InterLink profits stale with second warning

By Catherine Boal

- Last updated on GMT

Related tags: Stock market

UK cake firm InterLink Foods has posted its second profit warning
in five weeks bringing its estimated loss before tax to between £6
million (€8.8m) - £7 million (€10.3m).

Yesterday's warning is the fourth in the financial year and reflects a worrying bout of unsteady trading for the owner of the Soreen malt loaf brand, prompted by restructuring and the move to a new distribution centre. Last year, rumours were rife of a company buy-out which would take the cake-maker off the stock market. Private equity firms Hg Capital and LDC were among those supposedly interested in making an offer. In September, management confirmed a takeover could be in the pipeline - saying they were in "exploratory talks which may or may not lead to an offer for the company." ​Now that profits - and subsequently shares - have dropped, the future of the company remains uncertain as it struggles to compete in a market dominated by its closest rival RHM. RHM own subsidiary Manor Bakeries which produces the iconic Mr Kipling brand. In its trading statement, InterLink admitted going up against heavyweights such as RHM had threatened own-label cake operations at the company. It said in a statement: "The own-label business is still suffering from the competitive market conditions that have prevailed for 18 months and the sales and margins previously anticipated for the final four months of the financial year have been revised downwards." ​ Heavy borrowing has helped keep the company afloat with InterLink debt now standing at around £60 million (€88.5m). The bakery hopes to recoup these costs with a stronger performance in 2007 and a shake-up at management level. The higher echelons of the company have suffered an upheaval in recent months. Co-founder and former executive chairman Alwin Thompson left his position in January following in the footsteps of the former chief executive Paul Griffith who resigned in October last year.

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