Lindt powers to first half profits for first time
first half of 2004 in the black - the first time the company has
completed the first six months of the year in profit. Increased
marketing expenditure - helped by tight cost control - enabled the
luxury chocolate maker to lift its sales during the usually quiet
first half, offsetting the high costs which are traditionally
charged in that period.
High-end confectionery groups such as Lindt see most of their sales come in the second half of the year - essentially at Christmas - and as a result the first half tends to end in an operating loss. For example, Lindt said that the first six months usually account for less than 40 per cent of annual sales but about half the fixed costs - but not this year.
Helped by a slight upturn in the economic climate in core markets such as the US, Germany, France and Switzerland, Lindt managed to lift its volume sales in the first half of the year to exceptionally high levels, with the chocolate bar segment in particular helped by the launch of a number of new products under the Excellence brand.
This in turn lifted revenues by 15.6 per cent during the half to SF778 million - the first time in three years that growth in Swiss francs has been higher than that in local currencies (12.1 per cent), a reflection of improving exchange rates with the euro and sterling.
Operating profit was only just positive - SF0.1 million for the half - but was nonetheless some SF10.4 million higher than the same period a year earlier. Pre-tax results remained in the red, however, at minus SF2.5 million, although this was still SF10.9 million better than 2003 as a result of lower financial costs.
Raw material costs, which have plagued many food makers for the last year or so, remained virtually unchanged in the first half, with cocoa bean prices in fact falling over the period, the first decline in several months, but cocoa butter, hazel nuts and almonds all increasing in price.
The biggest addition to the company's cost base during the half was in fact related to personnel, with more seasonal workers required to help the company meet the unexpected demand for its products. But ongoing efficiency savings meant that the additional cost of labour was still less than the growth in sales, allowing the group to plough more cash into marketing its products, in turn generating more revenue.
Despite its first ever first-half profit, Lindt & Sprüngli refused to get carried away with its forecasts for the year as a whole, sticking to its annual growth target of 5-7 per cent. It is, however, confident of maintaining the momentum in terms of volumes, confirming that SF90 million would be set aside to expand production in 2004/05.
