The maker of Sorbent tissues and Libra personal care products has been hit by rising costs and fierce competition, which will hit its full-year earnings by 30 per cent.
Asaleo Care warned on Tuesday that its preliminary half-year underlying earnings would be 24 per cent lower as a result of higher pulp and electricity costs, lower sales and price competition.
The company also slashed its full-year guidance by around 30 per cent to $80 million to $85 million from $113 million to $119 million.
Asaleo said the drop in interim underlying earnings was largely due to "significantly" higher pulp and electricity costs of about $10 million, lower tissue and baby care sales as well as increased spending to support market share as a result of heavy discounting by competitors.
In a bid to recoup part of the cost increases, Asaleo said it had increased its prices, triggering what it called "protracted" negotiations with customers and causing product promotions to be reduced and in some cases cancelled, resulting in a big drop in volume.
"These negotiations have now largely concluded with promotions resumed and price increases achieved in many cases," Asaleo said.
Asaleo is undertaking a strategic review across all its operations, in a bid to improve its performance.
Asaleo shares hit a record low of 82 cents shortly after the announcement, with the stock down 43 cents, or 33 per cent, at 87.75 cents in a flat Australian share market at 1125 AEST.
Asaleo expects to report its first-half results on August 21.
