Zetar

Confectionery and snack foods group Zetar grew sales by 10% in a much-improved year to April.

In a confident trading update, AIM-quoted Zetar, which produces a variety of confectioneries including chocolate and dried fruit and nuts, highlighted strong recovery in its performance, with sales, pre-tax profits and earnings coming in ‘significantly ahead’ of last year and in line with analysts’ forecasts.

CEO Ian Blackburn flagged up sales increases in both divisions – confectionary and natural and premium snacks – of 9% and 11% respectively, during a good year for Zetar. ‘The confectionary market has been buoyant in the recession, when people are more likely to buy chocolate’, he explained, adding that ‘whilst men turn to alcohol, women turn to chocolate’.

Blackburn also credited increasing health awareness amongst the British public with growth in the natural and premium snacks division. ‘People will now pick up a bag of nuts as an alternative to crisps or chocolate’, he told Growth Company Investor.

Zetar also pleased investors with news of a reduction in debt to £11.5m, almost £4m lower than last year, due to a combination of strong trading and a continued focus on cash management. Having made good progress in paring debt, Zetar is forecast to serve up April 2010 sales and profits of £131m and £6.3m respectively, ahead of £137.6m and £7m for 2011.

Based on forecast earnings of 37.6p, the shares, recommended by Growth Company Investor at 152.5p in 2009, are selling for an undemanding 5.7 times earnings and should have much further to go. Buy/hold.