Cloetta mulls sale of Italian business
European confectionery company has said it may sell its Italian business as part of a strategic review, aimed at improving overall growth and margins.
The company, which says it has a strong position with the seasonal brand Sperlari and sweetener brand Dietor in Italy, operates four production facilities in the country.
However, in light of the negative Italian economic development and the performance of Cloetta Italy over the last years, Cloetta said it has initiated a strategic review of Cloetta Italy.
As a result, an indicative valuation of Cloetta Italy shows an impairment requirement of SEK771 million ($87.2m) pre-tax and SEK594m post-tax attributable to Cloetta Italy. “The strategic review of Cloetta Italy is aimed to improve growth and margins of the Cloetta group and might include a potential divestment of the Italian business,” the company said in a statement.
In 2016, Cloetta’s sales in Italy totalled around SEK750m, the company noted, adding that a divestment of Cloetta Italy “would improve Cloetta’s EBIT margin”.
The impairment of Cloetta Italy includes an impairment of goodwill and trademarks relating to the Italian business and will lead to a non-recurring cost item of SEK771m pre-tax, and SEK594m post-tax that will be reported in the fourth quarter of 2016.
The impairment is non-cash and will not affect Cloetta’s net debt/EBITDA or the groups dividend capacity, the company added.