The Danish-Swedish dairy giant Arla Foods says its sales in the Middle East have plummeted to zero as a result of a row over cartoons published in Denmark.
The firms said it had to lay off 100 people because of the fall in demand.
The row began when a Danish newspaper published a series of caricatures of the Prophet Muhammad, some of them depicting him as a terrorist.
Anger against Denmark is continuing to grow across the Middle East, despite an apology offered by the newspaper.
Arla Foods, one of Europe’s biggest dairy companies, is being hardest hit by a boycott of Danish products across the region.
The company has annual sales of $480m there.
“Our sales in the Middle East have come to a complete stop – in all countries in the region,” company spokeswoman Astrid Gade Niels told the BBC.
She said the row came as a shock to the company.
“We have found ourselves in the middle of a game that we have no part in.
“We have taken 40 years to build up a very big business in the Middle East, and we’ve seen it come to a complete stop in five days.”
No government apology
At the weekend, Arla placed adverts in Middle-Eastern newspapers to try to dissociate itself from the caricatures.
The cartoons sparked outrage in the Muslim world, where depictions of the Prophet Muhammad or Allah are banned.
On Monday the newspaper that published the caricatures, Jyllands-Posten, said: “These cartoons were not in violation of Danish law but have irrefutably offended many Muslims, and for that we apologise.”
The Danish Prime Minister, Anders Fogh Rasmussen, welcomed the apology – but again defended the freedom of the press.
“The Danish government cannot apologise on behalf of a Danish newspaper… Independent media are not edited by the government,” he said.
Besides boycotts, the backlash has also included diplomatic sanctions and Islamic militant threats.
The Danish foreign ministry advised against non-essential travel to Saudi Arabia and urged Danes to be cautious in other Muslim countries.
“Danes who choose to stay in Saudi Arabia should show extraordinarily high watchfulness,” it said on its website.
Saudi Arabia has recalled its ambassador to Denmark, while Libya said it was closing its embassy in Copenhagen.
On Monday masked gunmen briefly stormed the local office of the EU in Gaza, demanding apologies from Denmark and Norway, where a paper reprinted the cartoons.
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