Lindt Fiscal Year Sales, Earnings Rise
15 Mar 2013 --- Despite the challenging underlying economic conditions and increasingly subdued consumer sentiment in some countries, Lindt & Sprüngli is still on track for success. In the past financial year, the group of companies succeeded once again in achieving a substantial increase in its sales, operating profit and net profit, outperforming the trend in all its markets. In doing so, the company confirmed the reliability of its announced growth and profit targets. The strong sales performance is accompanied by corresponding market share gains in practically all countries and categories and was assisted by all the subsidiary companies.
In the 2012 financial year, Lindt & Sprüngli stepped up its consolidated group sales to CHF 2.67 billion. This represents a gain of 7.3% on the previous year. The organic growth of the Group in local currencies stands at 6.8% and is mainly attributable to the slight devaluation of the Swiss franc to the US-dollar. Chocoladefabriken Lindt & Sprüngli AG therefore managed once again to meet its strategic growth target of expanding much more quickly than the markets and of gaining additional market shares practically across the board. Growth, in turn, was driven mainly by volume increases which were underpinned in all key markets by a large number of innovations and new launches in the year-round business and in seasonal operations. Moreover, in the own global retail sector, fast-growing markets in the emerging regions were tapped with the proprietary LINDT retail outlets and cafés. Here, the own points of sale not only generate additional turnover but also help to establish and sustainably consolidate the LINDT brand as a premium chocolate.
In predominantly flat or slightly declining chocolate markets, all subsidiary companies performed distinctly better than the general market trend, with the exception of Italy and Spain which are particularly hard hit by the present crisis, and won corresponding new market shares. In the shrunken Swiss domestic market, LINDT achieved well above average growth of 2.3%, while exports and the travel retail business were hampered by the continuing strength of the Swiss franc.
With an operating profit (EBIT) up by 10.3% at CHF 362.5 million (prior year: CHF 328.7 million) and an EBIT margin of 40 basic points higher at 13.6%, the strategic long-term profit forecasts were fulfilled. Net income stood at CHF 271.9 million and is also 10.3% higher than in the previous year. This gives a return on sales of 10.2% (previously: 9.9%). The operating cash flow rose from CHF 345.4 million in the previous year to CHF 381.2 million in the year under review.
With a balance sheet that remains extremely robust, the company retains an equally strong capital structure. At the end of 2012 the equity ratio and net cash stood at 65.9% or CHF 543 million. The share buyback program under way since spring 2011 for a maximum of 5% of the registered share capital was completed on December 20, 2012. Overall, 3,889 registered shares and 75,253 participation certificates were bought back. The total volume of these purchases stood at CHF 326.9 million.
The strong development of the sales and earnings figures over the past 20 years clearly shows how a Swiss family-owned enterprise with an international appeal has been transformed into a successful global group with Swiss roots. Over this period, sales have tripled and net income multiplied almost seven-fold. The group’s headcount has more than doubled from originally around 4’000 to 8’157 employees while its share value has risen more than twelve-fold. An impressive feat, which is based on a business model developed 20 years ago and consistently implemented with high quality, brand management, a spirit of innovation, marketing expertise, process know-how and geographical expansion as its central pillars. The profitable growth trend generated over the past 20 years is also attributable in no small measure to the commitment, motivation and team work of all the personnel at every level of the organization.
Dividend
In view of the sales and profit growth reported last year, the Board of Directors will propose to the Shareholders’ Meeting scheduled for April 18, 2013 a dividend of CHF 575.- per registered share (CHF 535.- from a withholding tax-free distribution from the approved capital contribution reserve and CHF 40.- from available retained earnings) and CHF 57.50 per participation certificate (CHF 53.50 from a withholding tax-free distribution from the approved capital contribution reserve and CHF 4.- from available retained earnings). This is equivalent to a 15% increase on the previous year.
Outlook for 2013
Since the beginning of 2013, there have been some signs that the Swiss franc is weakening. A continuation of this trend is likely to have a favorable impact on Swiss exports. The slowing global economy and rising unemployment might undermine general consumer mood, especially in southern European countries. Our experience as a premium chocolate manufacturer confirms that LINDT quality chocolate is relatively unaffected by prevailing economic sentiment and that consumers are reluctant to dispense with high product quality and an excellent taste experience, even in tough times. With a full pipeline of innovations and marketing measures, Lindt & Sprüngli is particularly well placed to face the coming challenges and is adhering for the current year to its long-term objectives with a view to organic growth of 6 to 8% and an increase in its operating profit margin by 20 to 40 basis points. Here, not only the key markets in Europe and North America but also the new emerging markets in Russia, Asia and South America will play a role.
