UK: Confectioner Zetar posts lower FY profits

By Dean Best | 18 July 2012

UK confectioner and snack maker Zetar has reported a fall in annual profits as retailers cut orders in the key Easter selling season.

Zetar, which makes products for retailers and under licence for brand owners, booked a 17.5% drop in adjusted pre-tax profits for the year to 30 April.

Revenue was down 5% thanks to the lower sales at Easter and Zetar's decision to quit "low-margin" commodity snack products.

The company flagged up the "caution" among UK retailers ahead of Easter in January. Chairman David Williams said today (18 July) suggested retailers may have be too cautious almost all stock sold out before the Easter weekend.

"In hindsight, based on the fact that virtually all stock sold out in advance of Easter weekend, one may conclude that retailers under-ordered and hopefully will be more confident when ordering for next Easter 2013," Williams said.

The Zetar chairman, who plans to stand down in October after seven years in the role, said the new year had started "well" for the company. Underlying sales in the first 11 weeks of Zetar's new financial year are up 7%.

Click here for coverage of just-food's interview with Zetar management.

Show the press release

18th July 2012

Zetar Plc

Preliminary Results for the year ended 30th April 2012

Zetar Plc, the AIM listed confectionery and snack foods group, announces its preliminary results for the year ended 30th April 2012.

· Results delivered in line with current market expectations

· Positive start to the current year

· Proposed dividend increased by 33%

Financial Highlights

• Group revenue 5.0% lower at £128m (2011: £135m) due to strategic exit from low margin commodity snack products and reduction in Easter confectionery sales

• Group adjusted PBT1 down 17.5% to £5.5m (2011: £6.7m)

• Group adjusted diluted EPS1 down 12% to 33.8p (2011: 38.5p)

• Net debt at year end reduced to £10.8m (2011: £14.9m)

• Net assets of £47.0m represent £3.55 per share (2011: £3.50)

• Proposed dividend per ordinary share increased by 33% to 3.0p (2011: 2.25p)

Operational Highlights

• Group sales mix improving:

- brands 34%

- everyday products 54%

• 25% growth in Natural Snacks’ licensed brand portfolio

• Derwent Lynton business transfer and integration completed

• Zetar France subsidiary established and first licences signed

· Overhead reduction plan implemented, saving £600k pa in FY2013

· David Williams stepping-down having been Chairman since Zetar formed 7 years ago

Post year-end Highlights

• Positive start to the current year with sales in first 11 weeks up 16% to £19.9m (2011: £17.2m):

o Underlying sales growth due to further gains on everyday confectionery 7%

o One-off Olympic food gifting sales in May/June of £1.5m

• Zetar France listings confirmed with French retailers for Christmas 2012

• Guinness and Tango brands added to portfolio; further strong brands in negotiation.

Ian Blackburn, Chief Executive of Zetar Plc, commented:

“Last year’s financial performance was disappointing primarily due to the late reduction in Easter 2012 sales, as our customers became increasingly cautious as the economic crisis in Europe unfolded. However, we continued to make good progress towards our main strategic objectives to increase the proportion of everyday and branded sales. Our portfolio of brands has been extended by the addition of the iconic brands Guinness and Tango, and we anticipate signing further well-known brands in FY2013. Towards the end of the year we also reduced overheads and have put initiatives in place to improve operating efficiencies and product quality. The Group’s positive cash flow enabled it to continue to reduce borrowings whilst also making a significant investment in the Group’s future growth.

"We are optimistic about the new financial year following recent significant new everyday product wins and although consumer markets remain challenging, we are pleased that the year has begun in line with our expectations with underlying sales growth of 7%, to which may be added one-off sales in respect of Olympic gifting products of approximately £1.5m million in the first eleven weeks of the year. Last year’s cost initiatives are reflected in improved margins in the period. Accordingly the Board is confident that the Group’s results for the current financial year will be back on plan and its confidence in the Group’s future prospects is reflected in the proposal to increase the dividend by 33% to 3.0p per ordinary share”.

- Ends -

Original source: Zetar

Sectors: Confectionery, Financials, Private label, Snacks

Companies: Zetar