Zetar establishes French subsidiary
The announcement was made in the company’s half-year results where it saw modest growth in its confectionery category and a sales decline in its natural snacks division.
Zetar manufactures children's character chocolate products and branded alcohol-based chocolates under the Bailey's and Famous Grouse brands. It also produces natural fruit and nut snacks and is a major Easter egg supplier.
The company said in its financial statement: “Over recent years, the Board has reviewed a number of acquisition opportunities before concluding that establishing our own subsidiary was the most cost effective and lowest risk method of entry to the European market.”
“We believe that this is an exciting opportunity to leverage the Group’s UK business into another large European market,” it said.
This month, the company set-up Zetar France SAS, a wholly-owned French sales, marketing and distribution subsidiary based in Lille, Northern France.
“The establishment of French and Belgian distribution capability has already provided the Group with credibility as a European operation and has helped Kinnerton to extend the UK licences for Hello Kitty, Power Rangers and The Simpsons to include France, Benelux and other European markets.”
It added that it would seek to add licences specific to the French and Belgian markets to its portfolio and said there may be plans to include additional branded and private label confectionery and snacks ranges.
For the first six months ended 31 October 2011, Zetar’s group revenues rose 2.4% to £61.8m.
Its adjusted profit before tax stood at £2.8m, up 13% on the same period last year.
The company also reduced its net debt by around £1m to £24.4m.
The firm’s confectionery division saw a 12.4% sales increase during the period with a £1.4m boost from its Derwent Lynton business, which it acquired in April last year.
The company’s Bailey’s range also saw 10% growth, while Zetar said the re-packaging of its Lir brand had also furthered sales.
The company closed Derwent Lynton’s Derby factory just before the end of the period. It has integrated operations to its facility in York and said it expected to realise cost benefits from the move in the second half of the financial year.
Zetar’s natural snacks division did not perform so promisingly.
Operating margins were said to be well below historic norms due to a prolonged period of raw material cost inflation.
Sales for this segment declined 13% to £20.6m.
The company said its strategy for the confectionery division would be to capitalise on seasonal sales.
It enjoyed a reasonable Christmas despite a fall in consumer confidence, but expects the next holiday season to be more difficult than the last.
Company chief executive Ian Blackburn said: “While the outlook for Easter remains less than certain than usual, due to the pronounced fall in consumer confidence, we remain positive about the strategic direction of our business.”