Lindt to keep growing 5-7% after Europe, new stores boost 2019 (updated)

Chocoladefabriken Lindt & Spruengli AG

14/01/2020 06:33

(Adds detail, background)
    By Silke Koltrowitz
    ZURICH, Jan 14 (Reuters) - Swiss chocolate maker Lindt &
Spruengli  LISN.S   LISP.S  wants to keep growing 5-7% per year
in the mid-term after strong growth in Europe and the opening of
new Lindt stores boosted organic sales by 6.1% in 2019.   
    Chocolate makers are grappling with sluggish demand as many
consumers prefer healthier snacks, but Lindt has so far bucked
the trend thanks to upmarket products like Lindor chocolate
balls or pink grapefruit-flavoured dark chocolate that people
buy as a special treat.
    "The market environment continues to be very challenging,"
the company based in Kilchberg on Lake Zurich said in a
statement on Tuesday, adding it had gained market share in all
important countries.
    Organic sales, which strip out currency swings and
acquisitions, were up 6.2% in its biggest market, Europe, thanks
notably to Germany, Austria and the United Kingdom despite
Brexit worries. 
    Growth in North America was 5.4%, a slowdown versus the
first half of the year, with Lindt pointing to substantial price
pressures in a changing retail landscape.
    "Organic sales overall were actually better than expected
although surprisingly it is Europe rather than North America
that surprised positively," Kepler Cheuvreux analyst Jon Cox
said.
    Group sales rose to 4.51 billion Swiss francs ($4.65
billion) in 2019.
    The group confirmed it expected to publish a 20-40 basis
point improvement in its operating profit margin when it
releases full results on March 3.
    An extraordinary provision and restructuring costs of around
60 million francs linked to the U.S. market will be offset by a
one-time tax benefit of around 60 million francs and thus have
no impact on reported earnings, Lindt said.
    Kepler's Cox said the unusually high restructuring charges
showed Lindt was serious about improving the margin in North
America that has been under pressure since the Russell Stover
acquisition in 2014.
    
($1 = 0.9709 Swiss francs)

 (Reporting by Silke Koltrowitz
Editing by Michelle Martin)
 ((silke.koltrowitz@thomsonreuters.com; +41 58 306 7454; Reuters
Messaging: silke.koltrowitz.thomsonreuters.com@reuters.net))