Lindt posts high profit growth despite ‘saturated’ European chocolate market and ‘challenging’ trading environment

The Swiss company said all of its markets showed strong growth during the period, even though the European chocolate market is “highly saturated”​ and the trading environment is “exceptionally challenging.”​

‘Impressive’ growth in Europe

The company said: “Market share gains were particularly impressive in the large markets in Europe,”​ where it generated sales of CHF 855.6m ($861.3m), representing a 5% organic growth.

Lindt noted Germany and Italy reported sound results, while sales growth in the UK, Austria, Spain, and the Nordics were well above the average.

“Growth rates even hit the high double-digits in the Eastern European markets of Russia, the Czech Republic, Slovakia and Hungary. ​

“Key growth drivers in this region were the core product lines, including Lindor and Excellence as well as limited editions of the Gold Bunny at Easter,”​ added Lindt. “The sugar-free product line from Italy also attracted attention.”​

To cater to the market demand, Lindt installed several major investment projects earlier this year to expand production capacities in Switzerland and Germany.

In 2018, the company is also investing over CHF 30m ($30.2m) in modernizing and expanding its cocoa center in Olten, Switzerland, as well as more than CHF 25m ($25.2m) in upgrading the logistics warehouse and linking the logistics and production facilities via a fully automated conveyor system in Aachen, Germany.

North American growth coming back

Lindt said its performance in North America has come back after the market experienced a “stagnating”​ growth during the previous period.

“Despite a challenging trading environment, the NAFTA segment was able to report solid organic growth of 4% in the first half of 2018, with total sales amounting to CHF 564.1m ($567.6m)… mainly thanks to more eye-catching point-of-sale displays for the leading brands Lindor and Excellence,”​ it noted.

The company added Ghirardelli’s sales also grew faster than the overall market and Russell Stover, which launched a sugar-free chocolate range last year, managed to stabilize its sales with only a modest dip.

Lindt said it will invest around CHF 200m ($201m) in building a new high-tech production lines for cocoa and chocolate within the next three to four years in the Stratham, New Hampshire, to support its expansion in North America.

Lindt expects a 5% organic growth for the full financial year with additional 40 to 50 chocolate boutiques and cafes opening across the world in later 2018.