High-end Swiss chocolate company Lindt & Sprüngli posted a resilient performance for the first half of 2022, recording a 12.3% increase in sales to CHF 1.99 billion, in addition to an increase of 33, 4% of its operating profit, totaling CHF 185.2 million, writes Neill Barton.
In addition, the company, which has benefited from a strong pipeline of innovations, including unveiling its first oat milk series at the Sweets & Snacks Expo recently in Chicago, confirmed a new registered share buyback program and certificates of CHF 1 billion.
Significantly, the business also generated an improvement in net profit of CHF 138.4 million for the period (up 36%), despite the business operating in what it describes as a “ difficult economic environment” of supply chain bottlenecks for raw materials and packaging. He also noted that mounting inflation pressures, energy prices and the ongoing war in Ukraine were cause for concern.
However, the company added that its success was based on the strong commitment of more than 14,000 employees, its focus on superior quality and consumer needs, the launch of innovative products and the continued expansion of geographic distribution. . Following the improvement in its position, the company raised its outlook for the full year to a level of sales growth of 8 to 10%.
Additionally, the company said the positive growth trend in global chocolate markets remained unchanged in the first half of 2022. The main drivers were volume growth and price increases in roughly equal proportions. The above-average increase in the premium segment continued unabated as the company continued to grow market share in all regions.
According to the company, its seasonal business in the first half of the year, such as Valentine’s Day, especially Easter, followed by Mother’s Day, is very important for Lindt & Sprüngli and has developed very well.
These gift-giving occasions could again be celebrated without restriction among family and friends in most countries. As a result of these developments, the product mix has shifted over the past six months in favor of more expensive praline products, in favor of its Lindor products.
On the other hand, sales of personal consumption products, such as Excellence bars, progressed less strongly. Due to strong cost increases in the first half of the year, in particular for packaging materials, logistics, energy and certain raw materials, Lindt & Sprüngli had to increase the selling prices to our partners in most countries – despite our considerable efforts to improve efficiency.
Strong organic sales growth
In the “Europe” segment, Lindt & Sprüngli achieved organic sales growth of +9.1% to CHF 980.1 million. Our main markets, Germany and Italy, achieved double-digit sales growth thanks to good Easter deals. The Swiss market also recorded good sales growth, especially for gifts. In the Italian market, the integration of Caffarel into Lindt & Sprüngli Italy as well as the acquired retail activities of the STSpA retail stores have been successfully completed, laying the foundations for accelerated growth in the future. The smaller subsidiaries in Austria, Central and Eastern Europe, Poland and Benelux continued their success and all posted double-digit growth.
In North America, sales recorded double-digit organic growth of +15.2% to CHF 739.1 million. The Lindt companies in the United States and Canada as well as Ghirardelli stand out for their above-average growth. Russell Stover, on the other hand, managed to keep sales around year-ago levels.
The “Rest of the world” segment increased its sales organically by +16.9% to CHF 272.5 million. Of note are businesses in Japan, China, Brazil and duty-free operations, all of which recorded good double-digit sales growth. The duty free business benefited from the recovery in global passenger traffic at airports and was able to increase its sales accordingly with an attractive product range.
Costs and investments
In terms of operating costs, Lindt & Sprüngli was impacted by rising global inflation mainly in the areas of production and logistics. In the case of raw materials, this mainly affected the prices of milk powder and sugar. In the packaging materials sector, the generally high demand has led not only to higher prices, but also to delivery delays and longer delivery times.
In order to secure its future growth objectives, the Lindt & Sprüngli Group continues to invest in the expansion of its group-wide infrastructure. He highlighted his key project in the form of expanding the world’s largest cocoa liquor factory in Olten – is proceeding according to plan and will be available for sustainable supply to all European production sites from 2024. In At the same time, the expansion of the capacity of our Lindt production site in Stratham in the United States for the North American market is also continuing with high priority.
As a premium chocolate manufacturer, we are committed to our corporate purpose “We delight the world with chocolate”. This is inextricably linked to our quality standards as well as sustainable and socially responsible business practices. Already in 2020, Lindt & Sprüngli has taken an important step by sourcing 100% fully traceable and externally verified cocoa beans as part of its own agricultural program.
According to the company, at the end of last year, its agricultural program involved more than 91,000 cocoa farmers (2020: 80,000) in seven countries of origin, seeking to improve the lives of key cocoa farming communities. with which he engages. It is also committed to reducing greenhouse gas emissions from its business operations in accordance with the Science Based Targets (SBT) initiative. Based on this footprint, a plan of measures and a roadmap for reducing greenhouse gas emissions will be announced in the spring of 2023.