Unchanged sales, higher manufacturing costs

Unchanged sales, higher manufacturing costs

For the second quarter, Cloetta Fazer reported sales of SEK 658 million (656)
and an operating profit of SEK 33 million (54). Operating margin fell to 4.9 per
cent (8.2).

“A combination of slower sales growth at the end of the second quarter and
higher manufacturing costs are reflected in a year-on-year profit decrease,”
says the company's CEO Jesper Åberg. “Our business follows a seasonal pattern,
where the first and fourth quarters are strongest in terms of sales and profit.
Sales are also influenced by the weather and the heat wave in early June
contributed to the downward trend. The cooler temperatures in July then
triggered a sharp increased at the start of the third quarter.

“Our sugar confectionery range has shown impressive development. To boost
capacity and efficiency, we have therefore decided to invest in a new production
line in Finland.”

Sales in the first half of the year rose by SEK 10 million to SEK 1,398 million
(1,388). Operating profit is reported at SEK 112 million (122). Operating margin
was 8 per cent (9.2 per cent excluding one-time costs). Profit after tax was SEK
91 million (94).

Sales remained strong in Finland, with growth of 8 per cent during the period,
but declined by 3 per cent in Sweden. Sales on the Baltic market continue to
rise. The establishment of an in-house sales organisation in Russia led to
increased sales in the first half of the year. 

Raw material costs, mainly for cocoa and milk products, have risen over the past
year.
“Our products are exposed to severe price pressure, much of which we have been
able to
overcome through efficiency gains like the transition to fewer and larger
production units.
Now we will be forced to raise our prices to offset rising raw material costs as
these reach full impact in the second half of the year,” says Jesper Åberg.

For additional information contact Jesper Åberg, Managing Director and CEO,
mobile +46 70-180 2101 or Curt Petri, CFO, mobile +46 70-593 2169. 
www.cloettafazer.com

About Cloetta Fazer 
The Cloetta Fazer Group is the Nordic region's leading confectionery company,
with a market share of around 22 per cent. The company has production facilities
in Sweden and Finland. Cloetta Fazer's strength lies in its many popular brands,
such as Karl Fazer, Kexchoklad, Dumle, Geisha, Polly and Center. The average
number of employees is around 1,500 and annual sales amounts to approximately
SEK 3 billion.