Retail & Consumer

Consumers' sweet tooth helps Lindt & Spruengli shine

3 minute read

Chocolates are displayed during the annual news conference of Swiss chocolatier Lindt & Spruengli in Kilchberg, Switzerland March 5, 2019. REUTERS/Arnd Wiegmann/File Photo

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  • H1 organic sales growth 17.4%
  • Sales of 1.8 bln Sfr beat poll
  • Net profit rises to 101.6 mln Sfr
  • Expects low double-digit organic growth this year
  • Shares up 3% in weaker market

ZURICH, July 27 (Reuters) - Strong demand for Lindor and Excellence chocolates boosted sales and profit at Switzerland's Lindt & Spruengli (LISN.S), in the first half, allowing it to raise its full-year guidance as the impact of the COVID-19 pandemic waned.

The global chocolate confectionery market is still sluggish, but Lindt, whose organic sales dropped 6% last year, is now seeing demand for its upmarket chocolates recover due to continued investment in marketing and new products.

"Group sales have almost returned to their pre-COVID-19 trajectory," Chief Financial Officer Martin Hug told investors on a call on Tuesday.

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He said the group had seen "exceptional growth" of 17.4% in the first half and gained market share in all its regions, with just its own stores and travel retail still below pre-pandemic levels.

Hug said growth would slow in the second half due to tougher comparisons, but was expected to be in the "lower double-digit range" for the full year, above previous guidance for 6-8% growth.

"We have benefited a lot from in-home consumption, now people will go out more," Hug said.

The group's participation certificates were up 3% at 0912 GMT, making it the best performer in a 0.6% weaker European food sector index (.SX3P).

Analysts at Vontobel and Kepler Cheuvreux called the results "mind-blowing" and "out of this world strong".

Net profit hit a record for Lindt's traditionally weaker first half at 101.6 million Swiss francs ($110.9 million), fivefold the amount recorded in the year-ago period and almost twice as much as expected in a Refinitiv poll.

The Zurich-based company expects an operating margin "at the upper end of 13%-14%" this year in spite of higher packaging and staffing costs, Hug said.

Lindt confirmed its medium-term target of 5%-7% organic growth and an operating margin of 15% from 2022 onwards. It said its share buyback programme of up to 750 million francs was on track and set a goal to make all its packaging recyclable by 2025.

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Reporting by Silke Koltrowitz; Editing by Kirsti Knolle, Sherry Jacob-Phillips & Simon Cameron-Moore

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