Swedish confectioner Cloetta, which on Friday announced plans to merge with local rival Leaf International, today reported a fall in quarterly profits.

Cloetta said net profit for the three months to the end of November dropped 28.1% to SEK23m (US$3.3m) on the back of lower sales and higher spending on marketing. Operating profit fell 31.1% to SEK31m. The lower profits led to a 9.3% decrease in sales to SEK302m.

CEO Curt Petri pointed to an increase in sales of Cloetta's two leading brands - Kexchoklad and Polly - but said the overall lower revenues were due to a weak grocery sector and fewer products made on contract. He also said sales in last year's first quarter were helped by the launch of Tarragona.

Petri said higher marketing investment, particularly in Norway, hit profits. However, he added: "Price increases have been implemented during the autumn which will have an effect in the coming year."

Reflecting on Cloetta's plans to merge with Leaf, Petri said the deal would "bring whole new opportunities" to the company.

"Together with Leaf's attractive brand and product portfolio we will gain at least five complementary segments where we are market-leaders in Sweden and a firm footing in the Nordic market, which will benefit the shareholders, customers, consumers and employees alike," he said.