In This Article:
Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Cloetta AB (FRA:0CL) reported exceptionally strong profitability improvement driven by its broad portfolio.
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The company achieved a 25% or better profit despite high raw material costs.
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Cloetta AB (FRA:0CL) has a strong market presence, being among the top three players in all Nordic markets.
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The company has a clear strategic focus on its 10 super brands and aims to grow beyond its core markets.
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Cloetta AB (FRA:0CL) reported a strong free cash flow of 199 million, nearly double that of Q1 2024.
Negative Points
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Organic sales were down 1.1% due to the later celebration of Easter and the sale of the Nutrisol brand.
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The company experienced a decline in branded packaged products sales by 3.4%, marking the first negative number in this segment.
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Cloetta AB (FRA:0CL) faced challenges with high chocolate prices affecting consumption, especially towards the end of the quarter.
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The reduction in SKUs and discontinuation of certain contract manufacturing agreements negatively impacted sales.
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Increased marketing costs contributed to a rise in SG&A expenses, impacting overall profitability.
Q & A Highlights
Q: Less contract manufacturing had a negative impact on sales in Q1. Was this a temporary impact, or can we expect an impact also in the coming quarters? A: (CFO) No, it's not a temporary impact. We have exited those contracts due to profitability not meeting expectations. This will carry through unless more profitable contract manufacturing offers arise.
Q: Can you quantify the negative impact on sales and EBIT in Q1? A: (CFO) The shift due to Easter timing is around 40 to 50 million Swedish kroners. We expect continued clear profitable growth for the first half of the year.
Q: Can you comment on your development and growth in the US in Q1? A: (CEO) Sales in the US are still very limited. We recently set up our first store with Candy King and the pick and mix concept. If successful, we will consider further expansion.
Q: Could you elaborate on the reduction of SKUs? Does this mainly affect packaged products, and is this something we can expect to continue? A: (CFO) The reduction mainly affects packaged products as part of our strategy to focus on super brands and specific markets. This will continue as part of regular maintenance to drive efficiency and reduce complexity.
Q: You mentioned increased marketing costs in the quarter. Can you quantify this increase, and how should we think about marketing costs for the rest of the year? A: (CFO) A significant portion of the SG&A increase relates to marketing, between a third and half of the 30 million increase. We will continue to support our brands to drive consumer preference and sales.