Lindt confirms full-year target as first-half profit rises

Tuesday 19 August 2014 12.18
Chocolate makers are grappling with soaring input costs for raw materials such as cocoa beans and butter
Chocolate makers are grappling with soaring input costs for raw materials such as cocoa beans and butter

Swiss chocolate maker Lindt & Spruengli confirmed its full-year sales and profitability target after net profit rose 14%in the first half, helped by strong volume growth and efficiency gains. 

Chocolate makers are grappling with soaring input costs for raw materials such as cocoa beans and butter, nuts, almonds and dairy.

But Lindt is faring better than rivals thanks to its positioning in the faster growing premium segment. 

"As no significant price adjustments could be implemented in the highly competitive chocolate segment, growth was mainly driven by volume increases. Once again, the premium chocolate segment benefited most from this trend," the company said in its half-year report. 

The maker of Lindor chocolate balls and gold-foil wrapped Easter bunnies said the rise in net profit to 55.8 million Swiss francs ($61.56m) was mainly due to efficiency optimisations in production and above-average volume growth. 

Lindt said it was seeing a slight improvement in consumer sentiment in practically all markets, including signs of stabilisation in southern Europe, but it remained difficult to pass high raw material prices on to the trade. 

Prices of commodities, such as cocoa, dairy and nuts, have increased in recent months with cocoa futures hitting a three-year high this week. The cost of cocoa butter, which gives chocolate its melt-in-the-mouth texture, is also high. 

Hershey, Mondelez and Mars have all announced price increases in recent weeks to offset rising raw material costs. 

Lindt said it had also had to adjust prices on selected products. 

It confirmed its forecast for 6-8% underlying sales growth this year and a 20-40 basis point improvement in earnings before interest and tax margin this year, excluding the contribution to sales and income of the newly acquired American-based Russell Stover business. 

The group, based in Kilchberg on Lake Zurich, said last month that underlying sales rose 9.2% in the six months to June. 

It also announced the billion-dollar takeover of US candy maker Russell Stover, its biggest deal ever, to secure the number three slot in the US chocolate market.