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Sales and pre-tax profits both surged by 15% in the first half at Hotel Chocolat (HOTC) as new store openings and digital growth helped the retailer offset rising costs.

Sales grew by 15% to £71.7m in the six months to 31 December, boosted by 10 new store openings during the period which contributed 5% to its year-on-year growth.


During the year it opened a new flagship store in Oxford Westgate and tested its first ever retail park location at Teesside. The group also completed two relocations.

Its website delivered a 16% year-on-year growth driven by an increase in traffic, particularly on mobiles, a benefit of the new website that launched in January 2017.

It also signed new wholesale accounts with digital retailers including Amazon and Ocado, which contributed 6% to digital growth.

Underlying EBITDA margins increased by 10 basis points thanks to the benefits of improved efficiencies and increased scale, which mitigate a 95 basis point hike in costs.

Rising cost pressure included the unwinding of its foreign exchange hedging, meaning the period was the first time it was directly affected by the post-Brext depreciation of sterling. In 2016 it decided to bring subscription distribution in-house in order to make the service more responsive, which negatively impacted EBITDA margin by 60 basis points.

However, during the period factory capacity increased by 25% driven by improved asset utilisation and more efficient production scheduling. Also, new capital projects commissioned in January 2018 have increased liquid chocolate capacity by 180%.

Underlying EBITDA grew of 15% to £15.8m, while pre-tax profits were also up 15% to £12.9m

Angus Thirlwell, co-founder and CEO commented: “”This has been another period of strong progress for Hotel Chocolat with growth in both sales and profits. The critical Christmas period was again successful, helped by further improvements in availability, our best ever seasonal range and the extension of our one-stop gift solutions range. We have exciting plans in place for the key spring seasons of Mother’s Day and Easter, and have recently launched a new cacao beauty range and a weekly subscription called Mbox. We are confident of further progress during the year.

He added that recent trading, including the Valentine’s period, is in line with the board’s expectations and its “continues to make good progress against our three key strategic objectives of opening more stores, improving our digital capability and increasing our production capacity”.

Morning update

Arla Foods in has reported an 8.1% rise in group revenues to €10.3bn, driven by higher sales prices, increased branded share of sales, and a better geographical and product mix

It said this was achieved in another volatile year in the global dairy market characterised by significant shifts in market prices, which supported an increase in sales prices of EUR 1 billion.

During the full year to 31 December 2017 it saw a 27.4% increase in pre-paid milk price to its farmer owners, leading to a net profit of 2.8% revenue, which is said was “within its target range”.

Gross profit fell 5% to €2.28bn, while profit before tax dropped 19% to €321m as production costs rose by 12%.

The group has reported a 10.1% rise in revenues from Arla branded goods, a 13.2% sales jump from international markets and 19.6 per cent revenue growth in Arla Foods Ingredients.

Within the UK, its largest market, the company grew its retail and foodservice revenue to €2.21bn up from €2.19bn in 2016.

Arla Foods’ CEO Peder Tuborgh, commented: “In 2017, we delivered a strong performance built on the good balance of brands, categories, and geographies that we have in our business to drive growth. Most importantly, this enabled us to pay out significantly higher milk prices to our farmer owners and utilize our balance sheet to enable the substantial capital investments we are making in 2018.”

Revenue in 2018 is expected to be at a similar level of between EUR 10 to 10.5 billion as a result of higher milk volumes and an improving product mix, which are likely to be largely offset by expected negative currency developments.

The group will continue to target a net profit share for 2018 in the range of 2.8%-3.2% of revenue, but expects seasonality to have a high impact on the 2018 half-year results, which are expected to be below the annual target range.

Elsewhere, Irish food group Glanbia (GLB) has said it “delivered a good performance” in 2017 as its full-year results show 7% growth in its wholly owned continuing operations.

Wholly owned revenue from continuing operations was €2.39bn, an increase of 7% on a reported basis and up 9.2% on a constant currency basis.

The drivers of this revenue growth were a 5.3% improvement in volume, a 0.2% increase in price and a 3.7% contribution from acquisitions.

Wholly owned EBITA from continuing operations was up a more modest 3.6% to €283.2m (up 5.8% constant currency) as EBITA margin from continuing operations fell 30 basis points to 11.9%.

Total group profit (after discontinued activities and exceptional items) in 2017 was €329.4m up €117.3m against the previous year, driven by a good underlying performance from its performance nutrition (GPN) and nutritionals (GN) businesses, the profit arising on the disposal of 60% of Dairy Ireland and a strong performance from JVs.

Glanbia said it refreshed its strategy its 2017; reaffirming better nutrition at its core and restating the ambition to drive long term sustainable growth.

However, in 2018 the focus will be on volume-driven revenue growth. To achieve this Glanbia will invest further in building the consumer brand franchise in GPN, the solutions capability in GN and across the group will continue to support innovation, talent development and systems infrastructure.

For 2018 Glanbia is targeting mid-to-high single digit like-for-like volume growth in both the branded portfolio in GPN and the Nutritional Solutions component of GN.

Siobhán Talbot, group MD, said: “The strategic evolution of the Group portfolio continued in 2017 with the acquisition of two highly complementary businesses to the GPN portfolio, Amazing Grass and Body & Fit as well as the disposal of 60% of Dairy Ireland and the subsequent creation of the Glanbia Ireland JV.

“These initiatives demonstrate the ambition of the group to build on its existing strengths, drive future sustainable growth and deliver on our vision to be one of the world’s top performing nutrition companies.

“Our focus in 2018 will be on volume driven revenue growth across our wholly owned growth platforms of GPN and GN. The outlook for 2018 is positive… We expect growth to be delivered in the second half of 2018 as comparative dairy dynamics and planned investments will adversely affect performance in the first half of 2018.”

On the markets this morning, Hotel Chocolat is up 0.5% to 324p after its half-year results, while Glanbia has tumbled 5.1% to €13.84.

The FTSE 100 has fallen 0.2% so far this morning to 7,233.1pts.

Other movers include PureCircle (PURE), up 1.9% to 440p, Science in Sport (SIS), up 1.4% to 71p, McBride (MCB), up 1.3% to 160p and SSP Group (SSPG), up 1.1% to 617p.

Fallers include Bakkavor (BAKK), down 3.9% to 196p, Total Produce (TOT), down 1.9% to 210p, British American Tobacco (BATS), down 1.1% to 4,445p and Karry Group (KYGA), down 1% to 80.8p.

Yesterday in the City

The FTSE 100 ended the day flat at 7,246.8pts despite weaker than expected results from key constituents yesterday including HSBC, Intercontinental Hotels and miner BHP Billiton.

In grocery, Ocado (OCDO) jumped 4.6% back up over 500p to 510.2p as City hopes of a tie-up with a US grocer resurfaced yesterday.

It was a less positive day for Irish food group Kerry Group (KYGA), which saw its shares drop 5.1% to €81.65 despite announcing a 4.5% jump in full-year revenues to €6.4bn driven by strong volume growth.

In the US, Walmart plunged 11.3% to US$94.11 after its online sales growth rate halved in the run-up to the Christmas period, albeit at a still-healthy 23%. US store sales were up 2.6% but net profit sank 42% to $2.2bn.

C&C Group rose 0.5% to €2.86 after ending its US distribution deal with Pabst Brewing Co.

Elsewhere, risers included Britvic (BVIC), up 1.5% to 700.5p, Fevertree Drinks (FEVR), up 1.5% to 2,512p, WH Smith (SMWH), up 1.4% to 2,072p, Sainsbury’s (SBRY), up 1.3% to 254.5p and British American Tobacco (BATS), up 1.2% to 4,493p.

Reckitt Benckiser had another day to forget after Monday’s share price plunge, dropping 2.4% to 5,928p.

Other fallers included Hilton Food Group (HFG), down 2.9% to 806p, Devro (DVO), down 2.4% to 187.2p, PayPoint (PAY), down 1.6% to 823p and SSP Group (SSPG), down 0.9% to 610.5p.