Cloetta, the European confectionery supplier, has pulled plans to issue a dividend to shareholders, warning the risk of a “negative financial impact” on the business “from the end of March has increased significantly”.

In the second update to the financial markets in a week, the owner of brands including Candyking and The Jelly Bean Factory said it expects demand for pick-and-mix products to “temporarily be significantly reduced” due to a discontinued contract in Sweden and retailers taking measures to enforce social distancing.

“In addition, Cloetta expects a negative impact from sales channels such as entertainment and travel retail closing down temporarily,” Cloetta said this morning (23 March).

The company asserted it believes that pressure will be “partly mitigated” by continued customer demand for “branded packaged products in grocery stores and e-commerce”.

It added: “To date, our supply chain is still working well, and production is now steered towards branded packaged products following an expected lower customer demand for pick-and-mix.”

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By GlobalData

Cloetta had planned to table a proposal for a dividend of SEK1.00 (US$0.10) per share. The company said it has an “ambition” to summon the shareholders to an extraordinary general meeting later this year “to resolve on a dividend, if, at such time, the market is stabilised, and the company’s visibility of earnings is normalised”.

The company added: “Given the current uncertainty due to the global outbreak of Covid-19 and potential governmental response, it is not at this point possible to predict the full potential impact on our business. However, with the rapid spread of the coronavirus now heavily impacting markets where Cloetta has a presence and the currencies the group is exposed to, we believe that the risk of adverse effects has increased significantly.”