Lindt : 2024 Short Report

About this update from Chocoladefabriken Lindt & Spruengli Ag

Short Report 2024 Contents To read the full 2024 annual and sustainability reports, scan the code or visit: lindt-spruengli.com/investors/ financial-reporting/publications Management eport Letter to Shareholders 2 Financial Statements Consolidated Balance Statement 8 Consolidated Income Sheet Consolidated Statement of 10 Comprehensive Income Consolidated Cash Flow Statement 11 Five- ear Overview 13 Sustainability eport Sustainability at a glance 14 Focus Chapter 180 years Lindt & Sprüngli 16 Information Dates and imprint 41 Letter to Shareholders rnst anner Executive Chairman of the Board of Directors of the Lindt & Sprüngli Group Adal ert echner CEO of the Lindt & Sprüngli Group mmitment t i est a it Despite a challenging environment, Lindt & Sprüngli achieved solid financial results, exceeding its EBIT margin guidance for the financial year. In 2024, Lindt & Sprüngli grew in both value and volume, positioning it as one of the fastest-growing chocolate manufacturers and thereby gaining market share globally. 2 Letter to Shareholders continued ear Shareholders The Lindt & Sprüngli Group looks back on a challenging year characterized by record-high cocoa costs, substantial price increases, and weakened consumer sentiment. The cocoa market was volatile in the reporting year, with cocoa prices remaining at a historic high by the end of 2024. Offsetting the high cocoa costs forced us to adjust our pricing, which will be further re uired in 2025. Despite cost pressure, we stay committed to the high uality of our premium products. e continued to invest in our infrastructure and production network. According to market research data, the global chocolate market grew by 4.7 in value partly driven by manufacturers price increases while shrinking by -3.0 in volume in 2024. It is, therefore, encouraging that we continued to grow both in value and volume in 2024, making Lindt & Sprüngli one of the fastest-growing chocolate manufacturers, hence growing market share in volume and value. In this context, volume/mix grew by 1.5 . During the second half of 2024, consumer sentiment recovered slightly - even though still on a low level. e gained market share in almost all markets and noticed a shift in consumer behavior from uantity to uality and towards premium chocolate. This development offers us opportunities as a premium manufacturer, which we will continue to seize. In 2025, we will celebrate our 180 th anniversary, from our beginnings in Switzerland, then expanding to Europe, North America, and the est of the orld. Our impressive history shows our ability to spot and respond to trends as they are developing, thanks to a deep understanding of our consumers. Our history is also a testimonial to our robustness and resilience despite challenging market conditions. In our Focus chapter, we have compiled the most important milestones and most significant characters from 180 years of Lindt & Sprüngli. Strong organic growth across markets In 2024, Lindt & Sprüngli grew organically by 7.8 to CHF 5.47 billion previous year: CHF 5.20 billion . Sales growth in Swiss Francs was 5.1 . Currency effects impacted the result by -2.7 , mainly due to the weaker S dollar and Euro. All regions contributed to sales growth, especially Europe , with substantial organic sales growth of .5 , and the est of the orld , with double-digit organic sales growth of 10.0 . Organic sales growth in North America was solid at 5.0 despite a subdued chocolate market characterized by declining volume and flat value growth. Performance in North America was particularly affected by a shift of Easter orders into 2023, reflecting the earlier Easter date in 2024 and the de-stocking by major retail customers in the first half of 2024. Excluding these one-off effects, the organic growth rate would have been 6.0 . Lindt & Sprüngli's operating profit EBIT increased by 8.7 year-on-year to CHF 884.2 million, with an EBIT margin of 16.2 previous year: CHF 813.1 million, EBIT margin: 15.6 . Continued tight cost control, efficiency gains, process optimization, price increases to offset higher cocoa costs, and a one-time impact from a successful S legal case contributed to the increased profitability. This resulted in a net income of CHF 672.3 million previous year: CHF 671.4 million with a return on sales of 12.3 . ithout the one-time tax impact in 2023, net income would have increased substantially. Free cash flow came in at CHF 635.3 million, representing a solid free cash flow margin of 11.6 . 3 Letter to Shareholders continued Investments in future growth Those strong results allowed us to increase our investments by 8.1 to CHF 313 million, mainly in infrastructure development and new stores. The expansion of our cocoa mass factory in Olten, Switzerland - our most significant large- scale project - opened as planned in May 2024 to ensure the sustainable supply of our European production sites. The capacity expansion of the Lindt & Sprüngli production site in Stratham, SA, is progressing as planned. Furthermore, we invested in an improved Enterprise esource Planning E P system, which is rolling out in the first subsidiaries in 2025, to better coordinate processes across the group, improve data uality, and better inform decision-making. In July 2024, we opened the Lindt & Sprüngli Asia Pacific Logistics and Packaging Center in Shanghai, China. ith this new supply chain hub, we can store our products for Asia Pacific locally in a temperature-controlled warehouse and pack the final product on-site based on customer orders. The resulting speed of delivery, product availability, and product freshness will improve customer service in local markets and increase competitiveness in the region. Strong balance sheet and dividend increase Our balance sheet remained robust in 2024. As at December 31, 2024, the e uity ratio stood at 52.8 previous year: 54.2 , which allows us to share the company s success with our shareholders by increasing the dividend for the th time in a row. At the 127th Annual General Meeting on April 16, 2025, the Board of Directors will propose a distribution of CHF 1,500 previous year: CHF 1,400 per registered share and CHF 150 previous year: CHF 140 per participation certificate. ith our strong balance sheet, the Board of Directors decided at its July 22, 2024, meeting to start a new buyback program for Lindt & Sprüngli registered shares S and participation certificates PC , up to CHF 500 million. The buyback started on August 2, 2024, and will last until July 31, 2026, at the latest. A separate trading line was opened for the buyback on the SI Swiss Exchange AG, for the registered shares and the participation certificates. The Board of Directors intends to propose a capital reduction by canceling the repurchased registered shares and participation certificates at future Annual General Meetings. apid expansion in the retail business Global etail, where we operate stores under the Lindt, Ghirardelli, and ussell Stover brands made significant gains in the reporting year, with substantial double-digit growth from physical retail stores in all markets and overproportioned growth in our e-shops. In Global etail, sales in our own stores and e- shops developed strongly in all markets with an overall 16.7 growth. Over the year, we expanded our retail network to 568 stores by the end of 2024 previous year: 523 stores . The Global Travel etail business, where Lindt products are sold in duty-free shops, grew by .3 in the reporting year, particularly in the APAC, MEIA, and LATAM regions. " e ained mar et s are in m st mar ets and e n ti ed a s i t in ns mer e a i r r m antit t a it is de e pment ers s pp rt nities as a premi m man a t rer i e i ntin e t sei e rnst anner ecutive Chairman o the oard o irectors o the indt Spr ngli Group Continued growth in all regions The results for the three regions reflect the group's solid 2024 figures, with continued organic growth and market share gains. Europe posted the highest sales with CHF 2.5 billion previous year: CHF 2.41 billion , growing organically by an excellent .5 . Lindt & Sprüngli achieved double-digit growth in many European markets, especially in the K, Central Eastern 4 Letter to Shareholders continued Europe, France, and Benelux. Other core markets like Germany, Italy, and Switzerland contributed to the results with solid mid-single-digit growth. In 2024, North America increased sales to CHF 2.15 billion previous year: CHF 2.11 billion , an organic growth of 5.0 . Performance in North America was influenced by a shift of Easter orders into 2023, reflecting the earlier Easter date in 2024 and the de-stocking by major retail customers in the first half of 2024. Excluding these one-off effects, the organic growth rate would have been 6.0 . As expected, our business in North America gained momentum in the second half of 2024, despite a weak chocolate market with a declining volume development and flat value. Lindt & Sprüngli in the SA and Canada posted solid single-digit growth and gained further market shares. Ghirardelli also showed a strong performance, growing high single digits and gaining market share as well. ussell Stover faced a slight decline in sales in a challenging market. est of the orld achieved organic sales growth of 10.0 to CHF 0.72 billion previous year: CHF 0.68 billion , with excellent development in core markets like Brazil, Japan, and China at double-digit growth rates. Business in Australia fell slightly short of expectations due to reduced promotional activities with a large retail partner earlier in the year, which we expect to normalize again in 2025. In 2024, our subsidiary in Chile became operational and celebrated the opening of its first two stores. 2024 also saw the opening of the first Lindt stores in Mexico and New Zealand. Core products and innovation drive growth In 2024, the trend toward gifting, pralines, and hollow figures continued. Key growth drivers were Lindor and Excellence with strong organic growth and market share gains in all regions. Our innovation pipeline remains robust, with numerous new product launches. Product innovations included the rollout of the Excellence Paillet range, Excellence Pistachio, and new Lindor flavors such as Tiramisu. As consumers are increasingly willing to spend more on personalized and premium gifts, including seasonal special editions and distinctive gift boxes, we have introduced various packaging options for Lindor at different price points. To respond to the growing trend towards textured foods, we launched the Choco afer in selected pilot markets in 2023 and rolled it out in various other markets in 2024. The launch of the crispy Choco afer was so successful that we are already expanding production capacity after its first full year on the market. At the end of 2024, we introduced our handmade Lindt Dubai Chocolate in a limited edition in our own retail stores. The overwhelming success of this flavor has prompted us to develop the Lindt Dubai Style Chocolate with a similar recipe for rollout in wholesale. " Despite st press re e sta mmitted t t e i est a it r premi m pr d ts and ntin e t in est in r rands and pr d ti n net r Adal ert echner C o the indt Spr ngli Group Measurable achievements in sustainability In 2024, Lindt & Sprüngli continued to make progress towards its sustainability targets. Our Sustainability Plan paved the way for some measurable achievement in the face of industry- wide challenges. Building on our recognized responsible sourcing endeavors, we continued to advance our efforts to reduce negative social and environmental impacts. By the end of 2024, we were sourcing more than 82 of our priority raw and packaging materials through responsible sourcing programs, meeting our responsible sourcing target one year ahead of schedule. For cocoa, this figure was above 84 . 100 of our cocoa beans are already being sourced through the Lindt & Sprüngli Farming Program or other responsible sourcing programs. e aim to reach 100 for all our cocoa products, including butter, powder, and chocolate mass, by the end of 2025. In 2024, we made 5 Letter to Shareholders continued significant progress across the Group in developing our decarbonization roadmap, which aims to guide us to our goal of net zero greenhouse gas emissions by 2050. Decarbonization plans submitted by subsidiaries were consolidated at Group level. The key focus areas remain cocoa, dairy, packaging, transportation, and energy. In addition, we completed our Climate isk Assessment. Sustainability is a core component of our business strategy. Hence, we have already been reviewing future priorities related to our sustainability strategy. Since most of our targets will come to completion by the end of 2025, we are currently evaluating these to further develop and strengthen our approach, with the objective of defining a clear path for the years beyond 2025. Please refer to our Sustainability eport 2024 for a detailed overview of our sustainability targets and actions in 2024. Cocoa costs drive price adjustments The continuously record-high prices for our primary raw material, cocoa, remained the biggest challenge in 2024, while prices for other raw materials like sugar, milk or hazelnuts, and packaging have remained stable. Even though the El Ni o weather phenomenon has subsided over the year, diseases affecting cocoa trees, such as the Swollen Shoot Virus, continue to lead to significant crop failures, thereby keeping cocoa prices at a very high level. e have partly offset high cocoa costs through efficiency gains and tight cost control. To further compensate for the high costs for cocoa, we have to adapt our pricing group-wide again in 2025. Outlook e are entering the new financial year with strong momentum. By consistently reinforcing the value of our premium products, we aim to increase household penetration, gain market share, and increase visibility in our wholesale and retail channels. For 2025, we expect the trend from uantity to uality consumption of premium chocolates to continue, supporting our long-term strategy as a market leader in this category. Conse uently, we will continue to invest in our infrastructure and innovation pipeline to meet future growth. Based on the necessary price adjustments, Lindt Sprüngli expects increased organic growth of 7- in 2025 and an improved operating profit margin of 20-40 basis points. For the years after 2025, the Group continues to reiterate its strategic medium- to long-term organic sales growth targets of 6-8 with an improvement in the operating profit margin of 20- 40 basis points per year. e extend our sincere gratitude to all the employees of the Lindt & Sprüngli Group. Their dedication is essential to our success. They have navigated the many challenges of the past year with remarkable team spirit. e are proud of their passion and unwavering commitment to delighting our consumers with chocolate. e want to thank you, our shareholders, for your trust. e look forward to welcoming many of you at the upcoming Annual General Meeting, which will take place on ednesday, April 16, 2025, at our traditional venue, the Kongresshaus in Zurich. rnst anner ecutive Chairman o the oard o irectors o the indt Spr ngli Group Adal ert echner C indt Spr ngli Group 6 Financial eport ns idated a an e eet CHF million ecem er December 31, 2023 Assets Property, plant and e uipment 1,506.4 1,386. ight-of-use assets 430.1 358.2 Intangible assets 1,316.3 1,237.2 Financial assets 2,174.0 2,062.3 Deferred tax assets 16 .8 206.4 otal non current assets . . . . Inventories 41.3 21.5 Accounts receivable 1,184.4 7.7 Other receivables 112. 120.3 Accrued income and prepayments 53.7 41.5 Derivative assets 252.8 65.5 Marketable securities and current financial assets 0.7 0.3 Cash and cash e uivalents 1,014.5 462.2 otal current assets . . . . otal asset . . . ia ilities and e uit Share and participation capital 23.3 23.6 Own shares -28 .2 -61 .6 etained earnings and other reserves 5,105.5 4,853.6 uit attri uta le to shareholders o the parent . . otal e uit . . . . Pension liabilities 5.3 111.5 Bonds 1,173.5 748.8 Lease liabilities 3 3.6 325.8 Deferred tax liabilities 612.7 520.7 Provisions 24.2 43.2 Other liabilities 6.5 .4 otal non current lia ilities . . . . Accounts payable to suppliers 415.1 305. Other accounts payable 353. 137.3 Lease liabilities 76.6 68.5 Current tax liabilities 116.0 105.1 Accrued liabilities and deferred income .8 38.5 Derivative liabilities 13.4 13.1 Provisions 15. 11. Bonds 24 .8 Bank and other borrowings 20.8 12. otal current lia ilities . . . . otal lia ilities . . . . otal lia ilities and e uit . . . . 8

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