ZURICH (Reuters) - Swiss chocolate maker Lindt & Spruengli (LISP.S) said it was on track for organic sales growth of 5-7% in 2019 after an improving situation in the United States supported profit and sales growth in the first six months.
Chocolate makers have been facing sluggish demand in saturated western markets, but Lindt’s focus on faster-growing premium products, its own branded store network and a push into new markets has allowed it to buck that trend.
Net profit rose 2.4% to 88.1 million Swiss francs ($89.5 million), while organic sales increased by 6.2% to 1.76 billion francs, the maker of Lindor chocolate balls and gold foil-wrapped Easter bunnies said in a statement.
“The situation in the U.S., the world’s largest chocolate market, improved and the trading environment recovered slightly after several difficult years of restructuring,” said the company based in Kilchberg, on the shores of Lake Zurich.
The Russell Stover business Lindt bought in 2014 grew sales for the first time in years and the group’s North America region posted strong growth of 7.2%, up from 2.8% in full year 2018, Lindt said.
The group’s participation certificates, which have risen almost 9% so far this year, traded up 4.5% at 0950 GMT.
Group finance chief Martin Hug said the company expected growth in North America to slow to 4-5% for the year a whole as recently implemented price increases might weigh on volumes and drugstores like Rite Aid (RAD.N), still an important channel for Lindt, were facing difficulties.
He said the company expected organic sales to grow 5-6% in Europe and 8-10% in the rest of the world in 2019.
Analysts applauded the performance in North America.
“North America organic sales growth was a very, very positive surprise. Russell Stover is growing again while Lindt U.S. looks like it has got its mojo back,” Kepler Cheuvreux analyst Jon Cox said.
Reporting by Silke Koltrowitz; Editing by Thomas Seythal/Keith Weir