Cloettas earnings under pressure from weak  volume, one-off charges

Cloetta's earnings under pressure from weak volume, one-off charges

Confectionery group Cloetta reported mounting second-quarter losses this morning (13 July) as lower operating margins and an impairment charge related to its Italian operations hit the bottom line. 

Cloetta said net earnings dropped to a loss of SEK329m (US$39.2m) in the quarter compared to an income of SEK77m last year. The result includes a charge of SEK365m related to Cloetta's Italian business, which the group agreed to sell to Germany-based confectioner Katjes International last month.

Operating profit fell to SEK90m compared to SEK148m in the comparable year-ago period. On a comparable basis, stripping out Cloetta's Italian business, operating profit dropped to SEK115m, down from SEK156m. 

Cloetta president and CEO Henri de Sauvage-Nolting said the company's margins had been squeezed due to volume pressure. "The lower operating profit, adjusted, is mainly due to considerably lower production volumes in the quarter and a strong comparator. The cost per produced unit has thus increased. The increased proportion of pick & mix compared to previous year has also affected the profit development," he noted. 

Sales for the period were, however, 15.8% up year-on-year. Revenue rose to SEK1.41bn versus SEK1.22bn. Growth was supported by Cloetta's acquisition of Candyking, the Swedish company revealed. Organic growth stood at 0.5%, Cloetta added.