Lindt & Spruengli has reported a rise in annual profit thanks to price hikes offsetting increased production costs, it was reported on Tuesday.
The Swiss chocolate maker has turned a profit by passing on higher ingredient costs to customers while maintaining volumes.
The rise comes during a slowdown in the global chocolate market as adverse weather and tree illness impacts cocoa growth.
Issues with farming has caused cocoa prices to reach record highs, causing an expected harvest deficit.
This will then put further pressure on the chocolate market.
Sales Volumes
As the surge in prices trickles down to consumer level, brands such as Hershey's and Cadbury maker Mondelez have reported lower sales volumes.
This is due to increased prices deterring customers already trying to cut back on spending.
Lindt, which makes Lindor truffles, reported a 17.9% rise in net income for the year to 31 December.
This represents 671.4 million Swiss francs, which is broadly in line with the 670 million Swiss francs forecast by analysts at Zuercher Kantonalbank.
The luxury chocolate maker already reported a 10.3% rise in organic sales for the year in January.
This was due to the post-covid recovery in travel generating demand for higher-value products.
‘Strong Pricing Power’
Vontobel analyst Jean-Philppe Bertschy said in a note, “Lindt once again demonstrated its strong pricing power in FY23 thanks to its global premium positioning with high exposure to gifting and pralines.”
The company achieved an operating margin of 15.6% for 2023, up from 15% the previous year.
Lindt also proposed a 100 franc rise in its dividend to 1,400 francs per registered share.
Chief executive of Lindt Adalbert Lechner gave guidance for mid-single digit price hikes for 2024.
The company is reportedly aiming for organic growth of 6% to 8% and an operating margin of 20 to 40 basis points.
Read More: Hershey And Cadbury Chocolate Makers Plan Price Hikes
