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NEWS

Lindt’s pralines sweeten 2023 sales despite cocoa costs

By Paolo Laudani and Marleen Kaesebier

(Reuters) -Swiss chocolate maker Lindt & Spruengli reported a 10.3% rise in 2023 organic sales on Tuesday, as the post-COVID recovery in travel generated demand for higher value products such as pralines.

Lindt’s shares rose by around 5%, on track for their biggest daily increase since July 2022.

The maker of Lindor balls and gold foil-wrapped teddy bears attributed most of the growth to higher prices used to offset elevated raw material costs, especially for cocoa.

Overall sales reached 5.20 billion Swiss francs ($6.06 billion) in 2023, up 4.6% when accounting for currency effects. This was slightly above analysts’ forecasts of 5.18 billion, according to LSEG data.

“Lindt blew it out of the park,” Kepler Cheuvreux analyst Jon Cox said. He said the market had braced for a miss “given weaker confectionery volumes and reports of a soft sell out at retailers during the holiday season.”

Cox added the company benefited from its Lindor Pralines and innovation in the premium segment.

Lindt said Lindor Pralines, its most important product line, recorded double-digit percentage growth in all regions last year.

“Within the product mix, the trend towards gifting, pralines, and hollow figures continued,” it said, adding the group was benefiting from the higher added value of these products.

Lindt said customer presence in its stores and travel retail business also increased, boosted by growth in tourism after the end of COVID-related restrictions.

Vontobel analyst Jean Philippe Bertschy said Lindt “once again demonstrated its strong pricing power” thanks to its premium positioning and high exposure to gifting and pralines.

For 2024, the Zurich-based chocolatier targets organic sales growth of 6-8%, and aims to increase its operating profit margin by 20-40 basis points.

It expects to report an operating profit margin of around 15.5% for 2023 when it publishes full annual results on March 5.

($1 = 0.8587 Swiss francs)

(Reporting by Paolo Laudani and Marleen Käsebier; editing by Milla Nissi and Barbara Lewis)

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