Shares in Premier Foods plc plummeted this morning after the UK’s largest food maker issued another profit warning.

Premier‘s stock was down 38.45% at 6.16p at 10:14 BST after the Sharwoods and Hovis maker said its annual trading profit was expected to be “below market expectations”. Shares had fallen to 5.69p earlier in the day.

The profit warning came in Premier’s first trading update under new chief executive Michael Clarke. It also followed a similar warning in June. 

In today’s update, Premier’s group results for the third quarter of the year were “significantly below our expectations”.

Sales were down 3.6% to GBP477m (US$740.3m) on the back of an 8% fall in volumes. Sales volumes of Premier’s brands dropped 10.4%.

The company said “market trends” had “improved” but admitted it had “under-performed versus the market”.

Premier said its volumes had yet to fully recover from the “slower than expected re-building of in-store presence following a customer dispute earlier in the year”. A dispute with a major customer, understood to be Tesco, led to a number of Premier’s grocery lines being delisted. The row cost Premier GBP10m in the second quarter and led to the June profit warning.

The company also admitted today that its promotional programme in the third quarter had not “delivered the results expected”.

Premier’s branded sales also fell. The company said its branded sales were down 6%, while its non-branded sales increased 1.2%, which it said “reflected a market shift towards non-branded products”.

Meanwhile, sales from Premier’s own-label unit Brookes Avana fell 13.2% after it lost a contract to Samworth Brothers to supply pies to MARKS AND SPENCER.

Clarke insisted there are “substantial opportunities” at Premier but conceded there are “also significant challenges”.

The Premier chief executive said a focus on eight “Power Brands”, strengthening the company’s sales and marketing and reducing costs would help build “a more profitable business”.

However, he added: “Our immediate priority is to conclude discussions with the banks to revise our banking covenants and put in place refinancing facilities. This process is well underway and we are hoping to reach a successful conclusion in due course.”