The maker of food for Marks and Spencer and other retailers said the outlook for its financial year was "substantially below expectation" after reporting a sharp deterioration in losses in the UK.

Buckinghamshire-based Uniq, the convenience foods group, said it had endured a disappointing second quarter in the UK and northern Europe and that operating profits for the first half of its financial year would be "close to break-even".

Shares fell six per cent today as analysts scaled back forecasts for pre-tax profits from the £20m previously expected for the year to the end of March.

In a trading update ahead of its half-year results, the company said sales were down 0.3 per cent in the first five months of the year in the UK where losses had reached £6.5m. In 2004 UK losses were £1.1m.

Although sales in northern Europe were down by five per cent, Uniq said the position was "most challenging" in the UK. It cited "ongoing labour, waste and supply chain problems" at the desserts business acquired at Minsterley, Shropshire in 2004, as well as the recent loss of salads business at Spalding.

Geoff Eaton, who became chief executive of Uniq in August, said the company faced "a challenging trading environment" but pointed out there were significant opportunities for improvement.

He added that considerable activity had been focused on the Minsterley operation, where some progress had been made improving service to customers.

The remaining UK businesses performed ahead of expectations, he added.

The firm, which is based at Gerrards Cross in Buckinghamshire, employs more than 8,000 people around Europe. It has nine manufacturing centres in the UK, where it is the market leader in the chilled desserts market.

It also supplies retailers with salads, ready meals and sandwiches and has a further 21 bases on the continent.

In May Uniq announced it was cutting 300 jobs as part of plans to save more than £20 million a year. Around 100 of those jobs were in the UK at the head office.