Lindt & Sprungli continues to increase sales and profit while expanding its market position

The good result achieved over the past business year is particularly gratifying given the backdrop of a persistently challenging environment of stagnating and even declining chocolate markets, generally subdued consumer sentiment caused by political and economic uncertainty, high raw material prices and increasing price pressure from trading partners.

Dynamic organic growth in Europe

The «Europe» segment achieved overall organic sales growth of 7.4% in local currencies. All European countries reported pleasing results. The two subsidiaries in Germany and the UK accelerated their pace of growth and attained double-digit sales growth. The smaller subsidiaries, Scandinavia, Czech Republic, Poland and Russia achieved double-digit growth as well.

US market leadership in the premium segment

The American chocolate market as a whole declined in 2016 for the first time in years, despite a more stable general economic situation. The organic sales growth increased by 3.4% in the «NAFTA» region. The adjustments to Russell Stover’s product portfolio and promotions strategy also had a negative impact on sales during the financial year, while at the same time laying the long-term foundation for profitable growth in the future. With its three leading brands – Lindt, Ghirardelli and Russell Stover – Lindt & Sprüngli is clearly positioned as No.1 in America’s premium chocolate segment. Cooperation between the US subsidiaries Lindt, Ghirardelli and Russell Stover was enhanced in 2016. The establishment of a new subsidiary, Lindt & Sprüngli (North America) Inc., helps to support the three US subsidiaries in centralized tasks such as merchandising, logistics and IT, while at the same time creating synergy effects.

Geographic expansion starting to pay off

Business performance in the segment «All other markets» was very dynamic. Total sales in this category rose by 10.2%. The results achieved in Japan and Brazil were particularly impressive, with high double-digit sales growth mainly due to the opening of our own shops and cafés. The geographic expansion pursued over previous years is starting to pay off: Lindt & Sprüngli is today represented around the globe by 24 subsidiaries and branches, as well as a network of over 100 independent distributors.

Global Retail – a driver for success

Global Retail once again reported strong double-digit sales growth in the 2016 financial year. The strategic target of 30 new openings every year was comfortably beaten again. With more than 60 new shops in total, the network has already grown to around 370 retail outlets. The Global Retail network helps the company to further expand its international presence and explore new sales channels. Not only are these shops extremely well perceived by consumers, but they also have a big impact on Lindt’s brand familiarity and image values. Every year these retail shops generate over 50 million customer contacts in total.

Personnel changes for a continuing successful future

Over the course of 2016 there were a number of key personnel changes at the top management of the company intended to set the course for a successful future. On October 1, 2016, Dr Dieter Weisskopf, the Group’s long-standing CFO, took over the role of CEO. As Executive Chairman, Ernst Tanner is concentrating on the Group’s long-term strategic direction. The new Group Management now consists of eight members: Dr Dieter Weisskopf, Martin Hug, Andreas Pfluger, Rolf Fallegger, Kamillo Kitzmantel, Dr Adalbert Lechner, Alain Germiquet, and Guido Steiner. Uwe Sommer, who has made a unique and invaluable contribution to the success of the Lindt & Sprüngli Group over the past 23 years, will retire on April 30, 2017.

Annual General Meeting

In view of the strong result achieved in the past financial year, the Board of Directors will be proposing to the 119th General Meeting scheduled for April 20, 2017, a 10% increase in the dividend to CHF 880.- per registered share (CHF 300.- from the approved capital contribution reserve (agio) and CHF 580.- from available retained earnings) and CHF 88.- per participation certificate (CHF 30.- from the approved capital contribution reserve (agio) and CHF 58.- from available retained earnings).

Outlook

Lindt & Sprüngli confirms its mid- to long-term goal of organic sales growth of 6–8% combined with an increase in the operating profit margin of 20–40 basis points. For the 2017 financial year, the Group expects sales growth to be broadly in line with the previous year, and a further improvement in the operating margin.

Milestones 2020

Lindt & Sprüngli is working towards the goal of ensuring that its entire global cocoa supply chain is traceable and verifiable by 2020. An important milestone was reached in this respect in 2016: the complete supply chain for cocoa beans from Ghana is now traceable and verified. Lindt & Sprüngli sources a great part of cocoa beans from Ghana.

In autumn 2016 the permit was granted for the building of the Chocolate Competence Center at Kilchberg. Construction work got under way in January 2017. The opening of the multimedia "chocolate experience”, which includes a chocolate museum, shop and café, as well as a “Chocolateria” and a pilot plant for research and educational purposes, is scheduled for 2020.