Karlshamns sees growing competition

- Last updated on GMT

Related tags: European union

Swedish ingredients company Karlshamns reports that growing
competition and decreasing margins characterised the market for
chocolate fats designed to replace cocoa butter.

Despite a tougher economic climate, Swedish ingredients company Karlshamns managed to achieve volume growth in all business areas for the first three months of the year with group net sales increasing by some 9 per cent to SK853 million.

But the effects of a more difficult climate took its toll on all business areas. Profits in the business area Oils & Fats declined to SK31 million from SK33 million for the same period last year. The company claimed keener competition on the European market combined with rising energy costs were responsible for the SK2 million fall in profits. Net sales for the first quarter reached SK597 million, up from SK558 million for the same period in 2002.

Hardening competition in the vegetable oil industrymainly affected margins on the Western European market and the more aggressive market conditions had negative effects on the margins for certain chocolate fats, reported Karlshamns this week. Although a growing demand for higher value-added non-trans products puts Karlshamns​ in a good position to increase its sales volumes within the business area Oils& Fats.

In the chocolate and confectionery fats sector, the company reports that the growing competition and decreasing margins characterised the market for chocolate fats designed to replace cocoa butter. Karlshamns noted that the time frame for the new European directive, that will allow other vegetable fats to replace up to five per cent of cocoa butter and due to come into force in the autumn of 2003, remains difficult to estimate.

Turning to edible oils, high volumes occurred despite rapidly decreasing sales toCarlshamn Mejeri, one of the company's largest customers, with fats for the bakery and large scale catering industry along with DFA (Dairy Fat Alternatives) being the most rapidly growing product segments.

Looking ahead, fighting increasing competition will mark company strategy for the following year, reported Karlshamns. The company hopes that focus and priority on sustainable profitable growth should deliver substantial profits in the longer, rather than medium, term. The emphasis will remain on productivity improving measures to offset the strengthening competition, while continuing to establish and develop, as quickly as possible, new growth platforms.

Related topics: Markets, Ingredients

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