Chocoladefabriken Lindt & Sprüngli AG (LDSVF) Q4 2024 Earnings Call Transcript

2025-03-04 11:06:46 ET

Chocoladefabriken Lindt & Sprüngli AG (LDSVF)

Q4 2024 Earnings Conference Call

March 04, 2025 08:30 AM ET

Company Participants

Adalbert Lechner - Chief Executive Officer

Martin Hug - Chief Financial Officer

Conference Call Participants

Patrik Schwendimann - ZKB

Joern Iffert - UBS

Ed Hockin - JPMorgan

Antoine Prevot - Bank of America

Jon Cox - Kepler Cheuvreux

Andreas von Arx - BAADER Helvea

Warren Ackerman - Berenberg

Bingqing Zhu - Redburn Atlantic

Presentation

Adalbert Lechner

Welcome to the Presentation of the Full Year Results 2024 of the Lindt & Sprüngli Group. I hope you had a good arrival here. I understand that half of you made some personalized gold panels. If this is true, I hope you had fun. It is our chocolate area, which is very popular here also with the visitors of our home of chocolate. And I can see that not only children are having fun with decorating chocolate and producing some nice gold bunnies.

Well, I will dig into the agenda. I will tackle shortly the highlights of the 2024 results. Then I will address the regional performance of the group, then I will hand over to Martin Hug, our CFO, for the financial results in detail and the outlook on the sustainability progress that we made, then I will give you a short outlook for the -- for our future guidance, and then we are here for you two of us for a Q&A session.

First of all, let me say that we are super happy that we can present good results for a year, which was really in a challenging environment. And I think you have all pursued what was going on in the chocolate market with an ever-increasing cocoa price. It came down nicely. Everyone expected that this would continue and then do all of our surprise, it inclined again and is at record levels at the moment.

So, -- and in this rounding to achieve the results that we present is really a demonstration of the dedication and the resilience of our teams, and I'm grateful for this you know that we have a very experienced team out there. We have huge continuity in our management. And I think this pays off in a year like this.

7.8% organic growth was published already in January, 16.2% EBIT, a 16% point increase in a year with a dramatic impact from raw material prices, I think, is an achievement. We are proud that volume was growing substantially. The volume mix in this case is even slightly misleading because we had a negative mix in this year. So, our volume was growing even stronger than the 1.5%.

And an improvement in free cash flow for more than 30% also shows that we navigated pretty well through this challenging year. We also made substantial improvements in our sustainability efforts, 84% of our cocoa is sourced through sustainable or responsible sourcing programs and improvement of 12 percent points, 82.2% a of all raw materials, including packaging material is sourced by a responsible sourcing program, an improvement of 24 percent points. And for all of these, we were awarded by the most reputated auditing company for ESG programs, EcoVadis with a silver medal. So, we find ourselves within the top 1% for sustainable procurement in the industry.

91.4% of our packaging is already designed to be recyclable today. So, here, we are ahead of our target, but we will not stop and we'll continue to change packaging material to be recyclable.

What are the global chocolate market developments and trends in 2024? We saw volumes declined by 3% globally. With the price increases, the value increased in the area of 4%. We outperformed the market in both dimensions. So, we were gaining market share in volume and in value, actually being the only big chocolate company with a positive volume performance also in the offtake figures.

Next to us, the big winner was private label. So, we see two behaviors from consumers, those who are really burdened by the high prices and say, I migrates to private label or those who decide and say, I will consume less and go for better quality. This is an ongoing trend. I explained before in individual talks. It's with the aging population. With the increasing middle-class in many economies, we see an ongoing premiumization in the market.

The cocoa price inflation, you all know, what is driving this inflation. It is on the one side, weather phenomenon. It is the climate change in general, you can say. So we see more droughts or more heavy rain occasions, which are not good for the plantations. And at the same time, we have a disease, a virus disease, the small and shoot disease, which is spreading continuously in West Africa and is impacting the crops that are achievable....

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