Zetar

Chocolate and snacks group Zetar (ZTR) has unveiled a strong set of full-year results as its premium range gains ground.

The AIM-quoted concern has reported adjusted pre-tax profits of £6.7m (2010: £6.4m) on turnover up 2% to £135m. Net debt increased from the £11.1m declared last year to £14.9m. There is also an inaugural dividend payment of 2.25p, something not expected by most analysts.

Zetar's 'confectionery' division, which sells a range of chocolates through brands such as Lir, grew sales 3% to £83.2m, helped by licensing deals with companies including Fox, Mattel and Disney. Lir, its Irish subsidiary, performed particularly well, growing revenue 8%. The company's natural snacks division, which sells fruits and nuts and other healthy snacks, increased sales 1% to £49.1 million.

Chief executive Ian Blackburn says the results represent a 'very good performance, taking into account the background of consumer income falling', adding that the acquisition of Lir (purchased in 2007 for €8m) was now 'coming to fruition to support a bigger business.' Looking forward he remarks the focus will be on building up own label sales over deals with licensing partners and building its 'fruit factory' business, a range of snacks that aim to 'make fruit fun' for children.

Analysts at house broker Liberum are forecasting adjusted pre-tax profits of £7.2m (for earnings of 42.1p a share) on sales of £135m for the year to April 2012. In 2013 the broker is pencilling in profits of £7.6m (for earnings of 44.6p) on turnover of £143m. A dividend of 2.5p and 2.6p a share is forecast for 2012 and 2013, respectively.

Recommended by Growth Company Investor this March at 203p the latest results show respectable organic growth across its divisions. While we remain concerned over the price of commodities such as cocoa and fruits such as apricots, the business has so far survived the downturn well. With an increasing focus on the premium sector we think the shares should have further to go. We retain our buy rating.