Sweet Results for Lindt & Sprüngli Despite Tough Times
07 Mar 2017 --- High-end Swiss chocolatier and confectionery company Lindt & Sprüngli grew at a faster pace than the overall chocolate market last year, according to the company’s latest financial results.
Although global demand for chocolate slowed down in 2016, Lindt & Sprüngli outpaced the market with consolidated sales increasing by 6.8% to CHF 3.901 billion (US$3.85 billion). This compares to a 7.9% growth in the previous year.
Organic sales growth was 6%, while the Group’s operating profit (EBIT) rose by 8.4% to CHF 562.5 million (US$556 million).
The company says it met its strategic growth and sales targets and the Group’s balance sheet “remains very solid” and is particularly pleased with the performance, given the backdrop of “a persistently challenging environment of stagnating and even declining chocolate markets, generally subdued consumer sentiment caused by political and economic uncertainty, high raw material prices and increasing price pressure from trading partners.”
There was an overall organic sales growth of 7.4% in Europe with the two subsidiaries in Germany and the UK accelerating their pace of growth, while smaller subsidiaries in Scandinavia, Czech Republic, Poland and Russian achieved double-digit growth.
The US chocolate market as a whole declined last year for the first time in years, however in North America Lindt reported organic sales of 3.4%.
“With its three leading brands – Lindt, Ghirardelli and Russell Stover – Lindt & Sprüngli is clearly positioned as No.1 in America’s premium chocolate segment. Cooperation between the US subsidiaries Lindt, Ghirardelli and Russell Stover was enhanced in 2016. The establishment of a new subsidiary, Lindt & Sprüngli (North America) Inc., helps to support the three US subsidiaries in centralized tasks such as merchandising, logistics and IT, while at the same time creating synergy effects,” says the company statement.
Elsewhere the company also performed well with results in Japan and Brazil reaching double digit growth, largely due to the opening of Lindt shops and cafes. The company says that geographic expansion of previous years are now starting to pay off. Lindt & Sprüngli is today represented around the globe by 24 subsidiaries and branches, as well as a network of over 100 independent distributors.
AGM & dividend
In view of the strong result achieved in the past financial year, the Board of Directors will be proposing to the 119th General Meeting scheduled for April 20, 2017, a 10% increase in the dividend to CHF 880.- per registered share (CHF 300.- from the approved capital contribution reserve (agio) and CHF 580.- from available retained earnings) and CHF 88.- per participation certificate (CHF 30.- from the approved capital contribution reserve (agio) and CHF 58.- from available retained earnings).
Lindt & Sprüngli confirms its mid- to long-term goal of organic sales growth of 6–8% combined with an increase in the operating profit margin of 20–40 basis points. For the 2017 financial year, the Group expects sales growth to be broadly in line with the previous year, and a further improvement in the operating margin.
