Lindt + Sprüngli: achieves robust growth in H1-2024

Kilchberg / CH. (ls) Switzerland’s Lindt + Sprüngli Group had once again a successful first half of the year in 2024, increasing sales by +7.0 percent to CHF 2.16 billion in organic terms. This increase was supported by mid-single-digit price increases in the first half of the year to offset higher cocoa prices, as well as solid volume/mix growth of +0.9 percent. The Group is confident that it will reach the objectives announced for the full year 2024, with sales growth in the range of 6-8 percent and an Ebit margin increase expected at the upper end of the 20-40 basis points range.

The Ebit margin increased to 13.5 percent (previous year 12.2 percent), with an Ebit of CHF 292.3 million. This improvement was mainly driven by efficiency gains and price increases, compensating for higher cocoa material costs. A legal dispute in North America was resolved and had a positive one-time impact on other income. Net income totaled CHF 218.0 million in the first half. Free cash flow reached CHF 70.4 million (previous year: CHF 137.3 million) with a margin of 3.3 percent (previous year: 6.6 percent). Cash flow was impacted by increased capital expenditure for capacity expansion projects to satisfy future volume growth. The balance sheet total increased to CHF 7.94 billion as of June 30, 2024 (December 31, 2023: CHF 7.86 billion). The equity ratio slightly increased to 54.6 percent (December 31, 2023: 54.2 percent).

All regional segments show positive growth

The Europe segment increased sales organically by a strong +9.3 percent to CHF 1.07 billion in the first half. Growth was most pronounced in France, the United Kingdom, and Central and Eastern Europe, with double-digit growth. Italy, Germany, and Switzerland continued to show solid growth.

The North America segment showed organic sales growth of +3.0 percent to CHF 794.6 million. Lindt + Sprüngli USA, Ghirardelli, and Lindt + Sprüngli Canada outperformed the market, gaining market share. However, this positive performance in the market is only partly reflected in our sales figures due to the shift of Easter orders into 2023 reflecting the earlier Easter date in 2024, and destocking by our major retail customers. Excluding those temporary effects, organic growth in North America would have been around +6 percent in the first six months of the year. The North American segment is expected to accelerate growth in the second half of the year (compared to the +3.0 percent in the first half).

The Rest of the World segment achieved strong organic sales growth of +10.0 percent to CHF 293.2 million. Notably, the subsidiaries in Japan and Brazil achieved double-digit growth rates in the first half of the year.

Cost management under control

While energy prices and supply security have stabilized, and prices for other raw materials and packaging have remained constant, the cost of cocoa continues to be a challenge, reaching record levels. The Group will partly mitigate the impact of rising cocoa prices through strict cost management, though further price increases will be needed. On the demand side, the global chocolate market continues to show its resilience with positive value sales development. However, with inflationary price effects, sales volumes in the global chocolate market have either stagnated or slightly declined depending on the product category and market. In these market conditions, Lindt + Sprüngli’s brands show strength and resilience, growing market share in all key markets, and we have been able to grow volume/mix by a solid +0.9 percent in this challenging market environment.

Strong direct-to-consumer business performance

The Group’s direct-to-consumer channels, which include retail and online stores, have shown strong development, with double-digit growth compared to the previous year (+15.8 percent), driven mainly by a demand for gifting. Sales in the Group’s around 530 own stores grew both on a like-for-like basis and through the addition of new store locations. Personalization continues to be a key driver. Notable Easter success includes the personalized Gold Bunny, with name printed ribbon. The key franchise Lindor, the largest brand in the product portfolio, continues to drive growth in all regions. Additionally, the dark chocolate key franchise Excellence accelerated growth in the first six months.

Focus on sustainability

Lindt + Sprüngli continues to make progress in implementing its sustainability strategy. Since 2020, the Group has sourced 100 percent of its cocoa beans through its own Lindt + Sprüngli Farming Program or other sustainability programs. Through continued investment, the company’s goal is that by 2025, 100 percent of cocoa products, including cocoa butter and powder, are sourced via sustainability programs. The Farming Program aims to contribute to reducing the risk of child labor in the cocoa supply chain. To support this, the Group became a member of the International Cocoa Initiative ICI earlier this year.

The company is also committed to reducing greenhouse gas emissions throughout the value chain (Scope 1, 2, and 3) and has set science-based reduction targets in line with the Paris Agreement. These targets will guide business practices with the objective of reaching net-zero emissions by 2050.

New share buyback program

With a strong balance sheet, the Board of Directors of Chocoladefabriken Lindt + Sprüngli AG decided at its meeting on July 22, 2024, to initiate a new buyback program for Lindt + Sprüngli registered shares (RS) and participation certificates (PC) in the amount of up to CHF 500 million. The buyback will start on August 2, 2024, and last until July 31, 2026, at the latest. For the buyback, a separate trading line will be opened on the SIX Swiss Exchange AG for the registered shares and the participation certificates. The Board of Directors intends to propose the capital reduction by cancellation of the repurchased registered shares and participation certificates at future Annual General Meetings.

Outlook for the full year 2024

With strong plans and activities ahead, the Group is confident that it will reach the sales objectives announced for the full year 2024. Accordingly, sales are expected to grow organically in the range of 6-8 percent and the Ebit margin at the upper end of 20-40 basis points compared to the previous year. For the coming years, the Group continues to reiterate its medium- to long-term sales growth targets of 6-8 percent with an improvement in the operating profit margin of 20-40 basis points per annum.