Cloetta divests Belgian operation
The decision was taken so that the new Cloetta could focus on its core brands and key markets following the merger with Dutch firm Leaf announced in December last year.
Cloetta will now work through Katjes to distribute products in Belgium that come mainly from the Leaf side of the business.
Katjes will continue to sell and distribute the chewing gum brand Sportlife and other Cloetta owned brands.
“The divestment of the distribution company will have a limited effect on Cloetta's future operating profit, and the purchase price is insignificant compared to the market value of Cloetta,” said the company in a statement.
In 2011, Cloetta's Belgian distribution arm had 50 employees, and sales of approximately €22.7m (SEK 200m).
Cloetta owned brands accounted for just €4.6m (SEK 40m) of the figure.
The company said the divestment would incur a non-cash cost of approximately €3.4m (SEK 30m) during the first quarter of 2012.
“However, the transaction will initially be cash flow positive,” the company said
Earlier this month, Cloetta restated its Q4 results to include post-merger figures.
Its sales fell around 14% on the same period last year to €30.9m (SEK 272m), while operating profit plunged almost 60% to €1m (SEK 9m).
The company was hit by an overall market decline in its core Scandinavian market, high raw material costs and IKEA’s decision to launch its own private labels.
The company expects to become the market leading confectionery firm in Sweden and a big player on the Nordic market.
Euromonitor’s senior research analyst in Scandinavia, Pasi Hannonen, previously told this site that the new Cloetta would become the market leader in Scandinavia, overtaking Kraft.
Cloetta said Leaf’s presence outside Scandinavia in countries like the Netherlands and Italy also created future growth opportunities.