Lindt & Sprüngli: Financial Year 2011

With organic sales growth of 6%, Chocoladefabriken Lindt & Sprüngli AG once again successfully achieved its strategic growth target. In fact, it grew significantly faster than the markets in an economic and currency environment which became progressively more difficult. Thanks to this good performance, further market shares were gained practically everywhere and in all categories. Conversion into Swiss francs results in Group sales of CHF 2.489 billion (previous year: 2.579 billion) reflecting the particularly negative exchange rate impact of - 9.5%, mainly on euro and US dollar.

On flat to slightly declining chocolate markets, all the subsidiary companies, with the exception of Australia, grew faster than the markets and gained important market shares. Particularly pleasing is the fact that the company outstripped the average organic growth of the Group in its most important and biggest markets with LINDT and GHIRARDELLI in the USA and LINDT in Germany and France. The strong franc and increasingly widespread economic weakness affected in particular exports from Switzerland and the Travel Retail business.

With an operating profit of CHF 328,7 million (previous year: CHF 325.3 million), the Group was able to improve its operating EBIT margin by 60 basis points to 13.2% which is above the long-term objective of 20 to 40 basis points annually. Together with the operating profit, the net income has increased more than proportionally against the sales figures in Swiss francs; this results in a higher return on sales rate of 9.9% (previous year: 9.4%). In organic terms, EBIT and net income show an increase of 11.5% and 13.7% respectively.

The company's balance sheet remains perfectly sound and reflects a strong position. At the end of 2011, the equity ratio and net cash flow stood at 64.4% and CHF 486 million respectively. Within the framework of the share buyback program amounting to a maximum of 5% of the registered company capital, which has been under way since the spring of 2011, registered shares and participation certificates with a total value of CHF 220 million were bought back as of December 31, 2011; this had a correspondingly positive impact on the average return on equity.

The good development of the annual figures shows that the Group's long-term business model is suitable, even under difficult conditions, for generating profitable growth year after year and safeguarding the competitiveness of the group of companies on a sustainable basis. The constant progress in the area of growth and profitability is attributable to the uncompromising commitment to top quality, consistent positioning in the premium sector, frequent innovation, a successfulmarketing strategy and the confidence of both consumers and trade partners in the brand values. A further important factor for securing the ongoing attainment of the growth and earnings targets is the acceleration of the geographical expansion. With access to new markets in buoyant emerging countries such as Russia, China and Brazil, opportunities have arisen which hold great potential for further development and must be grasped. By setting up own local organizations, such as the subsidiary company which was newly incorporated in South Africa in the year 2011, and also by searching for new distribution channels, Lindt & Sprüngli is increasingly taking specific initiatives for strategic market development and professional product marketing with a view to securing further growth for the LINDT brand on established markets, while gaining a foothold on new markets as quickly and efficiently as possible.

With the intention of expediting the Group's expansion plans and taking advantage of the potential held out by new markets, last year the top management structure of the Group was strengthened by the addition of an 'Extended Group Management.' In addition, a separate 'International Retail' department was set up at Group level to take care of the attainment of our strategic objectives in the framework of a newly developed distribution concept. The various distribution models are based on a harmonized presence and convey LINDT's essential brand values, while remaining flexible enough to adjust optimally to the specific characteristics of each particular market. Initial tests, such as the establishment of 'LINDT Chocolate Cafés' in Australia, have shown that this special distribution concept is particularly suited to create brand awareness and enhance the values of the LINDT brand in countries which do not have a well-developed, traditional chocolate culture.

One particular highlight of the last financial year was the inauguration of the 'Chocolateria' in Kilchberg by LINDT brand ambassador Roger Federer on November 14, 2011. Through the organization of exciting courses and workshops, the fascinating world of the LINDT Master Chocolatiers is being opened up to a wide audience of chocolate lovers, while at the same time focusing on essential brand values such as quality, know-how and passion.

Dividends
The Board of Directors will be proposing to the next Annual General Meeting on April 26, 2012, a dividend of CHF 500.- per registered share (previous year: CHF 450.-) and CHF 50.- per participation certificate (previous year: CHF 45.-) in the form of withholding-tax-free distribution from the capital contributions reserve. This is equivalent to an increase of 11.1% against the previous year.

Outlook for 2012
The debt crisis is spreading more and more widely and having an increasing impact on the global financial and economic situation. The lasting consequences of this development are hard to assess, making reliable forecasts almost impossible. In addition, commodity markets remain volatile and consumers are being destabilized by the prospect of a worsening employment market. Thanks to a robust earnings and financial situation as well as a corporate strategy which remains forward-looking and has proved its merits even in hard times, the group of companies is well placed to face the coming challenges, and is maintaining its long-term success targets which provide for annual organic growth of 6 to 8% with an increase of the EBIT margin by 20 to 40 basis points each year.

Contact
Lindt & Sprüngli (Schweiz) AG Seestrasse 204 8802 Kilchberg Tel. 044 716 22 33 Fax 044 716 24 77

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