Swiss chocolate maker Lindt & Sprüngli said its 2023 sales grew by 10.3% organically and came in ahead of market expectations, boosted by higher product prices and strong sales of its pralines across markets.
The maker of Lindor balls and gold foil-wrapped teddy bears attributed most of the sales growth to the increase in selling prices, which it used to offset higher raw material costs, especially for key ingredient cocoa.
'Within product mix, the trend towards gifting, pralines, and hollow figures continued, and the group is benefiting from the higher added value of these product lines,' the group said in a statement.
Cocoa Prices
The chocolate industry is dealing with historically high cocoa prices. New York cocoa futures rose to a 46-year high last year and are expected to remain strong in 2024.
Lindt said its overall sales reached CHF 5.20 billion (€5.54 billion) in 2023, up 4.6% when accounting for currency exchange effects. This slightly beat analysts' average forecast of CHF 5.18 billion (€5.52 billion), according to LSEG data.
Swiss Franc
The company said that exchanging foreign currencies into Swiss francs had a negative impact of 4.4% on the sales.
In the last twelve months, the Swiss franc has strengthened by roughly 8% against the U.S. dollar and by 5% against the euro, adding pressure on companies like Lindt that report in Swiss francs but get most of their revenue from North America and other European countries.
Lindt said it expected to record an operating profit (EBIT) margin of around 15.5% for 2023 when it posts full annual results on March 5.
For 2024, the Zurich-based chocolatier targets organic sales growth of 6% to 8%, and aims to increase its operating profit margin by 20-40 basis points.
Analyst Comment
Commenting on the group's performance, Barclays analyst Warren Ackerman said, "Most of the growth was attributable to price increases due to higher raw material prices, but importantly volume/mix closed the year slightly positive, with an improving volume trend in the latter part of the year despite volumes in the global chocolate market declining and the highest cocoa prices in decades with the price almost doubling over the course of the year.
"We would also flag, Lindt has performed very well in the non-tracked channels of food service, boutiques, travel retail and e-commerce which is not captured by our Nielsen data."
Additional reporting by ESM
