Financial Year 2009

In a difficult environment, Lindt & Sprüngli gains further market shares and makes substantial progress, especially in North America

      

Kilchberg, March 16, 2010 - Chocoladefabriken Lindt & Sprüngli AG achieved organic growth of 2.3% in 2009 in an extremely difficult market environment for premium products. Despite the generally challenging global economic situation, the company made substantial investments in production facilities in the USA and in marketing and brand-image enhancement. This will positively affect the coming years.

For the first time in ten years, the overall chocolate market declined in volume. As the economic crisis spread, consumers turned increasingly to low-cost products and private labels. Wide currency fluctuations and record-high commodity prices, especially for cocoa beans, together with liquidity shortages among distributors and a sharp decline in airline passenger numbers in the duty-free sector had an adverse impact. The company is therefore pleased to report that LINDT and GHIRARDELLI were once again the two fastest-growing premium chocolate brands in the USA with further substantial market share gains. Because of prevailing adverse consumer sentiment and cautious purchasing by trade partners, growth in Europe remained rather subdued. However, in view of the very weak overall market development, Lindt & Sprüngli was able to step up its market shares in most countries.

In many respects, the financial year 2009 was a transitional year for Lindt & Sprüngli. As already announced, various measures were taken to put the business on track for a successful future. These included restructuring of the LINDT chain of retail outlets in the USA, and the creation of logistic synergies with the merger of the warehousing sites of the two Italian subsidiaries. In addition, major investments were made in production facilities in the USA and globally in marketing and brand image enhancement.

Because of currency-related factors, Group sales fell slightly by 1.9% to CHF 2.52 billion (previous year: CHF 2.57 billion). In view of an increasingly widespread accounting trend in the consumer goods industry, and the expectation of a future alignment of IFRS accounting principles with US GAAP, payments to the trade for services provided are now offset against sales, and no longer stated as expenditure. Sales for the previous year have been adjusted accordingly.

The Group operating result (EBIT) stood at CHF 264.8 million with an operating profit margin of 10.5%. The net profit was CHF 193.1 million. This is equivalent to a return on sales of 7.6% and a return on invested capital of 13.1%. The company balance sheet remains perfectly sound and reflects a strong position. As at end 2009, the equity ratio was 65.3% while the net liquidity of the business more than tripled against the previous year and stood at CHF 356 million.

Prospects for 2010
The uncertain situation on the commodity markets is expected to continue. Lindt & Sprüngli will be affected in particular by cocoa prices. In addition, the trend on the currency markets is hard to predict. Consumer sentiment will in all probability remain subdued as unemployment numbers rise. Despite these circumstances, Lindt & Sprüngli is endeavoring to hold its prices stable as far as possible with only limited adjustments. In the financial year 2010, a clear focus will once again be placed on the strengthening of the market position and on gaining new market shares. Geographical expansion in Asia will therefore be expedited further with the inauguration of a LINDT Chocolat Café in Tokyo, Japan. Moreover, greater attention will be paid to growth markets in Great Britain, Russia, China and Scandinavia.

The group of companies is confident that the general economic climate will improve slowly in the second half of the year, which will positively affect demand from the trade and consumers.

For the financial year 2010 the company expects substantially higher organic growth of 5–7% and an operating result (EBIT) of CHF 300–340 million. From 2011 onwards, Lindt & Sprüngli has its sights set on further annual growth of 6–8% and EBIT growth of 8–10%, so once again meeting its long-term strategic targets.

General meeting
Despite the lower earnings reported in this transitional year, the Board of Directors will be proposing to the General Meeting of April 22, 2010, an increase in the dividend of 11.1% to CHF 400.- per registered share (CHF 360.- in the previous year) and CHF 40.- per participation certificate (previous year CHF 36.-).