The Icelandic Group, one of Europe's largest seafood producers, has is struggling to turn around falling sales and will not meet profit targets it set earlier this year.

Icelandic, which owns the UK's Coldwater Seafoods, also supplies meals to UK retailers Marks & Spencer, Tesco and the Iceland chain.

Worldwide sales for the first nine months of 2007 fell 5% to EUR1.05bn (US$1.6bn) and were down by 11% in the third quarter. The group made a loss of EUR2.5m in the quarter.

Icelandic has carried out major restructuring this year but has been hampered by the performance of subsidiary Pickenpack Gelmer in Germany and France, which it is in the process of selling. 

Chief executive Bjorgolfur Johannsson said: "Our plans assumed that the streamlining measures that have been in progress since July 2006 would result in an improved financial statement this year. This has not materialised."

Bad summer weather in the UK slashed sales by 12% and demand also slowed in the US.