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March 23, 2020

Candy giant Cloetta withdraws dividend amid Covid-19 pressure

Cloetta, the European confectionery supplier, has issued another update on how it sees the Covid-19 coronavirus outbreak affecting the business.

By Dean Best

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”.

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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.”

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.”  

Related Companies

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What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
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  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
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Enter your details here to receive your free Whitepaper.

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