Compass Group has revealed a 14.5% plunge in profits for the six-month period ending 31 March 2005.
Pre-tax profit fell from £145m in the first half of 2004 to £124m this year.
Earnings per share were down by almost a quarter, dropping from 2.5p to 1.9p compared with the same period last year.
The stock market has reacted badly to the news, with the share price falling by 8.16% to 216.75p this morning.
Turnover was up by 5.9% to £6.2b.
Chief executive Mike Bailey acknowledged the performance hadn't been good and announced a business review of operations.
"I am not happy with our recent performance. We need to respond more rapidly than we have to the changes taking place in our market."
While Bailey highlighted the "virtuous circle of growth" that has driven the company forward over recent years he accepted that profit and cash flow were now more important considerations.
"As I look forward the key drivers will be consistent organic profit growth and sensible levels of capital investment. We need to look at bottom-line results and cash flow."
The group also announced the sale of its 75% stake in American high street bakery Au Bon Pain for $90m (£49m).
But Bailey refuted recent speculation that further sell-offs were in the pipeline. "There is no programme of disposals in front of us. If the review does identify a case we'll consider it," said Bailey
The embattled chief executive went on to outline a series of targets to win back investor confidence:
- £350-£370m cash flow in 2005
- Overhead savings of £50m over next 18 months
- Generate £1b cash flow between 2006-2008
- Improve return on capital employed by one percentage point between 2006-2008