Scandinavian confectioner Cloetta has recorded sales and profit growth in the second quarter driven by acquisitions and says it is eyeing further buys.
In May, the company acquired Aran Candy owners of the Jelly Bean factory brand for $21.1m. Cloetta also recently sealed deals for Swedish dried nuts market leader Nutisal and FTF Sweets UK, owner of the British candy brand Goody Good Stuff. Only three years ago it closed a $1bn merger with Dutch confectioner Leaf .
Cloetta said its acquisitions had helped sales grow 9.5% to SEK 1.2bn ($176m) in Q2 and had driven up net profit 120% to SEK 9m ($1.3m).
The company said it was still on the acquisition trail. “We will continue to look for opportunities. It’s very difficult to say when and how,” said Cloetta president and CEO Bengt Baron.
Asked if the firm would look to strengthen in its existing markets (Scandinavia, Netherlands, Italy and the UK) or look to emerging markets, Baron said: “The focus is on both but the likelihood would be more on existing markets.”
We are looking for interesting propositions that complement our portfolio whether it’s withing existing segments like Goody Good Stuff or Jelly Bean Factory, or whether it’s complementary like Nutisal was..”
He said that Cloetta would not go into emerging markets with its existing portfolio and would instead look for a local acquisition or partner.
“To be able to get the right shelf position and the right slots in promotions and in the cash register on the way out and secondary placement, you need to be a significant player and have a significant portfolio,” he said.
Tough Italian market
In Q2, Cloetta grew market share in most of its markets, but reported difficulties in Italy.
“We are growing in every market except for Italy. The sales decline in Italy has been and will continue to be a bumpy road,” said Baron.
He said Italy had been a tough macroeconomic environment that had harmed consumption. The CEO added that trade was affected by a reduction in payment terms in Italy from over 100 days to 60 days.
The Italian market represents a relatively small proportion of Cloetta’s sales but the market grows in importance in the fourth quarter due to the seasonal strength of nougat brand Sperlari.
Cloetta recently rose above competition from Candy King to supply natural snacks and confectionery pick & mix across over 600 Coop stores in Sweden. Pick & mix accounts for 30% of volumes in the Swedish confectionery market.