Lindt’s annual profit rises in slow chocolate market

Lindt & Spruengli reported a rise in annual profit on Tuesday as the Swiss chocolate maker managed to pass on higher ingredient costs to customers while maintaining volumes amid a broader slowdown in the global chocolate market.

Cocoa prices have risen to record highs as adverse weather in major growing regions, tree illness and capacity shortages lead to expectations of an ever wider supply deficit this season.

As the surge in prices filters down to retail shelves, the likes of Hershey’s and Cadbury maker Modelez have reported lower sales volumes as cash-strapped consumers cut back spending.

Lindt, which makes Lindor balls and gold foil-wrapped Easter bunnies, reported a 17.9% rise in net income to Sf671.4m for the year to December 31, broadly in line with the Sf670m forecast by analysts at Zuercher Kantonalbank.

It had already reported in January a 10.3% rise in organic sales for the year, as the post-Covid recovery in travel generated demand for higher-value products such as pralines.

Speaking at a press conference at the company’s headquarters just outside Zurich, CEO Adalbert Lechner highlighted the use of GLP-1 drugs for weight loss, such as Novo Nordisk’s Wegovy, as a new trend the company was seeing in the US and Switzerland.

However, Lechner said he was yet to see an impact on the business.

“Lindt once again demonstrated its strong pricing power in full-year 23 thanks to its global premium positioning with high exposure to gifting and pralines,” Vontobel analyst Jean-Philippe Bertschy said in a note. He added that despite high cocoa prices, he expects the strong momentum to continue this year.

The company achieved an operating margin of 15.6% last year, up from 15% in 2022, and proposed a Sf100 rise in its annual dividend to Sf1,400 francs per registered share. The CEO guided for mid-single digit price hikes for 2024, as it aims for organic growth of 6%-8% and an operating margin of 20-40 basis points.

Reuters