Chocolate Sales Defy Inflation Fears as Lindt Boosts Profit Outlook
The sweet taste of success: Lindt & Spruengli, the renowned Swiss chocolatier, has reported a remarkable 7.8% organic growth in sales for 2024, sending a strong signal that consumers are willing to indulge in premium chocolates despite rising prices.
Pricing Power Pays Off
Lindt’s strategy of hiking prices to offset record-high cocoa costs has paid off, with the company expecting to raise prices further in 2025. This bold move has allowed the chocolate maker to maintain its market share and demonstrate its pricing power, according to Vontobel analyst Jean Philippe Bertschy.
Cocoa Costs Soar
The chocolate industry is bracing for a challenging year ahead, with cocoa prices having nearly tripled in 2024. This unprecedented cost headwind is expected to impact the industry significantly, but Lindt is well-positioned to navigate these challenges, says Bertschy.
Sales and Profit Outlook
Lindt’s sales reached 5.47 billion Swiss francs ($5.97 billion) in 2024, in line with market expectations. The company has also raised its annual operating profit margin estimate to at least 16.0%, the top of its earlier forecast range. For 2025, Lindt expects organic sales growth of 7-9% and a further improvement of 20-40 basis points in the operating profit margin.
Analysts Weigh In
J.P.Morgan analysts believe that Lindt’s 2024 delivery and 2025 outlook will reassure investors and boost the company’s shares. Indeed, Lindt’s shares rose 2.3% in early trading. The company will report its full annual results on March 4.
A Sweet Future Ahead
With its robust sales growth and pricing power, Lindt is poised for a successful 2025. As the chocolate industry faces unprecedented challenges, Lindt’s ability to navigate these headwinds will be closely watched by investors and industry experts alike.
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