The Murray River Organics Ltd (ASX: MRG) share price has been one of the worst performers on the Australian share market today.
At the time of writing the organic food company's shares are down a whopping 34% to 41 cents, extending its year-to-date decline to 65%.
What happened?
Just over two weeks ago Murray River Organics saw its share price plunge 41% after it downgraded its full-year pro forma EBITDA guidance to between $12.5 million and $13.5 million and pro forma net profit after tax between $4.2 million and $4.9 million.
Previous guidance, given in February, was for full-year guidance for EBITDA of $15.9 million and net profit after tax of $6.6 million.
Management blamed the downgrade on its lack of progress on planned operating efficiencies.
Well, this morning the company came back with yet another shocking downgrade following a poor harvest.
Management believes that a reduction in sellable dried vine fruit from the 2016-2017 crop as a result of unfavourable weather conditions will mean pro forma EBITDA in the range of $6.5 million to $7.5 million and pro forma full-year net profit after tax in the range of just $100,000 to $800,000.
This drop in earnings means that the company will now breach its debt covenant on June 30. Whilst its financier has confirmed that it will waive the anticipated covenant breach, it certainly doesn't look good for the company.
Should you buy the dip?
Whilst I think the company has a big opportunity in the massive global organic food market and weather conditions are outside its control, I think this is a company that is best avoided at all costs.
In my opinion investors looking to gain exposure to the industry would be far better off looking at Costa Group Holdings Ltd (ASX: CGC) or Tassal Group Limited (ASX: TGR).
