Swiss chocolate maker Lindt & Spruengli (LISP.S) said continued improving consumer sentiment in Europe and buoyant demand in North America lifted underlying sales by 8.7 percent in the first half of the year, a pace of growth it will not be able to maintain throughout 2013.
The maker of gold-foil wrapped Easter bunnies and Lindor balls said in a statement on Tuesday the cold and rainy spring weather also helped to boost chocolate consumption.
"All chocolate makers have benefited from better consumer sentiment and cold weather, but we were able to grow about twice as fast as the market," Chairman and Chief Executive Ernst Tanner told Reuters in a telephone interview, adding the group's focus on marketing, its product positioning and relations with trade partners had helped it gain share across all markets.
The weather effect won't last into the second half when comparables get tougher, meaning growth will slow to 6-8 percent in the full year, Lindt said, confirming its long-term growth target.
Chocolate makers have seen demand pick up recently, helped by the economic recovery in the world's biggest chocolate market, North America, and increasingly affluent Asian consumers discovering their taste for sweets.
Rival chocolate maker Hershey (HSY.N) reported an 18 percent jump in quarterly earnings on lower commodity costs and raised its outlook for the year, while Mondelez' (MDLZ.O) flagship chocolate brands posted double-digit sales increases in the second quarter.
Vontobel analyst Jean-Philippe Bertschy said Lindt's sales growth was "above all other global players" and the targeted margin improvement at the upper end of its long-term target range of 20-40 basis points should be "rather easy to achieve".
Lindt shares, which have gained about 25 percent so far this year, rose 2.2 percent at 0549 ET, outperforming a 0.6 percent weaker European food sector index .SX3P.
"Consumer sentiment is better in Germany and the UK, but not yet in France and southern Europe," Tanner said. "The situation is also really improving in North America."
Lindt reported a 5.8 percent rise, up from 4 percent in the year-ago period, in organic sales in Europe, which accounts for 65 percent of its sales, and a 12.7 percent rise, up from 6.7 percent, in North America, where it has a quarter of sales and expects double-digit growth in the second half, Tanner said.
Germany, France, the UK, and Switzerland achieved "good to very good growth rates", helped by new products, such as its "Hello" chocolate range for younger customers it will soon roll out worldwide. A sales decline in crisis-hit Italy was halted.
The improvement was driven by volumes as "no relevant price increases could be enforced in the current somewhat deflationary environment", but promotional activities at retailers stabilized at a high level in the first half, Lindt said.
Tanner said Lindt would continue to open 10-15 new stores each year. "They serve different purposes: in emerging markets, they help increase the notoriety of the brand and here in the West they also generate sales and profits."
Overall sales rose to 1.132 billion Swiss francs ($1.22 billion), just ahead of estimates in a Reuters poll. Net and operating profits jumped some 40 percent, due to lower material costs, higher volumes and efficiency gains.
Cocoa bean prices, which hit an eight-month high earlier this month on supply concerns in West Africa, were relatively stable in the first half, but those of cocoa butter, milk and nuts increased, the company said. "Cocoa grindings are stable and the outlook for the crop is good," Tanner said.
Lindt said it will invest more than 200 million francs this year in its production sites to keep up with volume growth. "We work 24/7 shifts in almost all our factories at the moment," Tanner said, adding there were currently no plans for acquisitions given the lack of targets or a new share buyback.
ZKB analyst Patrik Schwendimann said the premium on Lindt shares - the participation certificate trades at 25.1 times forward earnings versus 24 times for Hershey - was justified given its strong sales and profit dynamics.
