Cloetta (CLA) Q3 2024 earnings summary

Executive summary

• Achieved record quarterly net sales of SEK 2,196m, with organic growth of 5.7% and Pick & mix segment organic growth of 18.6%, outperforming branded packaged products at 1.4%.

• Adjusted operating profit rose 14.4% to SEK 238m, among the highest ever, driven by margin-enhancing activities in Pick & mix.

• Rolling twelve months adjusted operating profit reached an all-time high, supported by continued investments in core brands.

• Free cash flow improved 71.5% to SEK 211m in Q3, with net debt/EBITDA reduced to 1.6x, well below the long-term target.

• Sale of the Nutisal brand completed; ongoing business performance excludes Nutisal.

Financial highlights

• Net sales for Q3: SEK 2,196m (up 2.2% year-over-year); organic growth 5.7%.

• Adjusted operating profit: SEK 238m (up 14.4%); adjusted EBIT margin 10.8%; gross margin 32.0%.

• Net profit for Q3: SEK 130m; EPS SEK 0.45; effective tax rate 21.7%.

• Free cash flow: SEK 211m in Q3, up from SEK 123m; YTD improvement of SEK 236m.

• Net debt at SEK 1.8bn; net debt/EBITDA at 1.6x; unutilised access to SEK 4bn in cash and credit.

Outlook and guidance

• Full impact of high cocoa prices expected in Q4, challenging double-digit adjusted operating profitability.

• Greenfield plant project in the Netherlands put on hold for reassessment due to energy supply risks; further investments on hold.

• Margin compression from input cost increases remains a challenge for achieving the 14% operating margin target.

• No need for a similar year-over-year increase in marketing spend in Q4 as seen in Q3.

• Continued focus on margin enhancement, portfolio optimization, and investment in core brands.