Company Reports

The substantial price premium that Lindt & Spruengli commands over mainstream brands—estimated to be around 100% in the United States and the United Kingdom and around 25% in large European markets—together with its leading market share in key regions signals the presence of durable competitive advantages from brand intangible assets in the form of brand strength. This has led us to award Lindt a wide moat rating, supported by the company’s ability to maintain its premium positioning over the long term by pricing in line with inflation and peers, and its focus on a segment of the chocolate market that has experienced somewhat stable competition and is largely shielded from the threat of private label.

Wide-moat Lindt&Spruengli delivered strong 2023 results with EBIT of CHF 813 million—9% ahead of the prior year, further margin improvement to 15.6% from 15%, and EPS of CHF 2,900, which are broadly aligned with our estimates. Most of the profitability improvement is attributable to price increases to compensate for rising raw materials costs, especially the price of cocoa, which almost doubled over 2023 and reached a historic high at the end of the year. Despite the global market slowdown, all regions contributed to top-line and profit growth and volume/mix remained positive. We maintain our fair value estimate of CHF 94,000. At current levels, shares look overvalued.

Wide-moat Lindt & Spruengli reported 2023 organic sales growth of 10.3%, ahead of expectations, and indicated that operating margin should come in at 15.5%, slightly ahead of guidance and the 15.4% in our forecast. As expected, the weakening of the U.S. dollar and the euro compared with the Swiss franc weighed heavily on the top-line result, with 2023 reported sales growth of 4.6%, compared with 4.3% in our forecast.

The substantial price premium that Lindt & Spruengli commands over mainstream brands—estimated to be around 100% in the United States and the United Kingdom and around 25% in large European markets—together with its leading market share in key regions signals the presence of durable competitive advantages from brand intangible assets in the form of brand strength. This has led us to award Lindt a wide moat rating, supported by the company’s ability to maintain its premium positioning over the long term by pricing in line with inflation and peers, and its focus on a segment of the chocolate market that has experienced somewhat stable competition and is largely shielded from the threat of private label.

Wide-moat Lindt & Spruengli, or Lindt, delivered strong first-half results, with 10.1% organic sales growth and a record EBIT margin of 12.2% (structurally lower compared with the 2022 full-year margin due to gifting seasonality but an almost 300-basis-point improvement compared with the same period of last year). However, reported sales growth only amounted to 4.7% as the strong Swiss franc weighed on the top-line result.

The substantial price premium that Lindt & Spruengli, or Lindt, commands over mainstream brands—estimated to be around 100% in the U.S. and the U.K., and around 25% in other large European markets—together with the company’s leading market share in key regions signals the presence of durable competitive advantages from brand intangible assets in the form of brand strength. This has led us to award Lindt a wide moat, supported by the company’s ability to maintain its premium positioning over the long term by pricing in line with inflation and peers, and its focus on a segment of the chocolate market that has experienced somewhat stable competition and is largely shielded from the threat of private label.

Lindt&Spruengli's, or Lindt's, 2022 annual result offered little surprise on the whole, with the wide-moat stock delivering EBIT of CHF 750 million and EPS of CHF 2,400, broadly aligning with our estimates. Still, with the North American operating margin improvement tracking ahead of our prior expectations, we increase our fair value estimate by 2.5% to CHF 84,000. A time value of money adjustment also contributes to our upwardly revised valuation. Lindt shares continue to screen expensively, trading at a price/fair value estimate of 1.21.

The substantial price premium that Lindt & Spruengli, or Lindt, commands over mainstream brands—estimated to be around 100% in the U.S. and the U.K., and around 25% in other large European markets—together with the company’s leading market share in key regions signals the presence of durable competitive advantages from brand intangible assets in the form of brand strength. This has led us to award Lindt a wide moat, supported by the company’s ability to maintain its premium positioning over the long term by pricing in line with inflation and peers, and its focus on a segment of the chocolate market that has experienced somewhat stable competition and is largely shielded from the threat of private label.

Lindt & Spruengli, or Lindt, reported full-year 2022 sales in line with our expectations, with organic sales growth of 10.8%—slightly above the upper end of its guidance of 8%-10%. The strength of the Swiss franc relative to the euro and the pound sterling once again hurt reported sales growth (negative 2.4% for the full year). Lindt reaffirmed its EBIT margin guidance of about 15% despite broad inflationary pressures in the second half. Consequently, Lindt stands ready to report full-year 2022 EBIT of about CHF 750 million. Our long-term expectations for the wide-moat stock remain unchanged as does our fair value estimate of CHF 82,000. Lindt shares continue to screen expensively, trading at a 2023 P/E of 39 times and a price/fair value estimate of 1.21. Lindt will deliver its 2022 result in full on March 7, 2023.

We initiate coverage of Swiss premium chocolate manufacturer Lindt & Spruengli, or Lindt, with a wide moat rating, a standard capital allocation rating, and a CHF 82,000 fair value estimate. We also view uncertainty as Medium, reflecting Lindt’s status as a pure-play on premium chocolate with no diversification and significant currency exposure (less than 10% of sales are generated in Switzerland).

The substantial price premium that Lindt & Spruengli, or Lindt, commands over mainstream brands—estimated to be around 100% in the U.S. and the U.K., and around 25% in other large European markets—together with the company’s leading market share in key regions signals the presence of durable competitive advantages from brand intangible assets in the form of brand strength. This has led us to award Lindt a wide moat, supported by the company’s ability to maintain its premium positioning over the long term by pricing in line with inflation and peers, and its focus on a segment of the chocolate market that has experienced somewhat stable competition and is largely shielded from the threat of private label.

We are no longer providing equity research on the following companies: Chr. Hansen, Tate & Lyle, Kerry Group, Glanbia, Chocoladefabriken Lindt & Spruengli, and Geox. We provide broad coverage of more than 1,400 companies across more than 140 industries and adjust our coverage as necessary based on client demand.

Narrow-moat premium chocolate manufacturer Lindt & Spruengli, or L&S, reported in-line 2016 results with organic sales growth of 6.0% and a 20-basis-point EBIT margin increase, at the bottom end of its long-term guidance. Sales, EBITDA, and EBIT were all within 1% of our estimates. While our estimates are broadly unchanged, we are cutting our fair value estimate by 3% to CHF 57,000, reflecting a drop in the pension surplus. Our narrow moat rating is unchanged.

Lindt & Spruengli, or L&S, is a key player in the premium chocolate segment, as distinct from the mass market. The company commands a significant price premium of 100%-200% over mass-market peers in the United States, though this is lower (25% or so) in Europe, where the market is already more premium. L&S has a limited presence in emerging markets (6% of sales).

Lindt & Spruengli reported a solid recovery in sales in the second half of 2016, when organic sales growth increased to an estimated 7.1%, up from 4.4% in the first half. Through both halves, sales were depressed by a weak North American chocolate market, coupled with portfolio rationalisation at newly acquired Russell Stover. Currencies contributed positively to sales in 2016, for the first time since 2012. We are not making any changes to our narrow moat rating or our CHF 59,000 fair value estimate.

Lindt & Spruengli reported reassuring first-half 2016 results. Organic sales growth of 6.6% came in line, excluding a portfolio adjustment at Russell Stover, a U.S. company L&S acquired two years ago, and operating profit grew 9%, implying a 20-basis-point increase in the margin. We are increasing our fair value estimate by 5% to CHF 59,000, and we are maintaining our narrow moat and stable moat trend ratings.

Lindt & Spruengli, or L&S, is a key player in the premium chocolate segment, as distinct from the mass market. The company commands a significant price premium of 100%-200% over mass-market peers in the United States, though this is lower (25% or so) in Europe, where the market is already more premium. L&S has a limited presence in emerging markets (6% of sales).

Narrow-moat Lindt & Spruengli published 2015 results that were exactly in line with our expectations, showing 7.1% organic growth (already announced in January) and a 20-basis-point improvement in the EBIT margin to 14.1%. We are not making any changes to our fair value estimate of CHF 56,300, or to our narrow moat and stable moat trend ratings.

Narrow-moat Lindt & Spruengli reported disappointing full-year 2015 sales, implying a sharp slowdown in growth between the two halves of the year, which is imputable to tougher trading conditions. After hitting 9.4% in the first half, organic sales growth slumped to around 5% in the second half. Full-year growth of 7.1% is still within the company's forecasts of 6%-8%.

Lindt & Spruengli, or L&S, is a key player in the premium chocolate segment, as distinct from the mass market. The company commands a significant price premium of 100%-200% over mass-market peers in the United States, though this is lower (25% or so) in Europe, where the market is already more premium. L&S has a limited presence in emerging markets (6% of sales).