(Adds comments by CEO and analyst, share price reaction)
By Silke Koltrowitz
ZURICH, March 7 Swiss chocolate maker Lindt &
Spruengli expects like-for-like sales to increase by
another 6 percent this year, at the lower end of its long-term
target, in a sign that a shrinking overall market in the United
States is making growth more difficult.
However, the company said on Tuesday it was counting on a
gradual improvement in consumers' appetite for chocolate treats
and easing raw material costs to help it meet its long-term
goals of 6-8 percent organic sales growth over the coming years.
Global chocolate demand is down as consumers tend to prefer
healthier snacks, but Lindt has so far bucked that trend by
marketing its Easter bunnies and Lindor chocolate balls as
high-quality treats customers can indulge in at special moments.
"We expect the environment in 2017 to be quite similar to
2016. All the challenges are still there," Dieter Weisskopf, who
took over as chief executive in October, told reporters at the
company's headquarters in Kilchberg near Zurich.
He said order levels for Easter looked healthy but a
repositioning of the Russell Stover brand in the U.S. market
that weighed on sales and margins last year was continuing and
lower cocoa bean prices would have a positive impact only in
Lindt faced difficulties in 2016 due to high cocoa bean and
butter prices, subdued consumer sentiment in its biggest markets
and price-sensitive trade partners.
Net profit rose 10 percent to 420 million Swiss francs
($415.2 million) last year, affording a 10 percent rise in the
dividend by 10 percent, in line with analysts' forecasts.
The operating margin improved by 0.2 percentage points to
14.4 percent, at the lower end of the group's long-term
"To us, it seems, Lindt really had to stretch in order to
reach the 6 percent organic growth for 2016, potentially trading
margin for growth," Baader Helvea analysts said in a note,
recommending a "hold" on the stock.
They said Lindt's share price premium might no longer be
justified if margin expansion started lagging more cost-focused
The shares, which have risen almost 7 percent this year,
were up 0.7 percent at 66,000 francs at 1137 GMT. They trade at
40 times forward earnings, at a premium to Nestle's PE
multiple of 27.3 and Hershey's at 32.9.
Lindt said in January its underlying sales rose 6 percent in
2016, making it one of the fastest-growing food and beverage
companies, ahead of Hershey at 0.8 percent, Mondelez's
chocolate division at 2 percent and Nestle's confectionery
business at 1.8 percent.
($1 = 1.0116 Swiss francs)
(Editing by Greg Mahlich)