Lindt 2016 Profit Misses Estimates as U.S. Market ShrinksBy
Co. forecasts 2017 sales rising at about last year’s pace
Dividend raised 10 percent to 880 francs per registered share
Lindt & Spruengli AG reported full-year profit slightly below analysts’ estimates as the U.S. market shrank and the world’s biggest maker of premium chocolate revamped Russell Stover’s portfolio to make it less seasonal.
Operating profit rose 8.4 percent to 562.5 million francs ($556 million), the Kilchberg, Switzerland-based company said in a statement Tuesday. Analysts expected 565.3 million francs.
The maker of Lindor chocolate balls continued a clean-up of Russell Stover’s portfolio of more than 2,000 products last year and offered fewer price promotions for the brand. The American chocolate market declined 2 percent in volume and was stagnant in value for the first time in about 20 years, according to Chief Executive Officer Dieter Weisskopf.
“Consumer sentiment wasn’t exactly great in the U.S.,” the CEO said at a press conference in Zurich. “The good news is that the premium segment in the U.S. grew again. The trading-up phenomenon is still increasing.”
Chocolate makers are grappling with slowing U.S. sales as Americans increasingly turn their backs on sugar. Hershey Co. earlier this month announced plans to cut 15 percent of its workforce. Lindt is adjusting Russell Stover’s portfolio and will introduce fewer seasonal products and revamped sugar-free items this year.
The company said it expects organic sales growth in 2017 similar to last year’s 6 percent increase, as well as further operating margin improvement. Lindt has a long-term target for annual organic sales growth of 6 percent to 8 percent, with its operating profit margin widening 20 to 40 basis points.
Lindt said it’s raising its dividend 10 percent to 880 francs per registered share. The stock was little changed at 65,480 francs.