Chocoholics drive Lindt profits
Fin24 - Mar 18th, 08:26
Zurich - Swiss luxury chocolate maker Lindt & Spruengli said it was confident people would keep buying its sweet treats this year despite weak consumer sentiment in its key market, Europe.
Strong demand for its Lindor praline balls and gold foil-wrapped Easter bunnies in Germany, France, Britain and the United States pushed net and operating profit up 10% in 2012, allowing the group to raise its dividend by 15%.
However, its shares fell 2.1% by 08:39 GMT, backtracking from a 21% rise so far this year and lagging a weaker European food sector index as some analysts cited the lack of a new share buyback as disappointing.
"L&S delivered once more a solid set of results," said Sarasin analyst Patrick Hasenboehler. "A slight disappointment could be that L&S announced no new share buyback programme."
Lindt, whose shares had risen on Thursday to their highest since early 2008, had in 2011 announced a plan to buy back up to 5% of its equity in a scheme which ran to the end of 2012.
The group in January reported a 7.3% rise in full-year sales to SFr2.67bn ($2.8bn), driven by a robust performance in Europe, which accounts for more than 60% of group sales.
While other food makers have been grappling with a weak consumer mood in Europe - French group Danone SA for instance announced big job cuts last month - Lindt said people were reluctant to go without their favourite chocolate treats.
"Our experience as a premium chocolate manufacturer confirms that Lindt quality chocolate is relatively unaffected by prevailing economic sentiment," Lindt said, adding the global chocolate market was flat or even shrinking slightly.
It confirmed it wanted to grow underling or comparable sales by between 6% and 8% and increase its operating margin by 20 to 40 basis points in 2013 and over the medium term.
It also said it would pay out a dividend of SFr57.50 per participation certificate (Lindt's non-voting shares, its most actively traded class of stock) for 2012.
Lindt said its strategy to launch many new products each year and tap emerging markets with Lindt-branded retail outlets and cafes had helped grow volumes and gain market share across the board.
Lindt shares trade at about 26 times estimated 2014 earnings, a large premium to Swiss peer Barry Callebaut at about 17 times.
Net income grew to SFr271.9m, broadly in line with the forecast in a Reuters poll, while the operating margin increased by 40 basis points to 13.6%.
Lindt said it would transfer SFr250m to two new charitable foundations, one to invest in sustainable cocoa production and processing, and the other to train young professionals in Switzerland.
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