Lindt shares dip following decision to cut guidance

Luxury Swiss chocolate maker Lindt & Sprüngli made the decision to cut its mid- to long-term sales guidance, saying the “environment remained tough”.

Shares in the company fell by nearly 4% on Tuesday after it said it now expected organic sales growth to be in the range of 5-7% a year, down from its previous target of 6-8%.

The reduction is due to a slowdown in the “saturated” US market, where growth slowed to 2.8% for 2018, down from 4% cited in the first half of the year.

The company has also needed more time to turn around its Russel Stover brand in the US, which reported a slight decline in sales last year.

The company, known for its gold-foil wrapped Easter bunnies, did not give more details on its outlook, but analysts at Bank Vontobel described the change as a “kind of revolution for Lindt,” since it has had the same growth guidance for the last 10 years.

Lindt said its total sales last year rose 5.5% to 4.31 billion Swiss francs ($4.4 billion), as “strong increases” in Europe and the rest of the world compensated for problems in the United States, its second biggest market.

Jon Cox, an analyst at Kepler Cheuvreux said its decision to cut guidance in a sales release with no scheduled news conference “is something of a surprise” although not totally unexpected.

“We have long anticipated such a cut given its size and position in big developed chocolate markets, lower like-for-like sales in its retail network… and emerging social pressure on sugary, fatty snacks,” said Cox, who rates Lindt at reduce.

Lindt is due to report 2018 results in full on 5 March.

Related content

Leave a reply

Confectionery Production