Cloetta (CLA) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered improved profitability, with net sales rising 2.0% year-over-year to SEK 2,038m and organic growth of 1.8%, supported by effective pricing and margin initiatives, especially in Pick & mix.

• The divestment of Nutisal in May 2024 streamlined the portfolio, supporting the long-term EBIT margin goal of at least 14%.

• Net debt/EBITDA reached a record low of 1.8x in Q2, reflecting robust financial health and strong cash generation.

• Operating profit benefited from previous pricing and margin-improving initiatives, with adjusted operating profit up 16.2% to SEK 222m.

• Stable volumes were maintained despite consumer shifts to discount retailers and ongoing input cost pressures.

Financial highlights

• Q2 net sales were SEK 2,038m, up 2.0% year-over-year; organic growth was 1.8%.

• Branded packaged products grew 1.2% organically; Pick & mix grew 3.4%.

• Adjusted operating profit margin improved to 10.9% in Q2 2024 from 9.6% in Q2 2023.

• Free cash flow for H1 improved by SEK 148m year-over-year, with Q2 free cash flow at SEK 28m.

• CapEx for Q2 was SEK 30m, below normal due to greenfield project preparations.

Outlook and guidance

• Management expects to continue managing increased input costs, especially for cocoa, with ongoing pricing actions and margin-enhancing initiatives.

• Margin improvement in Q2 may be moderated in H2 due to higher chocolate share and input costs.

• The company is preparing for a VAT increase in Finland in 2025 and developing mitigation strategies.

• Continued focus on achieving the adjusted EBIT margin target of at least 14%.

• Greenfield project is on track, with the first factory closure ahead of plan and new facility start-up expected in H2 2026.