Cloetta raises prices after ‘weak market’ harms sales

By Oliver Nieburg

- Last updated on GMT

Related tags Nordic countries Finland Sweden

Cloetta raises prices after ‘weak market’ harms sales
Swedish confectioner Cloetta has introduced price increases after its sales slowed in the first quarter (Q1) 2012.

The company, which completed a €753m merger with Dutch firm Leaf in February, was hit by rising raw material costs, expenses relating to the merger and 'weak' market development.

‘Soft’ market conditions

Cloetta CEO Bengt Baron said:  “The overall market conditions remained soft in almost all of our key markets.”

 “However, the market for chocolate products in Sweden grew somewhat during the quarter, and the confectionary market in Finland improved as it recovered from last year’s introduction of the confectionary tax.”

“The somewhat weaker market development impacted our sales performance.”

The company’s underlying net sales fell by 1.8%, while reported net sales increased by 3.9%.

Cloetta’s divestment of its distribution business in Belgium in February to focus on its core business in Nordic countries was said to have harmed sales further. The company plans to continue to sell its brand in Belgium through the new owners of the distribution company.

“We have been able to implement price increases during the quarter to offset higher raw material costs, but not all have reached full effect yet,”​ said Bengt.

 This led to a drop in underlying EBITA by 32.3% to SEK 50m.

Supply chain restructuring

In March, Cloetta announced that it would close three plants in Sweden and Finland in a move that would result in 345 job cuts.

“The key driver for this is the existing overcapacity currently found in the Group’s production structure,”​ said the firm.

 Bengt said that the closures would eventually bring cost savings of SEK 210m.

“The first positive effects of the integration should be visible on the EBITA level at the end of the year,”​ he said.

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