Gloomy picture at Photo-Me

PHOTO-ME International's shares slumped to their lowest in more than four years as the picture booths operator said its already poor performance was set to deteriorate.

The stock lost 7 1/2p to 32 1/2p after chief executive Serge Crasnianski admitted the company's outlook was uncertain and that the business 'did not expect to make progress' in the second half of this financial year.

Photo-Me is now worth just £118m, compared with £1.6bnwhen the stock peaked at 436p in early 2000.

The fall came as deputy chairman Vernon Sankey, former chief executive of household products group Reckitt Benckiser when it was Reckitt & Colman, said the company was effectively for sale, though directors were 'not touting it around'. He said 'interest had been expressed' in the business, but this had not constituted a takeover approach. 'We will entertain sensible offers for part or all of the business should they be made,' he said.

Profits from the passport-style photo booths had been hit in Britain by the loss of the Post Office contract and were down in Japan due to the weak yen and recession. In the US, sales of its photo processing machines had slumped, mainly because of the hard times being suffered by Kodak.

These factors combined to slash pre-tax profits for the six months to 31 October by 45% to £8.2m, despite a 1.4% rise in turnover to £107.3m. The dividend is cut from 0.5p to 0.3p.

Sankey said interest cover was running at a comfortable 5.8 times since debt was cut by £9m to £47m.