Lindt & Sprüngli on track: record sales and higher profits

 

The organic sales growth of Lindt & Sprüngli was with 3.7% below the range of the long-term strategic growth target due to the modest development of the US companies. According to the company, the Group’s operating profit (EBIT) rose by 5.8% to CHF 595.4 m. Thanks to increased operating efficiency, the EBIT margin also improved from 14.4% to 14.6%. Net profit was up 7.8% to CHF 452.5 m, with return on sales reaching 11.1%.

Organic growth in the Europe segment amounted to 6.2%. Lindt & Sprüngli performed particularly well in the two biggest chocolate markets of Germany and the UK, as well as in the mature markets of Italy, Austria and Spain, but also achieved double-digit growth rates in less established markets such as “Nordics", Russia, Poland and the Czech Republic.

Sales in the NAFTA region dipped slightly in a difficult retail environment by 1.6%. One particular highlight was the excellent result reported by Lindt Canada, which achieved double-digit growth. The American companies Lindt and Ghirardelli also recorded modest growth in a rapidly changing retail environment, due to the repositioning of the drugstore channel (an important outlet for chocolate) and department stores struggling with a decline in customer traffic. Russell Stover faced a decline in sales caused by the combination of a weaker market in general, the difficulties experienced by individual retail partners, and the realignment of its product portfolio. With the three brands Lindt, Ghirardelli and Russell Stover, the Group is No. 1 in the premium segment and No. 3 in the US chocolate market as a whole.

The Rest of the World segment is becoming increasingly important for the Lindt & Sprüngli Group. Business in the countries of this region is performing better than average, with organic growth of 12.4%. Markets such as Brazil, South Africa, Japan, China and Russia hold enormous potential for Lindt & Sprüngli in the coming years. Growth strategies in these markets are based on local consumer preferences. “In addition to the more mature chocolate markets, it is increasingly the new growth markets such as Brazil, China, Japan, Russia and South Africa that are driving our dynamic performance,” said Dieter Weisskopf, Group CEO.

Global Retail is making a key contribution to the overall Group result with its own shops and Chocolate Cafés. An important milestone was reached in 2017, when sales reached half a billion Swiss francs for the first time. Over 50 new retail outlets at prime locations have extended the network to more than 410 sites worldwide. In 2018, over CHF 30 m will be invested in the expansion and modernization of the Lindt Cocoa Center in Olten. There cocoa mass is produced to supply the European manufacturing companies. The additional capacity due to come on stream in the spring of 2019 will support the future growth of the entire Lindt & Sprüngli Group.

Lindt & Sprüngli confirms its mid- to long-term target of organic growth in the region of 6 to 8% and the improvement of its operating margin by 20-40 basis points. Given the ongoing strategic realignment of Russell Stover’s product portfolio and the current challenges in the US retail market, the Group expects organic growth of around 5% in the financial year 2018, as well as an increase in the operating profit margin within the long-term strategic range.