March 6, 2018 / 7:25 AM / in a year

Lindt expects U.S. business to weigh on sales growth this year

ZURICH (Reuters) - Swiss chocolate maker Lindt & Spruengli said on Tuesday it expected organic sales to grow about 5 percent this year, below its mid-term target, as difficulties persist in its U.S. business.

FILE PHOTO: Chocolate bars of Swiss chocolate maker Lindt are pictured at a store in Paris, France, July 20, 2017. REUTERS/Gonzalo Fuentes/File Photo

Confectionery companies have been facing a tough time as consumers tend to prefer healthier snacks, but Lindt has fared better than mass-market rivals, helped by its high-margin premium segment and its retail network.

However, its U.S. business, including recently acquired Russell Stover, is facing difficulties and is likely to weigh on sales growth this year, the maker of Lindor chocolate balls said in a statement.

“Given the ongoing strategic realignment of Russell Stover’s product portfolio and the current challenges in the U.S. retail market, the group expects organic growth of around 5 percent in the financial year 2018,” Lindt said.

The company confirmed its mid-term outlook for 6-8 percent organic sales growth and a margin increase of 20-40 basis points and said it expected the margin to rise in line with this target this year.

Net profit rose 8 percent to 452.5 million Swiss francs ($481.79 million) last year.

Lindt, known for gold foil-wrapped Easter bunnies, also announced a share buyback programme of up to 500 million Swiss francs in view of a capital reduction.

It proposed to pay out a dividend of 930 francs per registered share, a 6 percent increase over last year, and said it intended to maintain its dividend policy.

The company, based in Kilchberg on Lake Zurich, already reported a 3.7 percent rise in 2017 organic sales in January, its lowest level since 2009.

($1 = 0.9392 Swiss francs)

Reporting by Silke Koltrowitz; Editing by Amrutha Gayathri

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