Scandinavian confectioner Cloetta issues profit warning following factory fire

Stockholm, Sweden - August 23, 2014: One pack of Cloetta Sport lunch 80 grams milk choclate candy bar for the Swedish market isolated on white background.

High profile confectioner Cloetta have issued a stark warning in regards to their third quarter profits, as it seems very likely that they will be impacted following a fire at their production lines at their factory in Turnhout, Belgium in June.

The fire is set to have a serious effect on their Q3 results, as Cloetta are fully expecting their adjusted operating profit to be a significant amount lower than the same time last year, with Cloetta believing that the adjusted operating profit will take a SEK 40-50m (£3.7m-£4.6m/$5m-$6.3m) hit.

To make matters worse, the Swedish-based company had claimed that the fire damage to their production line had been much greater than expect, which as a result, has led to lower volumes of output and halting production constraints.

In order to try and combat the damage, Cloetta have recently installed new shifts at other factories in order to try and compensate for their losses, while they have also taken the decision to outsource some production so that they don’t grind to a halt completely.

However, one downside to this was that all of the hassle involved had been creating delivery issues, which as a result have meant that the company have lost out in sales.

Cloetta have pledged to make sure that the damaged production line in Belgium is replaced, and the factory itself is set to resume operations by the second quarter of 2018.

While Cloetta have been heavily impacted by the fires from a sales perspective, the Swedish company fully expect insurers to cover the fire damage and pay out in full, which will be a welcome relief for Cloetta at what is proving to be a very difficult time for them.

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