October 15, 2018 / 2:15 PM / a month ago

CORRECTED-UPDATE 1-Spanish supermarket chain DIA issues another profit warning, suspends 2019 dividend

(Corrects earnings year to 2018, removes analyst comparison)

MADRID, Oct 15 (Reuters) - Spanish supermarket chain DIA issued its third profit warning in 12 months on Monday and suspended 2019 dividend payments as it struggles with falling sales.

Shares in the budget retailer, which faces tough competition at home from local heavyweight Mercadona and German discounters Lidl and Aldi, plunged 35 percent by 1318 GMT, their worst trading day since DIA’s stock market listing in 2011.

The company also on Monday named an executive from main shareholder LetterOne as provisional chairman until a replacement is found for incumbent Ana Maria Llopis, who said in April that she would step down.

More than 18 percent of DIA’s share capital was held in short positions at the end of September, according to Spanish market watchdog CNMV, and volatility has continued amid speculation LetterOne could stage a full takeover.

The investment vehicle owned by Russian tycoon Mikhail Fridman disclosed last month it had built up a 29 percent stake, taking it within a whisker of the 30 percent threshold at which Spanish law dictates an investor must launch a takeover.

DIA, which appointed a new chief executive in August, said in a statement on Monday that it expected to book 2018 earnings before interest, tax, depreciation and amortisation (EBITDA) of between 350 and 400 million euros ($463 million).

It also blamed an increase in operating expenses for its reduced earnings outlook.

DIA gained market share during Spain’s economic crisis as it drew bargain-hungry customers, but it has struggled to find the right strategy since the Spanish economy returned to growth.

The group’s sales fell to 3.8 billion euros in January-June, down from 4.23 billion euros in the first half of 2017, according to its latest sales figures.

Monday’s plunge took its shares to the bottom of Spain’s blue chip index.

Chief Executive Antonio Coto is due to present a strategic plan by the end of the year.

DIA named LetterOne managing partner Stephan DuCharme as vice-president of the board of administration and said he would also provisionally take over as chairman. ($1 = 0.8634 euros) (Reporting by Sonya Dowsett and Isla Binnie, editing by Louise Heavens and Susan Fenton)

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