Swiss-based premium confectionery brand Lindt & Sprungli reported strong half-year results, with sales up 7% to CHF 2.16 billion. Europe, the core region for growth, recorded a 9.3% increase, reports Neil Burston.
The premium chocolate industry says the company’s improved position comes as it implemented mid-single-digit price increases across its product lines to combat soaring cocoa prices, which hit $12,000 a ton in May but have since fallen slightly to around $8,000 on the New York futures market.
Notably, the company’s position has also been strengthened by its successful resolution of a legal battle in the US, which, according to local reports, led to a $33 million win over the alleged failed implementation of a warehouse distribution software system linked to a new distribution centre in Western America.
In its financial statement, Lindt & Sprungli posted net profit of 218 million Swiss francs but noted that cash flow was affected by capital expenditures on capacity expansion projects designed to bolster future growth.
As previously reported by Confectionery Production, the group has invested €100 billion in a cocoa processing facility in Olten, a planned three-year project for the company as its global activities continue to expand.
It is noteworthy that in Europe, all regions recorded growth of over 9.3% in the first half of the year, reaching CHF 1.07 billion, with France, the UK and Central and Eastern Europe recording double-digit growth, while Italy, Germany and Switzerland continued to see strong growth.
Additionally, the company noted that organic sales in North America increased 3.0% to CHF 794.6 million. Lindt & Sprungli USA, Ghirardelli and Lindt & Sprungli Canada outperformed the market and gained market share. The company said that inventory adjustments by major retailers and an earlier Easter holiday impacted North American growth, which was originally forecast at around 6%.
Meanwhile, the “Rest of Regions” division posted good organic sales growth of 10.0% to CHF 293.2 million, with subsidiaries in Japan and Brazil in particular achieving double-digit growth rates in the first half of the year.
The group noted that energy prices are currently stable and, although there will be further price increases, mitigation measures will be needed to address the impact of higher cocoa prices through strict cost control.
It is worth noting that demand remains strong, resulting in positive sales growth. However, due to the impact of inflationary prices, volumes in the global chocolate market are stagnating or slightly declining depending on product category and market. In this market environment, Lindt & Sprungli brands demonstrated strength and resilience, gaining market share in all major markets and enabling the company to achieve a solid volume/mix increase of +0.9% in a challenging market environment.
The company also noted that its retail and online direct-to-consumer channels performed well throughout the year (up 15% year-over-year), driven by gifting demand. The company operates approximately 530 stores worldwide and has maintained momentum with new store openings. The company observed that personalized options such as Gold Bunny remain popular among consumers, driven by strong interest in its Lindor brand.
Regarding its outlook, the company confirmed that it remains confident in achieving its growth target of around 6-8 percent, driven by continued investment in its stores and its Swiss cocoa processing facility.
