Photo booth operator Photo-Me International said it would lose more than £5.5m in the year to April, sparking a heavy sell-off in its shares on Tuesday.

Photo-Me’s shares lost almost a third of their value to 7½p after the company, which is chaired by Hugo Swire, the Conservative MP, said its results would be worse than analysts’ estimates of a loss of between £3.5m and £5.5m. It blamed dropping sales of its photo-printing and developing machines, which it manufactures in Switzerland.

While its ordinary photo-booths are still bringing in steady cash, the company said the bigger, back-office equipment Photo-Me sells has suffered as customers such as photography shops struggle to raise finance.

It is also increasing its provision against bad debts in the expectation that some of the manufacturing arm’s customers will not pay their bills.

Sterling’s protracted weakness against the euro would also squeeze profits, the company said, which has significant French subsidiaries.

Photo-Me has been through a tumultuous few years, plagued by a succession of boardroom purges and ill-fated strategies. It made a pre-tax profit of £1.6m in the six months to October 31, down from £2.1m in the same period the previous year, on revenue of £115.9m.

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