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Zetar shifts seasonal focus after 2012 profit slump

By Oliver Nieburg+

18-Jul-2012

UK confectioner Zetar plans to shift its focus on seasonal products to branded and private label sales after suffering a 17.5% profit decline in 2012. Its chairman also plans to stand-down.

The company released its annual results today and reported £128m in sales and £5.5m in profit, down 5% and 17.5% respectively. The decline was put down to reduced Easter confectionery sales.

The group’s chairman David Williams said that the company would focus on branded products through licensing deals, such as those already secured with Guinness and Tango.

He also announced that the company’s AGM in October was “a good moment” for him to stand down after seven years as Zetar’s chair.

Unhappy Easter

The company’s confectionery division delivered sales of £87.8m for the year ended 30 April 2012, up 2% on the previous year. However profits slid 9% to £5.2m.

Zetar Chief Executive Ian Blackburn said: “Last year’s financial performance was disappointing primarily due to the late reduction in Easter 2012 sales, as our customers became increasingly cautious as the economic crisis in Europe unfolded.”

Williams added that retailers must have under-ordered as virtually all of Zetar’s Easter offerings sold out in advance of Easter weekend .

Zetar has licenses to produce confectionery for a series of brands, including Hello Kitty.

Seasonal risks

Blackburn noted the risks associated Zetar’s current seasonal-focus strategy.

“Seasonal business adds both operational challenges to our factories in dealing with fluctuating activity levels and commercial risk, as evidenced this year in particular with the late cancellation of Easter 2012 orders,” he said.

He added that the company had noticed this trend a few years and had begun to strengthen its everyday product offerings. With the addition of licensed brands such as Guinness and Tango to a portfolio that already includes Bailey’s and Hello Kitty, the company hopes to drive growth through more everyday offerings.

Private Label and branded focus

Blackburn said the company was looking to secure new licences and was already in negotiation with some “major brands”. Zetar already claims market leadership in children’s licensed chocolate products through its Kinnerton brand, which makes Simpsons and Power Rangers branded confectionery.

The company has a three-year strategy to improve its branded portfolio, making its sales mix less skewed towards seasonal products.

It also hopes to grow its private label sales as supermarkets and retailers look to add more premium products to complement their value ranges.

Upping exports

The company sees another opportunity on the European mainland and plans to increase its exports.

Zetar established a French sales and distribution subsidiary in Northern France earlier this year where it plans to expand in the French and Belgian markets.

Through this hub it also hopes to increase export sales for licenced character novelty products, private-label and premium licensed confectionery to other markets in Europe.

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