Lindt still feeling the heat

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Sales at Swiss confectioner Lindt & Sprüngli grew steadily in
the first half, despite the hot European weather and higher raw
material costs.

Swiss chocolate maker Lindt & Sprüngli has shrugged off the currency problems and weak market conditions which have affected many of its compatriots to report solid growth in first half sales - a particularly pleasing performance given that the first six months of the year are traditionally the weakest.

Turnover for the January to June period rose by 3.3 per cent to SF673 million (€437m) - rising by 7.4 per cent in local currencies - helped by good performances at Easter and Valentine's Day.

There was also an improvement at the profit level, but the company nonetheless remained in the red, with operating losses of SF10.3 million and pre-tax losses of SF13.4 million.

The first half of the year accounts for just 40 per cent of group sales but at least half of its fixed costs, and Lindt was quick to stress that the performance during the first six months was not necessarily indicative of its likely performance over the year as a whole.

Nonetheless, the company said it was pleased with the results, which came at a time of weak economic growth, cocoa price increases and aggressive price promotions by many of its competitors.

Excellent sales in the UK, France, Italy and Canada contributed strongly to first-half results, as did a number of new product launches such as Les Petits Desserts in France and Les Intenses in Switzerland.

France, Italy, the UK and Spain all reported double-digit growth rates in the first half, and despite the very difficult environment, especially in the important German market, the group's other European companies also reported progress. However, the promising start in Switzerland came to a halt in May/June due to the extreme heat.

In North America, all three of the company's subsidiaries reported double-digit growth rates in the first half of 2003. Growth at Lindt & Sprüngli USA, Ghirardelli and Lindt & Sprüngli Canada was boosted mainly by progress in the expansion of the distribution of Lindor and Ghirardelli Chocolate Square products through national retail chains.

Given the growth of the premium chocolate segment in recent years, the food retail trade is increasingly willing to include premium quality chocolate in the higher-priced segment, and both the Lindt and Ghirardelli brands have benefited from this change in policy, the company said.

The Australian subsidiary also reported excellent double-digit growth in the first six months, mainly due to successful market launches for the Easter season and higher sales of Lindor products. The very challenging economic environment, SARS, declining tourist numbers, and a weaker US-dollar against the Swiss franc had a negative impact on the export business in regions such as Asia, Latin America and Eastern Europe, as well as in the duty free sector.

While the weather conditions are likely to return to normal in the second half, Lindt said it saw little sign of the economic situation improving by the year end. Nonetheless, it said it remained confident of meeting its full-year sales and profit targets as a result of further product innovations and a good performance in the more important July-December period.

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