Lindt suspends its operations in Russia, remains confident on growth

"We have eight stores and about 125 employees in Russia​," said Chief Executive Dieter Weisskopf, “we re-evaluated our business activities in Russia and decided to temporarily close our shops with immediate effects and suspend all of our deliveries to Russia​.

“Our local employees will continue to receive our support and we will remain in close contact with them​.”

The chocolate maker had claimed  it would continue to operate in Russia when it released its 2021 financial results at the company’s headquarters in Kilchberg on Lake Zurich on Tuesday, saying “we keep operating and supplying as far as that is possible just like other food companies​.”

Domino effect

But when multinationals, including PepsiCo, Nestlé and Unilever, announced withdrawals in a domino effect from Russia on Wednesday, Lindt said it has decided to temporarily shutter its stores.

Regarding the financial impact on the company, Weisskopf said Russia and Ukraine accounted for less than 1% of group sales and he did not expect a big impact on business from Russia’s invasion of its neighbour.

Lindt said in its 2021 Results, it expects to grow sales by 6-8% this year and raised its mid-term sales growth outlook to 6-8%, from 5-7% previously, reporting said growth can be expected in at the upper end of that range this year.

Higher packaging and energy costs means the company would raise prices by 2-3% in response to the current inflationary environment.

Net profit

Net profit rose 53% to 490.5 million Swiss francs ($530m), ahead of an estimate of 474.8 million francs. Lindt said it proposed a 9% higher dividend of 1,200 francs per share, slightly below the poll estimate.

Lindt’s operating margin in North America should improve this year to 9-10%, from 7.7% last year, said Martin Hug, its Chief Financial Officer.

Supply chain bottlenecks at production sites of its Russell Stover brand in North America were being addressed and the brand’s sales were expected to return to growth this year, he told analysts on an earnings call.

Lindt’s operating margin rose to 14.1% last year with expectations of 15% in 2022.