Lindt looks to emerging markets for further growth
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Lindt looks to emerging markets for further growth

Lindt & Sprüngli (Lindt), the iconic Swiss chocolatier, reported earnings this week. The company’s figures were, speaking broadly, “solid” according to Dominion Investment Manager Christian Cole – although a weak North American market stood out as a drag on performance.

Lindt’s share price has edged up slightly throughout the week

graph 0803 lindt

SOURCE: Yahoo Finance

Lindt is the world-leader in luxury chocolate, and it saw “an above average result” in Japan, China, South Africa, Brazil, and Russia in 2017. The company has vowed to increase its focus on these regions, where is said it has “enormous potential” to outperform. Lindt thinks that its success in these coutnries is largely down to quality. The company released a statement saying: “This positive trend is being fuelled by consumers' growing demand for quality, greater purchasing power and also a growing desire for chocolate with a high cocoa content."

Lindt was more modestly successful in other parts of the world too, seeing its global net profits rise by 7.8% from 2016. These profits were driven by record sales of more than 4 billion Swiss francs. More good news came from the production line: Lindt’s raw materials (cocoa beans, cocoa butter, and sugar) all saw better harvests in 2016/17, meaning that the cost of creating all those gold foil wrapped bunnies has dropped.

The one weak area for Lindt is North America, where sales of its Russell Stovier brand declined. This black spot on an otherwise positive set of figures is responsible for muted guidance: the company expects “6% to 8% long term growth” but is pegging expectations lower (5%) for 2018.

Disclosure

Dominion holds Lindt in its Global Trends Luxury Fund.


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