COMMENT: Lindt sweetens Europe's austerity pill

By Chris Mercer | 15 January 2013

As Europeans brace for more austerity in hard-hit national economies, sweet-toothed consumers have been seeking light relief in chocolate maker Lindt & Sprüngli.

Lindt said today that sales for 2012 rose by around 7%, to CHF2.67bn (US$2.8bn), on the back of higher volume sales and market share gains in key countries such as UK, Germany and France. In Europe, only the Italians let the side down.

Early signs suggest that Lindt's growth has not been achieved via direct discounting or price promotions. The Swiss confectionery giant expects operating profits to rise more quickly than sales.

What a difference six months can make. In August last year, an air of disappointment and caution hovered over the analysis of Lindt's half-year results. Sales were up by 5% over the period and, while not bad, this fell below many expectations. 

Fast-forward to today (15 January) and several analysts toasted Lindt's sales for beating estimates. Kepler Capital Markets' Jon Cox said Lindt's comments mean it should post full-year operating profits at the high end of expecations, too. 
"The company said it invested in marketing and point-of-sale activities as well as innovation, meaning its seasonal and permanent business performed strongly," said Cox.

"Organic sales growth appeared to accelerate toward 8% in H2 while double-digit organic growth in North America should reassure those that assumed that market was becoming more competitive," he added.

In terms of the sector, we shall know more about its general health once Barry Callebaut has released key three-month sales data, scheduled for tomorrow (16 January).

However, Lindt's performance in 2012 looks to have set it up well for a stronger tilt at emerging markets in 2013, where it registered a "pleasing performance" over the 12 months.

The group opened offices in Moscow and Beijing last year and, even though premium chocolatiers are almost starting from scratch in some places, Lindt will be keen to kick-on.

"Familiarity with the Lindt brand is gradually being established and enhanced in these countries through an increasingly broad presence in selected retail trade channels and also in the duty free sector."

Lindt will publish full results on 15 March.

Sectors: Confectionery, Emerging markets, Financials

Companies: Lindt & Sprüngli, Barry Callebaut

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