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2016 Sales Report

Lindt exceeds market expectations with 6% annual sales growth

By Oliver Nieburg+

18-Jan-2017
Last updated on 18-Jan-2017 at 13:44 GMT2017-01-18T13:44:14Z

Lindt business model of high quality chocolate and innovation paying off, says Bank Vontobel analyst. Photo: Lindt
Lindt business model of high quality chocolate and innovation paying off, says Bank Vontobel analyst. Photo: Lindt

Lindt & Sprüngli has reported a rise in 2016 revenues driven by strong performance in Europe, which exceeded analysts’ forecasts.

In its ‘Sales Report 2016’ – published yesterday – the Lindor maker reported a 6.8% increase in annual sales in Swiss francs to CHF 3.9bn ($3.9bn), representing 6% organic growth.

‘Stunning result’ in Europe

It called organic growth of 7.4% in Europe “gratifying” and said Lindt & Sprüngli UK was the fastest growing chocolate brand in Britain over the period.

Jean-Philippe Bertschy, an analyst at Bank Vontobel, said Germany, France and the UK – which account for 30% of sales in the region – propelled Lindt’s sales growth in Europe.

He called Lindt’s European performance a stunning result, considering the deflationary environment, tough trade conditions (hard discounters), as well as relative high market shares“.

New CEO begins

Dr Dieter Weisskopf, Lindt CEO. Photo: Lindt

Former Lindt group CFO Dr Dieter Weisskopf has begun his first month as group CEO. Ernst Tanner left his position as group CEO at the end of 2016. Tanner will continue as Lindt’s executive vice chairman.

Growth in declining North American market

But the company’s Russell Stover unit slowed growth in North America.

Lindt recorded organic sales growth of 3.4% in the NAFTA region in 2016.

It said its growth was stunted by the chocolate market in North America declining for the first time in years and its repositioning of Russell Stover’s product portofilio.

Bertschy said he had expected organic growth of 4% for the Lindt group in NAFTA in 2016. The analyst added that the Russell Stover business was likely to have recorded a 3.5% sales decline for the full year, and the Lindt group would have grown 6.4% in NAFTA excluding this business unit.

Japan and Brazil

Lindt said that Brazil and Japan contributed strongly to 10.3% organic sales growth in its Rest of the World segment for the full year.

“The Group’s strategy of geographic expansion pursued over previous years is now starting to pay off,” it said.

Lindt added 60 retail stores during the year, including new outlets in Brazil and Japan.

The company has previously credited its own stores for helping it make inroads into emerging markets.

Global Retail now accounts for 11% of Lindt’s annual sales and the segment grew in strong double-digits in 2016, according to Vontobel.

Outlook for 2017

Lindt will report its full results – including net profit - on March 7, 2017. It expects a disproportionate increase in net profit due to a lower tax rate.

Bank Vontobel anticipates Lindt will be able to deliver 6% organic sales growth in 2017 and has maintained its buy rating.

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