--adds broker comment, updates share price--
Home safety products maker Sprue Aegis (LON:SPRP) expects underlying profits in 2015 to be below market expectations, thanks to the euro's weakness.
The shares were the biggest fallers in mid-morning trading as the company issued the profit warning, which came despite a strong start to the year by its French arm.
The French division's "significant order book" extends into the second half of 2015, indicating that Sprue's revenue this year is likely to be significantly ahead of expectations.
In 2014, revenue shot up 36% to £65.6mln from £48.4mln in 2013, the company revealed in a trading update on Monday.
The increase was entirely down to the £21.3mln increase in sales to continental Europe, as UK sales fell by 10% from a year earlier.
Profit before tax improved to £9.63mln from £5.08mln in 2013, paving the way for the payment of a full-year dividend of 8p, up from sixpence in 2013.
Aside from concerns over the weakness of the euro, another potential pressure point for Sprue is the possible forced relocation of its smoke alarms manufacturer, based in China, to make way for a new railway.
Sprue has, however, been through this process before with the manufacturer and will work with them to build up stocks ahead of any move.
The group ended the year with net cash of £15.9mln, up from £5.2mln at the end of 2013, after raising £8mln through a share placing.
Sprue Aegis listed on AIM last year and raised £7.2mln in the process.
Shares were 12% lower this afternoon at 303p.
Robert Sanders, an analyst at house broker Westhouse Securities was surprised with such a negative market reaction and believes many private investors have been too quick to sell.
“Management has taken full advantage of the positive legislative impetus in Europe, especially France.
“However, with over half of sales coming from continental Europe, Sprue is facing a currency headwind as the current exchange rate is significantly weaker than the average rate in 2014.
“Every one cent move leads to a £0.3m-£0.4m change in revenues and profits.
He reckons Sprue's shares are still worth 400p, believing its product will help drive operating profit and cash.
"Any strengthening of the euro likely to lead to profit upgrades we see further upside potential in the share price in due course," added Sanders.