Chocolate products maker Lindt & Sprüngli AG posted improved earnings in 2017 on higher-than-average growth in Europe and lower raw material prices.
The company reported net income attributable to shareholders of CHF450.7 million, or CHF1,880.6 per share, for 2017, up from CHF419.7 million, or CHF1,766.8 per share, in 2016. The S&P Capital IQ consensus GAAP EPS estimate was CHF1,846.5.
Sales rose 4.8% year over year to a record CHF4.09 billion, compared to CHF3.90 billion in 2016. But organic sales growth was 3.7%, below the range of the long-term strategic growth target because of modest performance in the U.S.
The group's operating profit increased 5.8% to CHF595.4 million in 2017 from CHF562.5 million in the previous year. Operating profit at the company's Europe segment increased to CHF345.1 million in 2017 from CHF301.4 million the previous year as third-party sales increased 8.4%. Sales in Germany were up 11.2% to CHF611.3 million from CHF549.9 million.
The NAFTA segment's operating profit declined to CHF 166.5 million from CHF 197.7 million. Sales in the region fell 1.8% from a year earlier due to a difficult retail environment. Sales in the U.S. decreased 4.9% to CHF 1.40 billion from CHF 1.47 billion, but the company's Canada segment achieved double-digit growth during the year.
Operating profit for the rest of the world segment increased to CHF83.8 million from CHF63.4 million and sales grew 14.8%.
"In addition to the more mature chocolate markets, it is increasingly the new growth markets such as Brazil, China, Japan, Russia and South Africa that are driving our dynamic performance," said CEO Dieter Weisskopf.
Lindt expects organic growth to be in the range of 6% to 8% and an improvement in operating margin of 20 to 40 basis points in the mid- to long-term. It expects organic growth of around 5% for 2018 and its operating profit margin to increase within its long-term strategic range.
The company's board also announced a share buyback program of up to CHF500 million for registered shares and participation certificates. The program will run from March 12, 2018, to July 31, 2019.
The board said Petra Schadeberg-Herrmann will not stand for re-election as a board member at its 2018 annual general meeting. Silvio Denz will replace her as a candidate.
As of March 6, US$1 was equivalent to CHF0.94.
