Record confectionery results drive Zetar’s profits

By Mike Stones

- Last updated on GMT

Related tags Chocolate

Peppa Pig helped Zetar's Confectionery division bring home the financial bacon.
Peppa Pig helped Zetar's Confectionery division bring home the financial bacon.
Record confectionery performance drove UK-based confectionery and snack foods firm Zetar to achieve adjusted profit before tax of £6.7m; up six percent for the year ended 30th April 2011.

Revenues climbed two percent to reach £135m compared with the previous financial year, according to the preliminary results published this week.

The Confectionery division’s adjusted operating profit soared 22 per cent to reach £5.7m while sales were up three percent at £85.9m compared with the previous year.

The company attributed the strong performance to its success at retaining UK leadership in the supply of children’s licensed character chocolate products, featuring Peppa Pig, via its Kinnerton brand.

Seasonal novelty products sold at Christmas and Easter also performed well. The company is now the fourth largest confectionery supplier of traditional Christmas lines after Cadbury, Nestle and Mars, according to figures from analysts Nielsen Scantrack.

Everyday products

In addition to seasonal sales growth, Zetar’s noted that its strategy of growing sales of everyday products was paying off with the category now accounting for about 40 percent of divisional sales.

The company’s Irish subsidiary Lir Chocolates reported eight percent sales growth in local currency. Although Lir doubled profitability, growth remains constrained by the strength of the euro against sterling, said the company.

Its Natural Snacks division posted adjusted operating profit of £1.8m, down 32 percent on the previous year. Sales were up one percent at £49.1m.

The dominant feature in the market over the past 12 months has been raw material cost inflation. Costs escalated throughout calendar year 2010, with most nuts and fruits reaching record highs, peaking around Christmas​,” said a company statement.

The main factor driving input cost inflation was demand from developing nations such as China and India. That coincided with a year of poor global harvests exacerbated by financial speculators trading in agricultural commodities, said the company.

David Williams, non executive chairman, pledged priority to growing export sales to mainland Europe in the year ahead. “In June 2011 we formed strategic partnerships with two other major European companies in this sector, taking the first steps towards the creation of a one-stop-shop for licensors covering all confectionery categories across a wide range of European territories​.”

Ian Blackburn, Zetar’s chief executive, said: "We are pleased with the progress made during a year of many challenges. In particular, our Confectionery division achieved a record result reflecting a continued increase in everyday sales and improved mix of higher margin products allied to further cost efficiencies​.”

Private label

Blackburn also highlighted the growth potential of premium private label brands in both the group’s Natural Snacks and Confectionery divisions.

"Our key focus is to drive sales of premium private label and branded products across both divisions​,” he said. “We have made good progress in the past year on extending our portfolio of innovative snack products sold under renowned brands, including Branston and Ambrosia.

“This trend has continued into the current year with Sharwoods and the recent signing of the Tango licence for orange-flavoured chocolate products. Private label sales also remain a core opportunity as retailers devote more shelf-space to premium, added-value products​.”

Blackburn reconfirmed the company’s appetite for growth through acquisition having acquired chocolate confectionery manufacturing company Derwent Lynton last April.

Derwent’s main products are milk chocolate and chocolate flavour confectionery distributed throughout the UK and exported to 23 countries worldwide.

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