Company News • 23.08.2012

Lindt Chocolate Rabbits: The Latest Casualty of The Eurozone Crisis

Lindt & Sprüngli expects cautious consumers to forsake gourmet chocolate as the eurozone crisis drags on

Lindt chocolate Easter bunny.
Lindt chocolate Easter bunny.
Source: mediacolor's/Alamy

Lindt & Sprüngli expects cautious consumers to forsake gourmet chocolate as the eurozone crisis drags on, the company said as it reported first-half net profits slightly short of expectations.

The Swiss confectioner, famous for its gold foil-wrapped rabbits, recorded a net profit rise of 14% to SFr36.6m (£23.99m), against a forecast of SFr38.5m in a Reuters poll of analysts.

"The euro crisis and general economic background conditions seem likely to become still more challenging in the second half of the year, with consumer sentiment further impaired in a number of countries," Lindt said.

Nevertheless, the company, which generates the lion's share of its sales in the Christmas period, stuck to its medium to long-term sales and profit targets and said that it expects organic growth between 6% and 8% in local currencies for 2012.
Last month, Barry Callebaut, the world's largest chocolate products maker, also said it expects to meet its financial targets despite a slowdown in sales.

Zuercher Kantonalbank analyst Patrik Schwendimann said that Lindt's targets were realistic, though it would now have to fight hard to achieve them. Organic growth for the first half of 2012 clocked in at 5.3%.

Lindt, the roots of which go back to a 19th-century Zurich chocolate shop, derives most of its sales from developed markets, many of which are suffering from stubbornly high unemployment.

"Organic growth in the first half was disappointing, given Lindt's standards," Schwendimann said. "A cool spring normally helps chocolate consumption and still growth wasn't better.

"Now they will have to dip into their pockets and boost their marketing spend to achieve the expected growth, and that will cause the margin to suffer."

While cocoa futures have risen to multi-month highs on concerns about supply from top producer Ivory Coast, they are still down about 20% from a year ago. That would help Lindt to achieve its targets, analysts said.

"It's all about the lower cocoa prices, so I'm pretty sure they'll make those targets," Kepler analyst Jon Cox said.

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