Shares in the AIM-listed company fell by 6.2 per cent on Monday after it confirmed press reports that it was owed £970,000 by the High Street chain.
Zetar, which is the umbrella company for the Kinnerton confectionery group, Humdinger and Readifoods, said on Monday that Woolworths accounted for approximately three per cent of the company’s turnover.
“The directors have discussed the potential impact of Woolworths plc being placed into administration,” it said in a statement. “…It is as yet unclear how much of this sum is irrecoverable, but the company, which is saddened by the loss of this long standing customer, continues to trade as normal.”
Although it is a major supplier of Easter eggs for Woolworths, the company is understood to have shifted much of its stock to other customers.
Zetar’s shares were valued at 177.5 pence (approximately €2.09 at today’s rate) at the end of last week, but dropped to 166.5 pence (€1.96) on Monday.
Existing pressures
Despite its attempt at a reassuring message to shareholders – and record turnover last year, up ten per cent on 2007 – the company’s share price had already been on a steady decline over the past year. The company had said that this was due to exchange rate volatility, particularly between sterling and the US dollar, as well as escalating raw material costs and energy prices.
At the company’s annual general meeting on September 25, chairman David Williams said: “Whilst sales for the year to date are approximately 10 per cent ahead of the same period last year, given the current challenging trading environment…we anticipate there will be pressure on margins…However, the board is still confident that profits for the year will be ahead of last year.”
Zetar’s full-year turnover to April 30 exceeded £100m for the first time this year, increasing 17 per cent to £111.2m (€130m). In its confectionery division, sales were up from £61.4m (€72m) last year to £65.3m (€76.6m).
The company added that its interim results are due to be announced on January 20, 2009 and it “looks forward to reporting to shareholders at that time.”