Cloetta's Profit Surge Sets the Stage for Aggressive Expansion
Volume-driven growth and record margins fuel a push into the U.S. and Germany
CLA-B.ST · Earnings Call · 2026-07-15
A Margin Blowout
Cloetta's second quarter delivered a striking profitability leap. The adjusted operating margin hit 14.9%, far above the company's 12% mid-term target for 2027. The growth was not just price-driven; it was volume-driven, with organic growth of 3.8% in the first half, at the upper end of the 3–4% long-term target. As CFO Frans Rydén explained, “Even though 14.9% is very strong, it is not the strongest quarter we've ever had.” — Frans Rydén, CFO · 2026-07-15 Indeed, the company has historically seen quarters above 14%, but the consistency and the fact that this comes alongside a strategic shift makes it noteworthy. The margin expansion is driven by a favorable mix from the focus on Superbrands, combined with an exceptionally strong operational efficiency. Frans highlighted three factors: mix, efficiency, and geographic expansion costs. He noted that all ten of the "10 things" that usually go their way did so this quarter. This is a clear signal that the company's operating model improvements are taking effect.Expansion Beyond the Nordics
While the core markets (Sweden, Denmark, Norway, Finland, Netherlands) remain the backbone, Cloetta is making concrete strides in its geographic expansion. The company launched Läkerol in the Netherlands, a key market, and is rolling out selected products from one of its Superbrands nationwide in the U.S. Additionally, it opened the first Pick & Mix concept based on Swedish candy in U.S. retail. CEO Katarina Tell expressed confidence: “We are making strong progress on our expansion agenda, both within and beyond our core markets.” — Katarina Tell, CEO · 2026-07-15 This follows a pattern from earlier calls. In Q1 2026, Katarina noted: “As mentioned, North America grew well in the quarter. So it contributed to the growth. We launched the CandyKing store in Manhattan in the end of December. It's a profitable business.” — Katarina Tell, CEO · 2026-05-06 The U.S. expansion is still in its early stages, but the company is already generating profitability from the New York store.Managing Costs and Future Investments
The strong quarter was also a result of deliberate cost management. The company held back on some investments in Q2 to fund one-time costs related to geographic expansion and a new product launch in the second half. As Frans noted, “I think in a way, the strongest indication of the range of step up... is the fact that we are saying that the 2027 target of 12% remains within sight.” — Frans Rydén, CFO · 2026-07-15 This suggests that the H2 will see a margin dip, but the full-year should still be solid. The company also addressed SG&A costs, which remained flat despite increased marketing spend, thanks to savings from the reorganization. This is a recurring theme from prior quarters. In Q4 2025, Frans commented on the savings: “So it's a super popular topic here... we are now delivering closer to 30% of that within the year.” — Frans Rydén, CEO · 2026-02-04 That discipline continues to pay off.What It Means
Cloetta's ability to deliver strong margin expansion while investing in growth is a compelling combination. The volume-driven growth indicates that the Superbrands strategy is resonating. The Branded packaged segment is particularly strong, with margins approaching pre-pandemic levels. The company's balance sheet remains robust, with net debt/EBITDA at 0.8x, providing ample firepower for opportunistic M&A or further investments. The key question is whether the H2 margin dip will be as significant as suggested. If the company can maintain a full-year margin around 12%, it would mark a major milestone. As Frans put it,This is not a story of a one-off spike, but of a strategic transformation taking hold. With the expansion into new markets and a clear focus on operational excellence, Cloetta is positioning itself for sustainable growth.Do feel really good about our ability to reach 12% for the full year and in a repeatable manner with the strong start that we've had.