Zetar CEO Ian Blackburn has played down the UK confectioner and snack maker’s caution over Easter.
Speaking to just-food after Zetar said its orders for Easter were so far lower year-on-year, an admission that dented its share price on Tuesday (24 January), Blackburn said the company was right to be cautious but insisted the period was a “smaller” part of its business.
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“I think it is right to be cautious at this time, given what is happening in the macro market [but] Easter sales represent less than 20% of the group’s overall sales. You’ve got to look through that,” Blackburn said.
“It’s not a problem with Easter. It’s not a problem with our product range. We have got listings. It is simply that the retailers are choosing to be cautious. We’ve still got two months to go so we don’t actually know what is going to happen at Easter yet but it’s right and proper as we sit here to say that people are a little bit nervous [and] unemployment is going up [but] one has to keep it in context of our business.”
The forecast led Zetar’s shares to fall 8.7% on Tuesday despite higher underlying profits and improved sales for the six months to the end of October.
However, Blackburn said Zetar had had a “good response” from analysts, who, he said, had looked beyond the Easter forecast to the company’s new brand licences and its international expansion.
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By GlobalDataBlackburn said: “We’ve had some good response from all the analysts we’ve been talking to because they’ve been focusing on the Tango launch, the Guinness launch, the French market. Our gross net assets are moving up again. Our debt is dropping. For the first time ever, in the first half, we’ve made more than GBP3m (US$4.7m) profit.”
Liberum Capital analyst Patrick Coffey said Zetar had put in a “credible performance given the tough trading conditions”.
However, the caution among retailers led Coffey to reduce his forecast for Zetar’s full-year earnings per share, although he added: “On our revised numbers, Zetar still trades on an unwarranted discount to the peer group. Despite short-term pressures, Zetar’s sensible, long-term strategic initiatives remain on track.” Coffey has a ‘buy’ rating on Zetar’s shares.
Blackburn said Zetar was “seeing a lot of promotion” in the confectionery and snack sectors, although he said changes to product mix and efficiency measures had meant the company was able to increase margins in the first half of its financial year.
Input costs, he added, had been “stable on the whole”. He explained: “It is a mixture, some being a bit lower, some a bit higher. It’s now two years since sterling devalued by over 20% and therefore we have seen a little bit stability in all commodity prices recently.”
The Zetar CEO said the company was confident about its prospects for the rest of the financial year and beyond. “We are working on the medium term with lots of initiatives; all-year round products, increasing our product portfolio. The snack division is going to be refining its model. We only really got the first listings in this first six months. Our three-year plan is a good one but don’t forget that now we have the opportunity, if our French office works, of increasing our sales growth as well.”
