February 22, 2024

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Lindt’s chocolate sales hit by lockdowns, sees slow recovery

By Silke Koltrowitz

ZURICH (Reuters) – Swiss chocolate maker Lindt & Spruengli expects a slow recovery in sales from the impact of the coronavirus crisis, before they bounce back next year, the company said on Tuesday.

Chocolate makers have been facing softer demand during the crisis as many shoppers stocked up on essential supplies and made fewer impulse purchases.

Chief Financial Officer Martin Hug said he expected sales at the group’s own stores to be below 2019 levels this year as social distancing meant fewer transactions, and he saw no quick recovery in the group’s profitable travel retail business.

“The rebound will take time,” he said. Hug said there were no signs of consumers swapping high-quality chocolate for cheaper treats as products typically consumed at home – like Lindt’s Excellence chocolate – had done well.

But the buying of chocolates to give as gifts declined, particularly over Easter, as lockdown measures made family gatherings impossible.

Shares in the maker of Lindor chocolates, down 3.6% so far this year, fell another 3.6% by 0957 GMT.

“Lindt suffered more than other food groups from COVID-19 because it generates about 18% of sales in channels directly impacted by the lockdown,” ZKB analyst Patrik Schwendimann said, referring to the company’s own stores, business supplying cafes and restaurants and duty free shops.

The group said it expected organic sales to decline 5-7% this year, after an 8.1% drop to 1.53 billion Swiss francs ($1.63 billion) in the first half. Organic sales exclude M&A and currency effects.

Lindt confirmed its mid-term guidance for 5-7% organic sales growth and said it expected to exceed this range next year due to a catch-up effect.

The operating profit margin should return to around 10% for the full year and then to around 15% in 2022/23 after dropping to 1.1% in the half year, assuming no more large-scale lockdowns and a 2020 Christmas business similar to last year.

In the first half of 2020, net profit slid 78% to 19.7 million francs.

(Reporting by Silke Koltrowitz; Editing by Michael Shields and Jane Merriman)

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