Fairtrade confectionery business Divine Chocolate saw pre-tax profits almost evaporate on the back of unfavourable exchange rates.
Profits dropped to just £9k in the year ended 30 June 2018, from £256k in 2017, despite the supplier strengthening its revenues.
Sales rose 6% to £15m, driven by significant growth in the UK and US, where sales jumped 12% and 8% respectively.
Divine’s margins were reduced by the low value of sterling against other currencies, it said, as gross margins slid from 36% in 2017 to 33% in the past year.
“The UK economic outlook remains uncertain,” the company said in recently filed accounts. “The value of sterling against other currencies is low, which has reduced Divine’s margins.
“The absence of any clear arrangement for exiting the European Union also creates uncertainty on whether tariffs will be applied after March 2019 to the goods that Divine imports.
Read more: Ferrero shuts down world’s largest Nutella factory over quality issue
“While the steep fall in the price of cocoa seen in 2016-2017 recovered towards the end of the year, it has since fallen again, presenting a significant challenge to the farmers who grow our cocoa.”
In August, the confectionery business also acquired Swedish retail business The House of Fairtrade, as it upped its exansion plans in Scandinavia.
“We had a prolific year of exciting new product development, and held chocolate tastings around the UK, delighting more consumers with the Divine taste,” added company chair Jamie Hartzell.
”We also embarked on a major new innovation that will both introduce our first organic range of bars, and enable us to extend the benefits of Divine’s unique business model to farmers we have not worked with before.”
No comments yet