UPDATE 2-HKScan warns of weaker 2008 profits, shares slide

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HELSINKI, July 4 (Reuters) - Finnish food group HKScan Oyj (HKSAV.HE: Quote, Profile, Research) warned on Friday that full-year 2008 earnings would fall well below the 2007 level as its markets had not recovered as expected.

The announcement sent HKScan shares down as much as 15 percent to their lowest level in three and a half years before they pared losses to trade down 11.9 percent at 7.28 euros by 1211 GMT.

HKScan had earlier forecast that 2008 profits would be on a par with 2007, when it made an operating profit of 55.3 million euros, if a difficult situation in the international pork market was overcome in the second half of the year.

"Management now estimates that a reversal in economic trends will be pushed back towards the end of 2008," the company said in a statement.

"This will weaken the company's earnings performance in all its markets and, in a departure from earlier estimates, depress full-year earnings clearly below those in 2007," HKScan said.

A Helsinki analyst, who wished to remain anonymous, said that the word "clearly" was the trigger for the steep plunge in the share price.

Earnings will fall short of forecasts both for the first half of the year and in the third quarter, it said.

Moreover, substantial additional costs from the use of frozen meat stocks in Finland and non-recurring writedowns of primary production in Poland will be booked in the second quarter, the company added.