Swiss chocolatier Lindt & Spruengli reported a surge in annual profit on Tuesday, attributing the increase to successful price adjustments amid soaring ingredient costs and a sluggish global chocolate market.
Despite challenges posed by record-high cocoa prices and reduced consumer spending reported by competitors like Hershey’s and Modelez, Lindt managed to navigate the market downturn by passing on increased costs to customers while maintaining sales volumes.
The rise in cocoa prices, driven by adverse weather conditions and supply shortages, has presented significant challenges to chocolate manufacturers globally.
However, Lindt’s ability to translate these challenges into opportunities through strategic pricing adjustments has been key in maintaining profitability amidst market headwinds.
“Lindt once again demonstrated its strong pricing power in FY23 thanks to its global premium positioning with high exposure to gifting and pralines,” Reuters quoted Vontobel analyst Jean-Philippe Bertschy as saying.
Bertschy expressed confidence in Lindt’s continued momentum despite the challenging cocoa price environment.
Speaking at a press conference, Lindt’s Chief Executive, Adalbert Lechner, highlighted emerging trends in consumer behaviour, including the rising popularity of weight loss drugs like Novo Nordisk’s Wegovy in the United States and Switzerland.
However, Lechner noted that the company had yet to observe any major impact on its business from these trends, signalling a cautious approach to market shifts.
Lindt’s strong financial performance for the year ending December 31, 2023, was characterised by a 17.9 per cent increase in net income, reaching 671.4 million Swiss francs.
The company’s organic sales also saw a notable uptick of 10.3 per cent, driven by post-COVID recovery trends, particularly in the demand for higher-value products such as pralines.
Looking ahead, Lindt aims to sustain its growth trajectory by implementing mid-single digit price hikes in 2024, alongside targeted organic growth of 6 per cent to 8 per cent.
The company also aims to achieve an operating margin of 20-40 basis points.
(With inputs from Reuters)
