Lindt & Sprüngli continues its consistent growth
n the financial year 2019, Lindt & Sprüngli achieved very solid sales growth, gained substantial market shares and once again grew faster than the overall chocolate market. All three regions – “Europe”, “North America” and “Rest of the World” – contributed to this excellent result. In particular, the leader products Lindor and Excellence were key growth drivers. Many new retail stores were opened, expanding the global network to around 500 shops and cafés.
Photo by Charisse Kenion on Unsplash
The market environment continues to be very challenging. Various political instabilities, along with a changing retail landscape, are putting pressure on the saturated US and European markets. Despite this, the premium chocolate market grows above average – a trend that Lindt & Sprüngli, as a leading global manufacturer of premium chocolate, can benefit from.
Lindt & Sprüngli Group’s sales amounted to CHF 4.51 billion. This represents organic growth of +6.1% and is therefore within the target range set for the financial year. The currency environment was still volatile in 2019. This had a negative currency effect on consolidated results, also due to the weaker euro. Sales resulted in an increase of +4.5% in Swiss francs.
Lindt & Sprüngli achieved solid organic growth of +6.2% in EUROPE. This result is very encouraging given the difficult political conditions in general, such as Brexit. Lindt & Sprüngli once again managed to expand its market share in all key countries and to grow faster than the market average. Sales growth was particularly strong in Germany and Austria. But sales also rose in the home market of Switzerland, as well as in the countries Spain, Italy and France, while Eastern European subsidiaries and the United Kingdom even reported double-digit growth.
The NORTH AMERICA region achieved strong organic sales growth of +5.4%. Despite the changing retail landscape, characterized by substantial price pressure, all three brands – Lindt, Ghirardelli and Russell Stover – contributed equally to this solid result. The subsidiary in Mexico also finished the year with double-digit sales growth.
Lindt & Sprüngli with its three brands Lindt, Ghirardelli and Russell Stover is the clear #1 in the premium segment and #3 in the overall chocolate market in North America.
The REST OF THE WORLD segment continues to grow and generated organic sales growth of +7.6%. The markets of Japan, China and Brazil performed particularly well, with all three reporting double-digit growth. These countries still hold substantial growth potential for Lindt & Sprüngli, as the consumption of premium chocolate is steadily rising in these markets.
The strategy of the own store network pays off and Global Retail once again made a notable contribution to the overall Group result. With numerous new openings, Lindt & Sprüngli is now present at around 500 locations worldwide and offers consumers a one-of-a-kind brand experience. Every year, millions of chocolate lovers visit the company’s own shops. The biggest drivers for the retail business were Japan and Brazil.
Outlook
The 2019 result will include two extraordinary one-off adjustments affecting EBIT and taxes that will offset each other at net income level:
The financial statement 2019 will be impacted by an extraordinary provision and restructuring costs of around CHF 60 million (net of tax) in the Logistics, Production and Retail network as well as Merchandising in the USA. Cost savings from the related projects will improve future results of the US-subsidiaries, while at the same time allowing for increased support of the brands for future sales growth.
This expense is offset by a positive one-time tax benefit, also around CHF 60 million, related to the Swiss tax reform approved in 2019, as well as other items.
As a result, the two one-time adjustments will not impact the reported net income and the earnings per share in the results 2019.
The Group’s operating margin (before consideration of the one-off restructuring charges and impairments) in the financial year 2019 is expected to increase within the given medium to long-term strategic target range of 20–40 basis points.
Also for the years to come, Lindt & Sprüngli still confirms its mid- to long-term sales growth target of 5-7% p.a., combined with a steady improvement in the operating margin of 20–40 basis points p.a.
More details will be provided when the full-year results are published at 7:00 a.m. on Tuesday, March 3, 2020.
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