Shares in engineering and plastics group Barlo collapsed yesterday to their lowest level for five years after the group sounded its third warning about difficult trading in the space of two months.

On the Dublin market, Barlo shares fell 38 cents to €0.39 after trading as low as €0.30, and this compares with a high earlier this year of €1.19. It was 1996 when Barlo shares last traded at so low a price and at this level the company is valued at just €66 million (£52 million).

Each warning about difficult trading this year has been accompanied by a sharp fall in Barlo's share price. In May, the shares fell 13 per cent after chief executive Mr Tony Mullins warned that a slower economic growth would slow Barlo's profit growth. This was followed by another 10 per cent in the value of the shares in July when the company again warned about difficult trading conditions and announced a cost-cutting programme.

But any hopes in the market that the cost-cutting programme would have the desired effect were shattered with yesterday's statement, which warned of a "significant" fall in both half-year and full-year profits. The reaction in the market was devastating with Barlo losing more than half of its value as analysts dramatically revised their profits and earnings forecasts.

Speaking to The Irish Times, Mr Mullins said that since the July statement, there had been a marked deterioration in its business, particularly in continental Europe where the group currently had six plants in Germany, the Czech Republic, Slovakia, France and Spain and a radiator plant in Belgium.

Mr Mullins said that the seasonal boost to the group's business in Europe did not materialise this year and that Germany, where the group had two plants, had been very slow.

He warned of further changes to reduce Barlo's cost base but added that this cost-cutting was unlikely to affect the group's four plants in Ireland and the UK which were performing well. "I don't see any great change in the Irish and British businesses," he added.

In his statement, Mr Mullins said that the slowdown in the first half would lead to results "significantly" below first half 2000 when Barlo had pre-tax profits of €9.4 million. He said the outlook for the full-year was difficult to predict but that full-year results "are likely to be significantly down on last year". In the full-year to the end of March 2001, Barlo had pre-tax profits of €24.9 million.

The reaction in the market yesterday suggested that the final outcome in the current year would be well down on that profit figure.