Food ingredients and bakery supplier Real Good Food (RGF) saw share prices drop 20% after it warned that profits for the year would not hit market expectations.

The board at RGF said in yesterday’s profit warning statement that it did not expect the final profit outcome for the financial year ended 31 March to meet current market expectations.

Extensive investment and restructuring, as well as the sale of Napier Brown sugar to Tereos last September, has had a “short-term effect” on the share price, which yesterday dropped over 20% to a low of 34.10p – a low not seen since April of last year, when low EU sugar prices soured trading at Napier Brown.

The group also cited “one-off events” as having had an impact in the profit warning, and indicated that its investments in cake decoration, food ingredients and premium bakery in the last year had also affected margins.

It said: “The business has invested heavily in people, product and brand across all its businesses as it executes its strategy of achieving the optimal operating platform from which to drive significant future growth.”

As a result, ebitda within the continuing business is expected to remain flat year on year. The stock has recovered some of the losses and is now trading 12.4% down at 39p.

The statement said: “The current financial year has been one of significant transition for the group as it implements its operational strategy and investment programme across the business.”