The loss of a contract to make chicken products for Burger King and outbreaks of avian flu forced food manufacturer Uniq to issue a profit warning yesterday.

Uniq was once a dairy product specialist but now concentrates on manufacturing "value added" convenience food. The company is in talks to sell the poultry business that is at the root of its problems. The talks put 600 jobs at risk at the two Yorkshire factories which make the poultry products. Its products include luxury stuffed turkey breasts for Marks & Spencer.

It warned about the loss of the Burger King contract last year but quantified the effects yesterday. Avian flu and the subsequent mass culls of poultry have led to a price rise for the meat. The firm said the problem had a disproportionate impact on businesses such as Uniq's that buy poultry from third-party suppliers.

A spokeswoman said it was an outbreak of avian flu in Holland last spring that had hurt the group's performance. The impact of the outbreak in the far east is not yet known.

The division is expected to report an operating loss of £3m for last year, compared with a profit of £5m the year before. The remainder of the businesses were said to be "performing in line with expectations".

"A significantly improved performance in France is offset by a weaker performance and greater uncertainty in the UK than anticipated at the half year," the company said in a statement. Uniq said it was expanding sales of its "food to go" lines in the UK, but has yet to replace business it lost from Costa and Asda desserts, thereby exerting pressure on profit margins.

Northern Europe has fared better, though reduced fish prices, largely passed on to customers will mean falling sales on a constant currency basis. Low-fat spreads have performed better than expected.