Cloetta boosted by M&A

Cloetta boosted by M&A

Leading Swedish confectionery manufacturer Cloetta has announced an uplift in sales and operating profits, thanks largely to the acquisition of Dutch rival Lonka. 

The company, which operates in the Nordic region as well as the Netherlands and Italy, saw its sales increase by 6.4% year on year, of which organic growth accounted for 2%. The acquisition of the Dutch confectionery company Lonka a  year ago contributed 4.9% of the growth.

The planned closure of the factory in Dieren, the Netherlands, as part of the integration of Lonka is going ahead according to plans and production there is expected to finish at the end of this year.

Production from Dieren is being switched to a factory in Levice, Slovakia, which is currently under construction. The Lonka acquisition is expected to generate annual cost savings of approximately SEK35m (US$4m).

Sales in the quarter were up in Sweden, Finland, Norway and Denmark,  while they were stagnant in Germany. Healthy sales in Sweden were driven by both improved distribution among certain customers and higher sales in pick-and-mix, while Finland was fuelled by pick-and-mix sales and pastilles.

However, sales were down in the UK, the Netherlands, Italy and other export markets. The company blamed the drop in UK sales partly on the weaker British pound following the Brexit vote. But only around 5% of the group's sales come from the UK, and the possible future impact of Brexit is therefore not expected to have much impact on Cloetta.

The decrease in sales in the Netherlands has been attributed to weak market development, while in Italy, sales were slightly down.

Net sales for the quarter increased by 6.4% from SEK1.28bn to SEK1.36bn, including a negative impact from foreign exchange rates of  –0.5%.

Operating profit meanwhile, increased to SEK142m from SEK130m compared to the same period last year.