Cloetta Fazer reports higher sales but lower profit for first half of 2008

Cloetta Fazer’s net sales for the second quarter rose by SEK 80 million to SEK 738 million. Operating profit amounted to SEK 7 million (33) excluding a goodwill impairment charge of SEK 90 million arising from the upcoming demerger of Cloetta Fazer. Operating margin was 1% (4.9%).

“Like the first quarter, the second quarter of 2008 was characterised by lower gross margins resulting from increased raw material costs and higher selling and marketing expenses,” says the company’s CEO Jesper Åberg.

Total sales for the first half of the year rose by 9% to SEK 1,520 million (1,398). The increase in sales for the period is mainly explained by acquisitions and volume growth. Operating profit for the first six months excluding the impairment charge of SEK 90 million was SEK 54 million (112).

“The implemented price increases have not been sufficient to offset higher raw material costs, which has impacted gross margins and contributed to the year’s weak earnings trend,” adds Jesper Åberg.”

The demerger of Cloetta Fazer has led to a goodwill impairment charge of SEK 90 million owing to decreased sales in the new Cloetta, which in the future will not include sales of Fazer products in Sweden.

The information from Cloetta Fazer contained herein is subject to the disclosure requirements in the Swedish Securities Market Act. The information was submitted for publication on 20 August 2008, 12:05 p.m.