Shares in manufacturing and retail group Supreme have been slashed after it warned that commodity price inflation and increased overheads are likely to temper its performance
The Manchester-headquartered company's share price was cut by more than 17% despite the group saying that growth continued over the past year.
However, the business highlighted that inflation was likely to impact its sports nutrition and wellness arm, with whey protein prices soaring
The group also said it would be impacted by higher wage and transport costs.
In a statement, Supreme said it expects to report a revenue in excess of £130m for the 12 months to March 31, 2020, up from the £122m it posted for the prior year.
The AIM-listed group added its adjusted EBITDA is set to be no less than £21m, up from £19.3m.
Supreme also said it will use a £25m funding deal it secured with HCBC in March to drive "organic growth, closely balanced with strategic acquisitions".
The group manufactures and imports vaping products, batteries, lighting, wellness and sports nutrition products and sells its wares in the likes of B&M, Poundland, Home Bargains and The Range.
In a statement, it said: "The vaping division is expected to report 10% revenue growth owing to new listings with Sainsbury's and Morrisons as well as continuing growth across all of its discount retail customers.
"This result will be enhanced by increases to its gross margin profile driven by further manufacturing gains.
"With increasing levels of government support for vaping, the group expects the double-digit revenue growth for this category to continue.
"The batteries and lighting divisions have continued to show their defensive characteristics and are expected to report growth in revenue of around 2% and 5%, respectively, and higher rates of gross margin as a percentage of sales when compared to 2021, highlighting the group's buying power and increasing breadth of distribution.
"The sports nutrition and wellness division has continued to demonstrate its potential with excess of 100% revenue growth.
"However, raw material price inflation, particularly recently in relation to whey powder, has impacted profitability."
On its new financial year, the group added: "Looking at FY23, the Group is expecting to deliver another year of profitable growth and increasing levels of cash generation, predominantly driven by Supreme's strong vaping sales footprint.
"However, this performance will be tempered by commodity price inflation within sports nutrition and wellness and the increases in the overhead base relating to wage and transport costs.
"Management has already taken steps to mitigate the external factors, including buying forward whey, and will also be continually reviewing potential price increases and ongoing manufacturing and distribution rationalisation."
