The Swiss food and hotel chain, Mövenpick, has reported a net loss of SFr45.5 million ($34.2 million) for 2002.
Last year the company slipped into the red for the first time in ten years when it ran up a loss of SFr11.6 million.
In a statement on Tuesday, Mövenpick also reported a nine per cent drop in turnover to SFr824 million from SFr906 million in 2001.
The results were worse than had been expected. The Zurich Cantonal Bank had forecast a loss of SFr26.5 million.
The canton Zurich-based group blamed the poor result on the "tough economic environment" and the adverse effect of one-time special costs related to the sale of the Deliciel bakery business.
Mövenpick said the global economic slump had hit business particularly hard in Germany, where the company generates almost 40 per cent of its sales.
All divisions reported lower sales in 2002, the company said, with the Gastronomy Division worst affected.
Rolf Kunz, an equity analyst at the Zurich Cantonal Bank, told swissinfo the result was far worse than expected.
"On the one hand there is a difficult economic climate, but on the other hand, there are some internal problems," Kunz said.
Kunz added that Mövenpick was unlikely to make an operational profit this year, and would rely on proceeds from the sale of its ice cream business to food giant, Nestlé.
"It's not an easy thing to turn this company around. It could take two or three years."
Mövenpick said that in the light of the results it had decided to refocus on its traditional areas of business: hotels and gastronomy.
It said it would be cutting back the group's diversification and giving individual areas of business greater autonomy.
The chairman of Mövenpick's board, Peter Kalantzis, said the company needed to increase sales to return to health.
"We urgently need to put the focus on increasing sales. Sales are the prerequisite for a positive return," Kalantzis said.
The chairman said Mövenpick was counting on the sale of its ice cream business to Nestlé as the means of returning to the black this year.
"We will achieve a profit, provided the transaction goes through," he said.
Instead of a dividend, the board has proposed reducing the value of registered shares by SFr2 each and SFr10 for bearer shares.
swissinfo with agencies
Mövenpick reported a loss of SFr45.5 million for 2002, compared to SFr11.6 million in 2001.
The company had reported profits for the ten preceding years.
Sales were down nine per cent at SFr824 million.
Mövenpick said that instead of a dividend it would reduce the par value of registered and bearer shares by SFr2 and SFr10 respectively.
In compliance with the JTI standards