UPDATE 2-Lindt sees strong N.America growth as premium focus pays off

Tue Jan 14, 2014 8:22am EST

* Full-year sales rise 8.6 pct vs f'cast 7.8 pct

* Sees double-digit growth in North America in 2014

* Confirms long-term target of 6-8 pct growth

* Expects FY margin at upper end of guidance

* Shares up over 1 pct, not far from six-year high (Rewrites first paragraph, adds comments from CEO and analyst, shares)

By Silke Koltrowitz

ZURICH, Jan 14 (Reuters) - Swiss chocolate maker Lindt & Spruengli expects double-digit sales growth in North America this year as its focus on premium products pays off and new ranges such as the youth-targeted HELLO range win over consumers.

Chocolate makers faced sluggish growth last year but Lindt has fared better than many rivals, thanks to its fast growth rate in North America - where it is expanding from a low base - and small exposure to slowing emerging markets.

"We have a very good position in the North American market, where we are building up the premium segment," Chief Executive and Chairman Ernst Tanner told Reuters on Tuesday. "We should be able to generate double-digit growth there in 2014," he said, maintaining a long-term target of 6 to 8 percent organic growth, or excluding acquisitions.

Lindt shares rose more than 1 percent to not far from a more than six-year high set last week.

The maker of Lindor chocolate balls and gold-foil wrapped Easter bunnies also released a forecast-beating 8.6 percent rise in full-year sales to 2.88 billion Swiss francs ($3.2 billion), driven by double-digit growth in North America and Britain.

"Lindt growth was about three to four times faster than global chocolate markets, grabbing share in all regions," UBS analysts wrote in a note. Analysts had forecast sales up 7.8 percent, according to a Reuters poll.

The company, based in Kilchberg on lake Zurich, said marketing activities, new products such as its HELLO range and cost controls had helped it achieve strong gains.

YOUNGER GENERATION

The HELLO range featuring strawberry cheesecake, crunchy nougat and caramel brownie flavours is Lindt's attempt to tap a younger generation with chocolate bars wrapped in distinctive black foil and printed brightly with irreverent "conversational" messages.

Consumers are also encouraged to share videos and photos on the Hello website.

"A very solid set of figures - hats off to this management team," analyst Jon Cox at brokerage Kepler Cheuvreux said. "The new HELLO brand and retail expansion is probably contributing more to sales growth than the market anticipates."

Tanner said the group's global retail business, including Lindt-branded chocolate cafes, flagship stores and outlets, should also continue to grow at a double-digit pace.

The group said its full-year operating margin should improve at the upper end of the previously announced 20 to 40 basis points range. Full results will be released on March 11.

But Tanner said it would be difficult to increase prices in the current tough market environment, noting high raw material prices would also be a headwind this year.

"I expect cocoa bean and butter prices to stabilise at current levels. I don't think there will be a shortage in cocoa beans," Tanner said, adding the company's high volume growth should help it cushion the increase in costs.

Cocoa bean prices rose about 20 percent last year, but have stabilised since late December.

Vontobel analyst Jean-Philippe Bertschy confirmed his "buy" rating on the stock, citing steady earnings growth and cashflow along with opportunities in emerging markets and travel retail.

Lindt announced a share buyback of about 450 million francs in October.

Its shares, up almost 35 percent last year, rose 1.3 percent by 1205 GMT, outperforming a 0.2 percent lower European food sector index. They trade on 27 times forecast earnings, ahead of Nestle's 19 times, according to Reuters data. ($1 = 0.9026 Swiss francs) (Additional reporting by Katharina Bart; Editing by Mark Potter and David Holmes)