Outlook looks brighter for Lindt after posting strong first half year results
Swiss chocolatier Lindt & Sprüngli has bucked industry trend by announcing ‘good results’ in the mainly saturated or stagnating chocolate markets with what it says is ‘a successful start to the financial year 2019’.
The Group said it has expanded its market shares in all its key strategic markets, building on the growth of recent years and is on track for organic sales growth of 5-7% in 2019 after an improving situation in the United States supported profit and sales growth in the first six months.
Financial results announced in the first half of the year revealed the Group achieved sales of CHF 1.76bn ($1.79bn), while net profit rose 2.4% to CHF 88.1m ($89.39bn), and organic sales increased by 6.2% to CHF 1.76bn ($1.79bn), the luxury chocolate maker said in a statement.
Lindt bought the Russell Stover candy business in the US in 2014 and reported a sales increase for the first time as the group’s North America region posted strong growth of 7.2%, up from 2.8% in full year 2018.
“Strong seasonal business, the launch of numerous innovations within the leading product ranges and the own global retail network were the key growth drivers,” Lindt said.
Solid results in Europe
In the ‘Europe’ segment, Lindt generated sales of CHF 874m ($886.76m) in the first half of the year, equivalent to +5.0% organic growth. The UK, Austria, Germany and Switzerland, as well as the Scandinavian countries, all recorded strong results, while the Eastern European markets – Poland, Russia, the Czech Republic, Slovakia and Hungary – did particularly well, posting growth rates in the high double-digits.
In Switzerland, Lindt celebrated the opening of the Lindt Cocoa Center in Olten in June 2019. The CHF 30m ($30.44m) investment represents a clear commitment to Switzerland as a business location and an increase in capacity in its cocoa mass production.
Good performance in North America
In the US, Lindt remains number one in the premium chocolate segment and number three in the overall chocolate market, thanks to steady sales growth and rising volumes. The ‘North America’ region achieved dynamic organic growth of +7.2% in the first half-year, to which all three US companies contributed. Sales rose to CHF 623m ($632.10m).
The situation in the US, the world’s largest chocolate market, improved and the trading environment recovered slightly after several difficult years of restructuring, the Swiss manufacturer said.
Russell Stover achieved a sales plus in the first half-year due to the promising relaunch of the Bow Line praline range, as well as the success of its sugar-free product line with stevia extract – and the Group reports Russell Stover is on track to meet its growth targets.
Analysts were encouraged by the performance in North America. “Will management achieve a turnaround at Russell Stover? We believe so. Encouragingly, the business finally returned to growth in H1, and we expect sustained growth going forward,” said Andrew Wood, senior research analyst, European Food & HPC at Bernstein.
Lindt also said it recorded strong growth in the ‘rest of the world’, especially in Japan, Brazil and China.
Lindt says its goal of achieving 100% sustainable traceable and verified cocoa bean sourcing by 2020 is on track.
One of the core elements is its Farming Program. Since the program started in 2008, the company says enormous progress has been made with this sustainable cocoa sourcing model. The program is now established in Ghana, Ecuador, Madagascar, Papua New Guinea and the Dominican Republic and is showing a positive impact there, it reported.
Lindt also said it has realigned its sustainability and one of its aims is the “no-deforestation” commitment, which states that by 2025, the entire cocoa supply will be sourced from areas free from deforestation.