Sweet results for Lindt despite sour times
The Swiss company posted a first half 2008 operating profit (EBIT) of CHF 33.6 million (€20.7 million), up 11.6 per cent, or CHF 3.5 million (€2.2 million), from the same period in 2007.
The focus on the premium chocolate segment and marketing product quality were identified as the reasons for the company’s “above the market average” growth. Passing on the rising costs of cocoa, hazelnuts, and dairy ingredients to customers also contributed to the company’s performance.
Chief executive Ernst Tanner is quoted by Reuters: "In 2008, we have had basically everything that can go against us, going against us."
"The consumer mood has also gone the wrong way," he said.
“A weakening economy and fear of inflation are beginning to impact consumer sentiment, especially in the US,” stated the company. “As part of the massive global increase in commodity prices, procurement markets have shown exceptionally strong upward movements since 2007, in particular since the early part of 2008.
“The price of milk already doubled in the second half of 2007. The price of cocoa on the London futures market has risen by more than 70% from early January to June 2008. To make matters worse, the economy was faced with continuous increases in energy and transportation costs.”
European performance
The company reports an overall growth of 3.8 per cent in Europe and the Middle East region to CHF 830.9 million (€513.8 million).
Market share increases were reported “almost everywhere”, said the company. Switzerland, France, Austria, and Spain were singled out for mention. Double-digit growth was also reported in Poland and Sweden.
The very early 2008 Easter date plus generally poor weather around the Easter season, a particularly important one for Lindt & Sprungli, resulted in weaker growth rates than before.
The Americas
The depreciation in the US dollar was cited by the company as a key reason behind the 4.1 per cent drop in growth, as expressed in Swiss francs. In local currency terms, however, the company reported a 12.1 per cent growth in sales, up to US$ 223.6 million (€151.9 million).
Other markets
Significant growth was reported for the rest of the world, coming in at 14.1 per cent to reach CHF 105.3 million (€65.1 million).
“Lindt & Sprungli has now become one of the leading chocolate suppliers also in Australia, the biggest market in this geographical segment,” said the company. “The concept of the three existing 'Lindt Chocolate Cafés' in Sydney has been extremely successful and will be followed by the opening of two more cafés before the end of the year.”
