Ingredients

Natra takes out $33m loan after cocoa prices hit chocolate business

29-Aug-2014
Last updated on 01-Sep-2014 at 12:41 GMT2014-09-01T12:41:31Z - By Oliver Nieburg+
Natra takes out a loan to remain competitive after its chocolate business was rocked by rising cocoa prices
A- A+

Natra has secured credit to mitigate the effect of rising cocoa prices, which have harmed its chocolate business.

The firm has taken a €25m ($33m) loan to support its Natra cocoa and chocolate business as it bids to protect its competitive strength in the international market.

“In recent years, and most notably in 2014, the international financial crisis and the strong speculative upward trend in cocoa prices have significantly affected the balance sheet of the companies and the profitability of the chocolate industry, a situation that has also influenced the evolution of Natra business,” said the firm in a statement.

The average daily cocoa price in July was $3,196 per metric ton, 38% higher than the same period last year, according to the International Cocoa Organization (ICCO).

In its first half (H1) results published on Sunday (9/1), Natra reported a 1.1% sales decline to €150.9m ($198.3m) for its cocoa and chocolate business. But its EBIDTA declined 91% to €0.96m ($1.3m).

It blamed costs associated with a new plant in Canada, but also the rise in cocoa prices combined with hikes for other raw materials like hazelnuts. The company said cocoa prices had risen 20% in H1 compared to the same period last year.

Divisions impacted differently

Natra’s chocolate and cocoa business has two divisions, which are inversely impacted by rising cocoa prices.

The Consumer Goods division manufactures finished products, such as countlines, mainly for private label and accounts for 75% of sales in Natra’s chocolate business. This segment is harmed by higher cocoa prices.

But Natra’s Industrial Goods division - which supplies cocoa butter, powder and coatings to manufacturers and makes up 25% of turnover for the firm’s cocoa and chocolate business – is helped by higher cocoa prices.

A familiar story

Natra is among a host of companies that have been hampered by rising cocoa costs.

Nestlé reported earlier this month that it took a 24% hit in first half confectionery operating profits due to spiraling cocoa costs and intense competition.

Mondelēz also missed its expectations in Q2 after its wholesale price increases, implemented due to rising cocoa costs, were met with resistance by some retailers.

Related topics: Outsourcing, Ingredients, Chocolate, Cocoa & Sugar