Lindt is the Swiss champion of premium chocolate, whose margins depend heavily on the cocoa price.
Analysis
For the second time this year the group lowers its organic growth target as the cocoa surge weighs on volumes. Several banks cut their price targets. The underlying issue is the limit of pricing power: passing on cost increases eventually dampens demand.
Opportunity
The opportunity would be a decline in cocoa, which would quickly restore margins, or a successful premiumisation strategy. The risk is a lasting erosion of volumes and market share to private labels.
Investor outlook
Negative short term outlook, more open over the medium term. A turn in the cocoa cycle is the catalyst to watch.
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