The famous Swiss chocolatier says its impressive sales is due to consumers’ elevated tastes and the rising cost of its products — a trickle-down effect of more expensive cocoa.

Lindt & Sprüngli increased its sales in the first half of 2023, exceeding the CHF 2 billion mark for the first time in the first half of the year. In addition, the company has become significantly more profitable compared to the same semester in the previous year. As a result, it increases its forecasts for the full year.

From January to June, the Kilchberg-based company sold chocolate bunnies, Lindor balls and pralines worth 2.09 billion Swiss francs. This corresponds to an organic increase of 10.1%, as can be seen from the half-year report published on Tuesday. All three of its segments – Europe, North America and the rest of the world – achieved a significant increase.

However, the strong domestic currency put pressure on the reported result. In Swiss francs, growth was only 4.7%.

Higher priced chocolate

However, the chocolate producer was primarily helped by price increases when it came to increasing sales numbers. Because raw materials and energy were still expensive, some of the cost increases were passed on to trading partners, they say. And not too narrowly: Of the 10.1% organic growth, 9.3% was due to price increases.

The remaining 0.8% growth came from volume and mix effects. That means: through more sales and a different composition of the products sold.

It is said that consumers have turned to high-quality, more expensive products more than in the previous year. In addition, gift packaging, pralines and chocolate figures such as Easter bunnies were popular – all products that bring in more to the company than simple chocolate bars.

Cocoa is more expensive

Meanwhile, the costs developed differently. While energy prices and security of supply kept the company busy at the beginning of the year, this tense situation has now calmed down, they say. But important raw materials and preliminary products such as sugar and packaging are still very expensive. In addition, the cost of cocoa has risen by almost one-third so far this year, which has offset the easing in prices for other products.

The operating profit (EBIT) nevertheless rose to 255 million Swiss francs, which corresponds to an increase of almost 38%. The EBIT margin as a measure of profitability increased by 2.6 percentage points to 12.2%.

However, according to the announcement, those responsible assume that this development will not continue to the same extent in the second half of 2023. Because the raw material costs should continue to rise according to management estimates. In addition, increased investments in marketing are planned.

Outlook strong

The bottom line is that Lindt made a profit of 204.5 million francs after 138 million in the first half of the previous year. The company is now confident for the year as a whole and is increasing its estimates for its own performance.

For 2023, those responsible are now assuming organic sales growth of between 7% and 9%. They had previously expected organic growth of 6% to 8%. The expectations for the EBIT margin increase were also raised. The margin is now expected to increase by 30 to 50 basis points after previously expected 20 to 40 basis points.

This article was reprinted with permission from Keystone SDA.