FINANCIAL ANALYSTS CONFERENCEFINANCIAL ......Substantial & continuous cost increase of raw materials...

FINANCIAL ANALYSTS CONFERENCEFINANCIAL ANALYSTS CONFERENCEANNUAL RESULTS 2010

CONTENTS

1 RESULTS – HIGHLIGHTS 2010

2 BUSINESS REVIEW► Business environment► Key figures► Sales analysis► Sustainability► Sustainability

3 FINANCIALS► Operating performancep g p

4 OUTLOOK► Business environment► Share buy-back► Financial guidance 2011 and beyond

2FY2010 Financial Analysts Conference

HIGHLIGHTS 2010HIGHLIGHTS 2010


2010 RESULTS – HIGHLIGHTS I L&S BACK ON ITS FAMILIAR ROAD TO SUCCESSL&S BACK ON ITS FAMILIAR ROAD TO SUCCESS

ABOVE-AVERAGE ORGANIC SALES GROWTH► 7 3 % organic growth for full year and market share gains in all important► 7.3 % organic growth for full year and market share gains in all important

markets► Sales growth in all markets except Australia► LINDT & GHIRARDELLI continue to rank among fastest growing brands in

the USA

STRENGTHENED PROFITABILITYSTRENGTHENED PROFITABILITY► Solid EBIT margin of 12.6 %(p.y. 10.5%) - despite head-winds

of FX and raw material price increase ► Improvement in net income by +25.3% due to decreasing tax rates► Continued priority on market share gains via above-average organic

sales growth


2010 RESULTS – HIGHLIGHTS IIL&S BACK ON ITS FAMILIAR ROAD TO SUCCESSL&S BACK ON ITS FAMILIAR ROAD TO SUCCESS

CAPEXC f► Lower investments in 2010: CHF 89 mio. - following substantial capacity

increase in prior years ► Successful start-up of cocoa liquor and chocolate tablet lines in USA

CASH & DIVIDENDS► High operating cash generation of CHF 364 mio► High operating cash generation of CHF 364 mio. ► Record net liquidity of CHF 540 mio. at year end► Proposed dividend: reg. share CHF 450.-/PC CHF 45.- (+12.5 % vs. p.y.)►“Agio” position for future tax free distribution to Swiss shareholders:

CHF 108 mio.


BUSINESS REVIEWBUSINESS REVIEW

BUSINESS ENVIRONMENT


BUSINESS ENVIRONMENT 2010 ONGOING CHALLENGING ENVIRONMENTONGOING CHALLENGING ENVIRONMENT

► Slow but steady economic recovery worldwide

► High volatility in FX and raw material – cocoa prices at 30 years high

► Volumes stagnating in most chocolate marketsg g

► Rising employment rates and progressive improvement of consumer confidence

► Consumers look again for quality and highly trusted premium products(trading-up)

► Hi h i t d i l f d i ti d t► Higher prices accepted mainly for new and innovative products


BUSINESS ENVIRONMENT 2010 GOOD PERFROMANCE BASED ON STREAMLINING IN 2009GOOD PERFROMANCE BASED ON STREAMLINING IN 2009

► Successful impact from measures taken in 2009 to safeguard long-term sales and profit growth p g● Structural reorganization of LINDT retail network in USA● Major investments in our USA facilities to satisfy growing demand● Logistics synergies in Italy by merging warehouses of both subsidiariesLogistics synergies in Italy by merging warehouses of both subsidiaries● Other steps to optimize efficiency and costs

► Strong brand support and, thus, continued focus on gaining marketh d i titi th th fit i i tishares and securing competitiveness rather than profit maximization

► Continued focus on innovations and on our key brands Lindor, Excellence, as well as on our seasonal business,

► Marketing: Further increase of advertizing and other brand building investments as i.e. Social Media



KEY FIGURES


KEY FIGURES P&LSOLID SET OF RESULTS WELL IN LINE WITH COMPANY GUIDANCE –SOLID SET OF RESULTS WELL IN LINE WITH COMPANY GUIDANCE

HIGH CASH GENERATION

CHF mio.

Net Net TRADE SALES

EBITDA

2‘579

423

Organic growth 7.3 % (in CHF: +2.2%)

+10.8% vs. p.y. – Margin: 16.4% (09: 15.1%)EBITDA

EBIT

423

325

10.8% vs. p.y. Margin: 16.4% (09: 15.1%)

+22.8% vs. p.y. – Margin: 12.6% (09: 10.5%)

NET INCOME

OPER..CASH FLOW

242

364

+25.3% vs. p.y. – Margin: 9.4% (09: 7.6%)

High cash generation

NET LIQUIDITY 540 Excellent base for future growth and returns to shareholders


KEY FIGURES – B/S SOLID BALANCE SHEET (no goodwill activated) & RECORD NET CASHSOLID BALANCE SHEET (no goodwill activated) & RECORD NET CASH

Equity CHF mio. Net Cash Y/E CHF mio.Equity B/S ratio in %


KEY FIGURES – L&S SHARES OUTPERFORMING SMI

+18.5% or CHF 30‘100 at 31.12.2010

-2.1% at 31.12.2010

SMI LINDT REGISTERED SHARE IN CHFSource VWD,

12

SMI LINDT REGISTERED SHARE IN CHF,bi-weekly share prices

FY2010 Financial Analysts Conference

KEY FIGURES – REGISTERED SHARE

1992 2006 2007 2008 2009 2010

Dividend (CHF) – Increase (CHF)

39

2

275

50

330

55

360

30

400

40

450*50

Dividend Yield 1.4% 0.9% 0.8% 1.6% 1.6% 1.5%

Pay-Out Ratio 16.9% 29.2% 29.5% 31.2% 47.3% 42.8%

Share price at year end (CHF) 2‘800 30‘700 39‘770 22‘600 25‘405 30‘100

Capitalization (CHF mio.) y.e. 492 6‘754 8‘871 4.868 5.518 6‘763

* PROPOSED TO THE GENERAL SHAREHOLDERS’ MEETING

Capitalization (CHF mio.) y.e. 492 6 754 8 871 4.868 5.518 6 763



SALES ANALYSIS


SALES ANALYSIS IORGANIC GROWTH 5 YEARSORGANIC GROWTH 5 YEARS

Absolute in CHF mio. Increase vs. p.y. in local currencies

13.4% 10.7% 4.9% 2.3% 7.3%


SALES ANALYSIS – DRIVERS

DYNAMIC VOLUME GROWTH 2010DYNAMIC VOLUME GROWTH 2010

- 5.1%

2.2 %


SALES ANALYSIS – MARKETS

Total NNTS 2010: CHF 2’579 mioTotal NNTS 2010: CHF 2 579 mio.



CORPORATE SOCIAL RESPONSIBILITY&

SUSTAINABILITY


CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITYINHERENT PART OF THE LINDT PREMIUM BRANDINHERENT PART OF THE LINDT PREMIUM BRAND

►High commitment in every aspect of corporate action

►Clearly formulated corporate policies

►Complete control of the supply chain from bean to premium chocolate

►Transparent communication on CSR activities through our webiste: http://www.lindt.com/ch/swf/ger/das-unternehmen/social-responsibility/


C b i Gh T bl b k t f

SUSTAINABILITY – UPDATE ON ACTIVITIES 2011 – I

Cocoa bean sourcing Ghana – Traceable back to farmer

►Lindt supporting infrastructure projects in villages supplying us with cocoa beans

►Premium paid for traceability & social projects in 2010►Premium paid for traceability & social projects in 2010 on top of market price USD 1.2 mio.

►Project update: During 2010, Lindt executed various projects in the villages it sources its high quality Ghana beansvillages it sources its high quality Ghana beans ● School● Water supply / Boreholes● Malaria nets● Farmer education


SUSTAINABILITY – UPDATE ON ACTIVITIES 2011 – I I

Energy Usage

►Lindt Goal to reduce CO2 output per ton produced by 2 % p.a.

►Implementation of 4‘250 m2 solar panels in Lindt Italy with● Production 320 MWh/year● Reduction of CO2 emissions by 214 tons/year2 y y

►Additional roof insulation in L&S Germany estimated energy savings ca. 110‘000 KWh p.a.gy g p

►Use of cocoa bean shells for CO2 neutral energy production in L&S USA 4KWh/kg shells

21

g

FY2010 Financial Analysts Conference

FINANCIALS

OPERATING PERFORMANCE

FINANCIALS


MATERIAL COSTS MATERIAL COSTS +/- INVENTORY CHANGE:MATERIAL COSTS / INVENTORY CHANGE:

FURTHER INCREASE OF COST MARGIN

Absolute in CHF mioAbsolute in CHF mio. In % of NNTS

33.0% 33.2% 35.8% 36.2% 36.5%


HEADCOUNT & NNTS PER EMPLOYEE INCREASE OF STAFF – MAINLY IN MANUFACTURINGINCREASE OF STAFF MAINLY IN MANUFACTURING

Average number of employees NNTS per employee in CHF (`000)

328 334 334 341 341


PERSONNEL EXPENDITURE DECREASE OF COST MARGIN DUE VOLUME- AND EFFICIENCYDECREASE OF COST MARGIN DUE VOLUME AND EFFICIENCY

GAINS

Personnel exp in CHF mioPersonnel exp. in CHF mio. Personnel exp. in % NNTS

23.6% 22.9% 21.2% 22.6% 21.9%


OPERATING EXPENSES 2009 IMPACTED BY EXTRAORDINARY CHARGES – „LIKE FOR LIKE“2009 IMPACTED BY EXTRAORDINARY CHARGES „LIKE FOR LIKE

INCREASE IN 2010 BASED ON HIGHER ADVERTISING EXPENSES

Absolute in CHF mio. In % of NNTSIn % of NNTS

27.3% 27.4% 25.6% 26.6% 25.7%


OPERATING PROFIT (EBIT) EBIT MARGIN INCREASE + 50 BASIS POINTS vs. 2009 RESTATEDEBIT MARGIN INCREASE 50 BASIS POINTS vs. 2009 RESTATED

FOR EXTRAORDINARY ITEMS

Absolute in CHF mio I % f NNTSAbsolute in CHF mio. In % of NNTS

12.9% 13.5% 14.0% 10.5% 12.6%


NET FINANCIAL EXPENSES ONLY SMALL POSITIVE EFFECTS OF HIGHER CASH POSITION - LOWONLY SMALL POSITIVE EFFECTS OF HIGHER CASH POSITION LOW

INTEREST RATES ON CHF LOW RISK INVESTMENTS

Absolute in CHF mio.


CORPORATE TAX RATE

TAX RATE BENEFITTING FROM HIGHER BEFORE TAX INCOME IN USTAX RATE BENEFITTING FROM HIGHER BEFORE TAX INCOME IN US COMPANIES – RATE TO STABILIZE AROUND 25.5%

Tax Rate in %


NET INCOME NET INCOME STRONGLY IMPACTED BY CURRENCY TRANSLATIONNET INCOME STRONGLY IMPACTED BY CURRENCY TRANSLATION

EFFECT IN 2010

Absolute in CHF mio. In % of NNTSIn % of NNTS

9.0% 9.6% 10.2% 7.6% 9.4%


FINANCIALS

RAW MATERIALS & PACKAGING

FINANCIALS


COCOA CROP / GRINDING BALANCE

COCOA BEANS ´000 TCOCOA BEANS 000 T

16.2%

42.4%5.5%

5.5%

15 5%15.5%

Source: CRA 02.11Source: CRA 02.11


COCOA PRODUCT PRICES 2008 – 2010

GBP/TON RATIO MULT.

COCOA LONDON TERMINAL BUTTER RATIO


NUT & ALMOND PRICES 2008 – 2010

USD/TON CHF/TON

HAZELNUTS ALMONDS


MILK PRICES EUROPE & SWITZERLAND 2008 – 2010

EUR/TONSMP SWITZERLAND SMP EUROPE


SUGAR PRICES 2008 – 2010

USD/Ton


MATERIAL COSTS TRENDS 2011

COCOA PRODUCTSCOCOA PRODUCTS

- Terminal Market short term

- Bean Differentials- Butter Ratio

OTHER RAW MATERIALSOTHER RAW MATERIALS- Milk- Sugar

Hazelnuts- Hazelnuts- Almonds

PACKAGINGPACKAGING

- Paper & Cardboard - Metals & Flexibles


OUTLOOK 2011OUTLOOK 2011


OUTLOOK - EXTERNAL ENVIRONMENT

KEY THEMES 2011 LINDT & SPRÜNGLI RESPONSEKEY THEMES 2011

► Slowdown in volume growth of chocolate ► Continuous launch of innovating concepts

KEY THEMES 2011 LINDT & SPRÜNGLI RESPONSE

CONSUMER INTEREST IN CHOCOLATE

KEY THEMES 2011

► Slowdown in volume growth of chocolate consumption in Western hemisphere

► Substantial & continuous cost increase of

► Continuous launch of innovating concepts► Priority on market share gains

► Price increases to consumers in 2nd half 2011

INPUT COSTS / COMMODITY INFLATION► Substantial & continuous cost increase of

raw materials► Price increases to consumers in 2nd half 2011

likely, due to cocoa, sugar, milk and packaging cost development

COST SAVING & PRODUCTIVITY

► Ongoing pressure on cost savings and productivity increase to absorb input cost effect

► Fixed cost absorption via higher volumes► Saving initiatives in all areas

GEOGRAPHICAL EXPOSURE► US economy perceived healthier than

Western Europe► Increasing importance of emerging

markets

► Stronghold in North-American market >30% of sales

► Enter cautiously emerging markets with differentiated approaches

GEOGRAPHICAL EXPOSURE

BILANZ PRESSEKONFERENZ 201139

pp

SHARE BUY-BACK 2011 / 2012BUY-BACK OF MAX. 5 % OF TOTAL CAPITALBUY BACK OF MAX. 5 % OF TOTAL CAPITAL

BUY-BACK PROGRAM 2011 / 12►Board of Directors has decided to initiate buy back program for►Board of Directors has decided to initiate buy-back program for

Lindt registered shares and Lindt participation certificates (PCs)

SIZE OF PROGRAMSIZE OF PROGRAM ►Re-purchase of maximum 5 % of total share/PC capital (ca. CHF 310 mio.)

TIMINGTIMING ►2011 up to maximum 31.12.2012

TECHNIQUE►Re-purchase via separate trading line (second line) – less withholding tax►Shares / PC’s to be retired by means of capital reduction


FINANCIAL GUIDANCE & GROWTH EXPECTATIONS NEXT YEARSMID- / LONG TERM SALES AND PROFIT TARGETSMID / LONG TERM SALES AND PROFIT TARGETS

Unchanged Guidance

Organic Growth 6 – 8 % p.y.EBIT Margin + 20 to 40 basis points (*)EBIT Margin 20 to 40 basis points ( )CAPEX CHF 120 – 140 mio.

CONTINUED HIGH CASH GENERATION

(*) Depending on background conditions i.e. raw material & FX


( ) p g g

DISCLAIMER

This presentation contains forward looking statements which reflectmanagement‘s current views and estimates. The forward lookingmanagement s current views and estimates. The forward lookingstatements involve risks and uncertainties that could cause actual results to differ from those expressed in the forward looking statements.Potential risks and uncertainties include among others factors as generalPotential risks and uncertainties include among others factors as general economic conditions, foreign exchange and commodity price fluctuations, competitive product and pricing pressures and regulatory developments.


FINANCIAL ANALYSTS CONFERENCEFINANCIAL ANALYSTS CONFERENCEANNUAL RESULTS 2010

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