Lindt & Sprüngli 2017 sales surpasses CHF 4 billion for first time
Group operating profits reached CHF 595.4 million.
March 7, 2018
Lindt & Sprüngli’s sales surpassed CHF 4 billion ($4.25 billion) in 2017, the first time in the Swiss company’s history.
Growth in the German and U.K. markets, as well as strong organic growth in other parts of the world, pushed Lindt’s group sales up 4.8 percent to reach a record CHF 4.088 billion. The group’s operating profit reached CHF 595.4 million ($631.03 million).
Overall organic growth saw a 3.7 percent increase, which was short of Lindt’s long-term goal of 6-8 percent. The company cited “modest development” in U.S. companies for the missed target in a report released to shareholders Tuesday.
Lindt said organic growth in Europe rose by 6.2 percent, thanks to a strong performance in the continent’s two biggest chocolate markets: Germany and the U.K. Lindt also did will in the mature markets of Italy, Austria and Spain, in addition to achieving double-digit growth rates in less established markets such as the Nordic region, Russia, Poland and the Czech Republic.
Markets such as Brazil, South Africa, Japan, China and Russia hold enormous potential for Lindt & Sprüngli in the coming years. Calling it the “rest of the world,” Lindt said it saw organic growth of 12.4 percent.
Though the Swiss company saw double-digit growth in Canada last year, Lindt said its U.S. subsidiary and Ghirardelli recorded modest growth. Lindt cited a “rapidly changing retail market,” pointing to the repositioning of the drugstore channel (an important outlet for chocolate) and department stores struggling with a decline in customer traffic.
Russell Stover also experienced a decline in sales, due to a “weaker market in general, the difficulties experienced by individual retail partners and the realignment of its product portfolio.” These portfolio adjustments included relaunching the sugar-free chocolate line with stevia extract, along with new packaging and attractive price points.
With the Lindt, Ghirardelli and Russell Stover brands, the group is No.1 in the premium segment and No. 3 in the U.S. chocolate market as a whole. With the ongoing strategic realignment of Russell Stover and the scheduled activities for Lindt and Ghirardelli, Lindt & Sprüngli says it remains on track in the world’s largest chocolate market.
Lindt’s own retail outlets and cafés also performed well in 2017, with sales surpassing CHF 500 million for the first time. By adding more than 50 locations, Lindt has extended its retail network to more than 410 sites worldwide.
Earlier this year, Lindt announced it will invest CHF 30 million in expanding and modernizing the Lindt Cocoa Center in Olten. Cocoa mass produced there supplies European manufacturing companies. It’s expected to come online in spring 2019.
Furthermore, construction on the new Chocolate Competence Center began this year. Financed and managed by the charitable Lindt Chocolate Competence Foundation, the center is intended to strengthen Switzerland’s international standing as a center for excellence in chocolate-making and will pool chocolate expertise across the entire industry. The Center will open its doors in 2020 to mark the 175th anniversary of Lindt & Sprüngli.
Given the Group’s high liquidity, solid balance sheet and high cash flow, the Board of Chocoladefabriken Lindt & Sprüngli AG has decided to launch a buyback program worth up to CHF 500 million for registered shares and participation certificates. This program is expected to start on March 12, 2018 and will end July 31, 2019. A separate trading line will be opened for registered shares and participation certificates on the SIX Swiss Exchange in accordance with International Reporting Standards.