Lindt & Sprüngli targets renewed growth after 2020’s market turbulence
The Lindt & Sprüngli group has released its latest annual results for 2020, with reported sales of CHF 4.02 billion, down 6.1% year-on-year, as the business adapts to ongoing coronavirus pandemic challenges, writes Neill Barston.
As the company noted, it had posted a strong start last year prior to the covid crisis, which it acknowledged had a negative impact on its operations, which were affected along with the wider industry with lockdown conditions around the world witnessing major retail shutdowns.
The business explained that trading restrictions at key periods including Christmas and Easter particularly affected the business, as well as the wider sector, with the company’s ability to drive revenues at the two core annual seasons significantly impacted. Its travel retail segment was also affected due to global flying restrictions amid the pandemic.
Consequently, the company’s EBITDA earnings for 2020 stood at CHF 696 billion, against CHF 915 for 2019, with net income reported at CHF 320 million compared against pre-pandemic figures of CHF 511 million that were recorded in 2019.
However, as the company explained, despite conditions, it said the business had outperformed the overall chocolate market, particularly in premium segments, as well as gaining market share in nearly all of the countries it operates. It noted that trading improved for the second half of 2020.
Notably, in spite of the pandemic, the business launched its €100 million Home of Chocolate visitor centre in Switzerland (pictured main image), last September, celebrating the work and history of its master chocolatiers.
Another key goal was also attained last year, as all cocoa beans within the chocolate ranges of Lindt & Sprüngli now being 100% traceable and externally verified by a third party, as a core pilar of its sustainability plans.
Consequently, the company added that sales growth was generated in a number of markets, as well as significant progress being made in the area of sustainability, on the one hand for the important raw material cocoa beans, and on the other hand in the areas of greenhouse gas and water.
The business said it had responded quickly to changing consumer habits, with shoppers switching most of their spend online, which prompted the company to focus on services including home deliveries, click & collect services, and the expansion of its e-commerce activities – which saw online sales double to represent around 5% of group revenues.
For 2021, the company said it plans to proceed with new e-shops in different countries. In addition to its physical stores, it has also addressed key trends of corporate gifting, teleshopping, and subscription programmes to improve revenues and engagement with customers around the world. This year, the company said it expects to reach organic sales growth of 6-8% and confirms thereafter its unchanged medium to long term organic annual sales growth target of 5-7%.
Within its core European market, the company noted ‘pleasing results’ with a modest decline of 2.9%, with sales in the UK, Germany and Spain reportedly increasing. Eastern Europe and Scandinavia recorded double-digit growth figures within its premium ranges, though its home market of Switzerland suffered amid a drop in tourism.
Meanwhile, in the US, sales reduced by 6.8%, but the business enthused that there were chocolate bar gains for both its Lindt and Ghirardelli brands, as well as for its Russell Stover sugar-free ranges.The losses were reportedly partly offset by rising self-consumption of chocolate bars and the great success of the baking products segment at the subsidiary Ghirardelli.
Its performance in the rest of the world for 2020 saw a decrease of -16.1%, in particular due to the sharp decline in the Travel Retail business and the frequent temporary shop closures resulting from the lockdowns. However, it attained strong sales increase and market share gains in the important growth markets of China and Japan.