Chocoladefabriken Lindt & Spruengli AG ((CH:LISN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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In the recent earnings call, Chocoladefabriken Lindt & Sprüngli AG showcased a robust performance with strong organic growth, notably in Europe, and successful product launches such as the Dubai Style Chocolate. However, the company also faced challenges with negative free cash flow, increased net debt, and mixed results in North America, which tempered the overall positive sentiment.
Strong Organic Sales Growth
Lindt & Sprüngli reported an impressive organic sales growth rate of 11.2% for the first half of 2025, exceeding their initial guidance of 7% to 9%. This achievement underscores the company’s ability to capitalize on market opportunities and drive sales momentum.
Record Performance in Europe
The Europe segment was a standout performer, with organic sales surging by 17.7%. Key markets such as the Nordics, Benelux, Central Eastern Europe, France, and Austria contributed significantly to this record growth, highlighting the brand’s strong foothold in the region.
Dubai Style Chocolate Success
The introduction of the Dubai Style Chocolate proved to be a strategic success, enhancing brand awareness and attracting new consumer demographics. This product alone contributed between 1% and 2% to the company’s total sales, marking it as a pivotal innovation.
Retail Division Expansion
Lindt’s global retail division experienced a remarkable growth of 22.1%, supported by low price elasticity. The expansion of the store network to 590 locations worldwide played a crucial role in this success, reflecting the company’s strategic focus on retail growth.
Recognition in Kantar BrandZ Ranking
For the first time, Lindt was recognized as the world’s most valuable chocolate brand in the 2025 Kantar BrandZ ranking. This accolade underscores the brand’s global prestige and consumer trust.
Negative Free Cash Flow
Despite the positive sales growth, Lindt reported a negative free cash flow of CHF 80 million. This was primarily due to increased inventory values driven by higher cocoa prices, posing a financial challenge for the company.
Increased Net Debt
Net debt rose significantly from CHF 880 million at the end of 2024 to CHF 1.4 billion. This increase was attributed to lower free cash flow and the continuation of the share buyback program, indicating a need for strategic financial management.
Mixed Performance in North America
In North America, Lindt experienced a modest organic sales growth of 3.6%, which fell short of expectations. This was largely due to weak consumer sentiment, highlighting the challenges in this key market.
Impact of Cocoa Price Volatility
The volatility in cocoa prices impacted Lindt’s EBIT margin, although the company managed to partially offset this through efficiency gains and price increases. This demonstrates Lindt’s resilience in navigating cost challenges.
Forward-Looking Guidance
Looking ahead, Lindt & Sprüngli has raised its full-year organic sales growth guidance to 9% to 11%, reflecting confidence in continued market strength. The company also anticipates an EBIT margin increase at the lower end of 20 to 40 basis points, despite the challenges posed by cocoa price volatility and increased net debt.
In conclusion, Lindt & Sprüngli’s earnings call painted a picture of a company achieving strong growth and strategic success, particularly in Europe and through innovative products like the Dubai Style Chocolate. However, financial challenges such as negative free cash flow and increased net debt present areas for careful management. The company’s forward-looking guidance suggests optimism for sustained growth, making it a compelling watch for investors and market enthusiasts.