Tue, Jan 16th 2024
Sweet Triumph: Lindt & Sprüngli’s Record-Breaking Year of Resilience and Growth
In 2023, Lindt & Sprüngli, the renowned chocolate manufacturer, achieved a significant milestone by exceeding CHF 5 billion in sales. This historic achievement was driven by popular products like Lindor balls, pralines, and chocolate bunnies, culminating in a total of 5.20 billion Swiss francs. This impressive figure represents an organic growth of 10.3 percent, despite the strong Swiss franc impacting local currency sales with only a 4.6 percent increase.
The company’s double-digit organic growth is mainly due to the fact that it has asked its customers to pay more for its chocolate products. “Most of the growth is due to price increases as a result of higher raw material prices,” it explains.
According to Lindt, the price of cocoa “almost doubled” over the course of the year. In fact, the commodity rose by over 60 percent last year on the commodity markets in New York and by almost 80 percent in London. For the first time in 45 years, over 4,000 US dollars were paid for a ton of the coveted beans. The reasons for this included bad weather and the spread of tree diseases in the most important growing region of West Africa.
While sales prices have risen, sales volumes have increased rather than decreased. At the same time, volume sales in the global chocolate market have shrunk slightly. “It shows that customers remain loyal to Lindt & Sprüngli despite price increases,” the company says with conviction.
The company from the left bank of Lake Zurich attributes the increase in sales to the rise in tourism, among other things. More people have visited Lindt’s stores, which are located at airports and tourist boulevards, among other places. Online sales of Lindt chocolate have also continued to grow after the pandemic.
In Europe, the largest region (accounting for almost 50 percent of sales), organic growth amounted to 9.1 percent. Double-digit sales growth was achieved in Switzerland, Italy, the UK and Eastern Europe, for example. “Solid growth” is reported for the important markets of Germany and France. The second-largest region, North America, also grew significantly by 11 percent (sales contribution of a good 40 percent).
Analysts had previously expected lower growth rates for both Europe and North America than Lindt has now achieved. In contrast, growth in the “Rest of the World” was slightly below expectations at 12.9 percent (AWP consensus: 13.1 percent). However, the management emphasizes in the press release that the strongest growth was recorded in this region. With a turnover of 0.68 billion, this business accounted for a good 13% of Group turnover, with Australia reportedly being the country with the highest turnover.
Lindt & Sprüngli has not yet announced its profit figures. They will be published together with the annual results in the spring. However, the company states in the press release that it is confident of achieving an EBIT margin of around 15.5 percent. This is at the upper end of the previously targeted margin of 15.3 to 15.5 percent.
In terms of net profit, the management expects “a significant, one-off positive effect, which will lead to a one-off tax rate of less than 15 percent”, according to the press release. The reason for this is the introduction of global minimum taxation and the “Tax Reform and AHV Financing” (STAF) bill in Switzerland.
This positive effect will have no impact on free cash flow in the 2023 financial year. According to a presentation published with the half-year results last July, the tax rate is expected to normalize again to around 23 to 25 percent.
Meanwhile, the company confirms its outlook for the current year. Those responsible see sales growth of 6 to 8 percent and an improvement in the operating profit margin of 20 and 40 basis points. The company is therefore expected to develop in line with its medium-term targets.
©Keystone/SDA
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