 14.29% to 36.00p at 12:27 on Wednesday.