Investor Conference Financial Year 2018

Maître Chocolatier Suisse Depuis 1845

Investor ConferenceFinancial Year 2018


Please note that the Financial Analyst Conference will be audio and video recorded. The recording will be published on the internet at www.lindt-spruengli.com.

Information


Group Management

5 March 2019Investor conference FY2018

Martin HugGroup CFO

Alain GermiquetCountry Responsibility

Dr Dieter WeisskopfGroup CEO

Guido SteinerInternational Operations

Dr Adalbert LechnerCountry Responsibility

Rolf FalleggerCountry Responsibility

3


• Financial Year in brief 2018

• Market Insights and Highlights

Financial Figures 2018

• Sustainability Update

• Outlook

• Q&A

5 March 2019Investor conference FY2018 4

Agenda


Financial Year in brief 2018


Europe:Flat chocolate markets in volume

North America:Changing retail landscape

Rest of the World: Uncertainties & volatility

Confectionery Landscape


• Moderate GDP growth only• Political uncertainties / shifts• Slightly positive consumer sentiment

• Declining store traffic, mainly drug & dept. stores• Low value growth in chocolate market• Unchanged positive trend to premium

• Usual volatile markets in GDP / FX / Politics• Good L&S starting position in BR CN ZA + JP • Underlying higher GDP growth creating consumer interest in premium

General: Trade / Consumer / Operations

• Hard discounters & private label• Price pressure• Growth of e-commerce

• Continued trend to premium • Value of sustainability & health• Importance of supply chain


Global Retail sales

CHF~550 m

Key Figures

Investor conference FY2018 5 March 2019 7

Group sales

CHF 4.313 bn

Sales growth in CHF

+5.5%Organic growth

+5.1%

> 72,500Farmers in the

Lindt & Sprüngli Farming Program

EBITCHF 636.7 m

+6.9%EBIT-Margin

14.8% (+20bp)

Net incomeCHF 487.1 million

+7.6%

Operating cash flow

CHF 651.6 m

+10.3%

Buyback Programon track withCHF ~500 mby July 2019

~ 14,000 Employees

460 Boutiques & Cafés

Europe

+5.6%Rest of the world

+10.3%NAFTA

+2.8%

Dividend

CHF 1,000+7.5%

Organic growth:


Global Retail: 460 stores worldwide


Lindt Outlet Store – O2 Mall (UK) Lindt Shop – Empire State Bldg. (USA) Lindt Shop – Vnukovo (RUS)

8

Lindt Shop – Jundiai (BRA) Lindt Shop – Okayama (JPN) Lindt Shop - Europa Park Rust (GER)


Market Insights and Highlights


Sales Analysis − Markets


38.4%

48.2%

13.4%

Total Group sales CHF

4.313 bn

North America CHF 1.66 bn (+2.8%)

Europe CHF 2.08 bn (+5.6%)

Rest of the World CHF 0.58 bn (+10.3%)


15.3%9.7%

6.4%

5.7%

3.8%

7.3%

Germany

France

Italy

UK

CH (excl. Exportbusiness & Duty Free)

Rest of Europe

Europe: Market Split


Total sales Europe CHF

2.08 bn(+5.6%)

Confectionery Market

● Largest region for L&S: 48.2% of Group sales

● Slightly positive consumer sentiment

● Generally flat chocolate markets in volume

● High price pressure by trade partners

● Expansion of hard discounters and private labels


Europe Switzerland: Highlights


● Decreasing per capita confectionery consumption in Switzerland (long & hot summer / border traffic)

● Total sales growth L&S Switzerland (including Export business and Duty Free): +1.6%

● Opening of Lindt’s 10th shop in Basel and a pop-up store in Lucerne

● Attractive Easter and Christmas markets at Kilchberg

● “Bachmann” Shop-in-Shop concept developed - opening in January 2019 - at Zurich’s Bahnhofstrasse

● Successful launch of innovations, e.g. Lindt bread spread in wholesale and Lindt Excellence Figue and Poire Intense

● Charity event in circus Knie for Winterhilfe with Roger Federer



● Market share gains in all markets - strong sales growth in well established and Eastern European markets

• UK +11.3%; Germany +5.4%; France +2.9%; Italy incl. Caffarel +3.0%, Austria +10.3%, Nordics +6.3%; Spain +7.6%; Central & Eastern Europe (CEE) +37.5%; Russia +29.9%

● Focus on strong key brands “Lindor” & “Excellence”

● Launch of new product formats for sharing and snacking, e.g. Lindt “Hello Bites” or Caffarel’s new sub-brand “L’Artigianale”

● Attractive range additions, e.g. “Lindor Mint” and “Excellence 78%”

● Launch of Lindt “No Sugar-Added” bars

Europe: Highlights

5 March 2019

Investor conference FY2018

14



North America: Market Split


32.2%

5.9%

USA

Canada

Total sales North America CHF

1.66 bn(+2.8%)

Mexico 0.3%(re-activated inMarch 2018)


● 2nd largest region for L&S: 38.4% of Group sales

● Solid GDP growth in 2018

● Structural changes in retail environment

● Premium segment outperforming growth of total chocolate market

● Limited impact of US trade disputes on chocolate market


● Organic sales growth + 2.8%; double-digit growth in Canada

● Investments to consolidate the logistics network in the USA lay foundation for future profitable sales growth

● Lindt & Sprüngli USA and Ghirardelli grow faster than chocolate market

• Lindt: First time partnership with the International EMMY Awards with exclusive Lindor Lounge

• Ghirardelli: Popular collaboration with restaurant chain for “Very Cherry Ghirardelli Chocolate Cheesecake” and new TV commercial “Makes Life a Bite Better”

● Lindt Canada: Distribution and marketing initiatives e.g.: Expansion of own store network & on-and offline campaign with chocolate magazine “The Season”

North America: Highlights




● Sales performance 2018 in line with expectations, i.e. only small decline

● Successful relaunch of sugar-free chocolate products based on Stevia extract with continued positive growth in 2018

● Stable market share in Easter and Valentine’s Day 2018

● Developed Relaunch of Assorted Pralines in 2019 to regain momentum: Improved quality and packaging

● Continued headwinds due to declining foot traffic in store formats with high L&S exposure: Drug & Department Stores (Kmart/Sears)

● Overall, expectation of business stabilization in 2019 (flat performance compared to 2018)

North America: Russell Stover



13.4%

Rest of the World: Market Split


Total sales All other Markets CHF

0.58 bn(+10.3%)


● 3rd largest region for L&S: 13.4% of Group sales

● Dynamic premium chocolate markets:

• Growth in all markets

● Consumer demand for chocolate increasing

● Good base for future growth in BR CN ZA & JP


Rest of the World: Highlights


● Double-digit growth, particularly in Brazil, China, South Africa and Japan

● New distribution center in Tokyo (stocks-, co-packing- and e-commerce-hub)

● Successful launch of innovations, e.g. Lindor Matcha & Special Lindor edition for the Soccer World Championship

● Marketing campaign in China with Chinese actor Xin Zhilei boosting brand awareness

● Chocolate Tastings with Lindt Master Chocolatier in Hong Kong

● Exclusive collaborations with travel retail partners support Duty Free Business


All other Markets: Overview



New markets increasingly important


Superior performance of growth markets: +20% – +40% sales increase

Russia

Japan

BrazilSouth Africa

China


Detailed Financial Figures


P&L Statement L&S Group


Organic growth of +5.1% and EBIT margin increase of +20 BP

6.8%17.4%8.0% 7.9% 4.8%

CHF million 2017 2018 Growth in CHF

SalesGrowth in local currency

4 088.4 4 313.2 +5.5%+5.1%

EBITMargin

595.414.6%

636.714.8%

+6.9%

EBITDAMargin

764.418.7%

816.218.9%

+6.8%

Net IncomeMargin

452.511.1%

487.111.3%

+7.6%


Shareholder Return


Dividend payment of CHF 1 000 (reg.) or +7.5% vs. 2017 / continuous increase over the past 25 years

6.8%17.4%8.0% 7.9% 4.8%

* Subject to approval by the AGM

1992 2014 2015 2016 2017 2018*

Dividend Reg. (CHF) 39 725 800 880 930 1 000

• From Agio 325 400 300 420 360

• From Retained Earnings 400 400 580 510 640

Increase (CHF) 75 75 80 50 70

Dividend Yield Reg. 1.4% 1.3% 1.1% 1.4% 1.3% 1.4%

Payout Ratio 16.9% 49.0% 49.4% 49.8% 49.5% 50.0%

Registered Shares(at year-end in CHF)

2 800 57 160 74 620 61 900 70 485 73 300

Market Capitalisation(CHF million)

492 12 495 16 338 13 768 15 829 16 518


Sales Growth − In CHF


Continuation of growth path

Absolute in CHF million (as published)Growth Rate in % (as published)

3 3853 653

3 9014 088

4 313

2 000

2 500

3 000

3 500

4 000

4 500

2014 2015 2016 2017 2018

4.8%7.9%17.4% 6.8% 5.5%


Organic Sales Growth


Confirmation of Guidance given for 2018

Absolute in CHF million (as published)Growth Rate in % (organic)

3 3853 653

3 9014 088

4 313

2 000

2 500

3 000

3 500

4 000

4 500

2014 2015 2016 2017 2018

3.7%7.1%9.8% 6.0% 5.1%


Sales − Growth Factors


Volume as main growth contributor

4.9% 5.1%5.5%0.2%

0.4%

0%

1%

2%

3%

4%

5%

6%

Volume Price / Mix Organic Forex Sales in CHF


Material Costs


Material costs - including inventory changes - decreasing by -170 BP vs. 2017

Absolute in CHF millionIn % Sales

30

1 2281 306 1 376 1 425 1 434

0

200

400

600

800

1 000

1 200

1 400

1 600

2014 2015 2016 2017 2018

36.3% 35.7% 35.3% 33.1%34.8%


Cocoa Price and Butter Ratio


36.3%

31

Price of cocoa beans slightly higher / cocoa butter slighly lower

22.5% 22.7% 21.2% 21.7%22.1%1 300

1 400

1 500

1 600

1 700

1 800

1 900

2 000

Jan. 18 Mrz. 18 Mai. 18 Jul. 18 Sep. 18 Nov. 18 Jan. 192.6

2.7

2.8

2.9

3.0

3.1

Butter ratio ICE London

Cocoa bean prices in GBP t Butter ratio

Mar. 18 May 18


720807 846 886

938

0

200

400

600

800

1 000

2014 2015 2016 2017 2018

Personnel Expenses


Stable expense ratio – higher costs in Retail compensated by efficiency gains

21.2% 22.1% 21.7% 21.8%21.7%

32

In CHF millionIn % Sales


Average number of employees (FTE)

Number of Employees (FTE)


Increase by about 600 employees – driven by expansion of Global Retail

10 712

13 180 13 539 13 94914 570

3 000

5 000

7 000

9 000

11 000

13 000

15 000

2014 2015 2016 2017 2018


868 912982 1 030

1 144

0

200

400

600

800

1 000

1 200

2014 2015 2016 2017 2018

Operating Expenses


Higher logistics costs in the US and increased marketing investments in 2018

25.6% 25.0% 25.1% 26.5%25.2%

34



474519

563595

637

0

100

200

300

400

500

600

2014 2015 2016 2017 2018

Operating Profit (EBIT)


Increase in EBIT Margin by +20 BP to 14.8% (EBITA margin: 15.0%)

14.0% 14.4% 14.6% 14.8%14.2%

35


+ 6.9%


588646

714764

816

0

100

200

300

400

500

600

700

800

2014 2015 2016 2017 2018

EBITDA


EBITDA Margin increase by 20 BP

17.4% 17.7% 18.3% 18.9%18.7%

36


+ 6.8%


235253

234

185

257

0

40

80

120

160

200

240

280

2014 2015 2016 2017 2018

Capital Investments


CAPEX in line with expectations, Outlook for 2019 – 2021 CHF 300 – 350 million p.a.

37

Absolute in CHF million


114127

152169

180

0

20

40

60

80

100

120

140

160

180

2014 2015 2016 2017 2018

Depreciation and Impairments


Increased depreciation ratio due to CAPEX (> CHF 200 million) in the past years

3.4% 3.5% 3.9% 4.2%4.1%

38



Tax Rate


Lower tax rates in some countries (incl. changes in US tax legislation)

27.5%25.5%

24.2%22.4%

21.5%

10%

15%

20%

25%

30%

2014 2015 2016 2017 2018

39

In % of income before taxes


343381

420453

487

0

50

100

150

200

250

300

350

400

450

500

2014 2015 2016 2017 2018

Net Income


Increase in net income margin by +20 BP

10.1% 10.4% 10.8% 11.3%11.1%

40


+ 7.6%


Net Financial Position − Development


Decrease of net debt mainly driven by high free cash flow generation

41

Net cash in CHF million

-154

-154 -13-200

0

200

400

600

800

2017 Operating CashFlow

CAPEX Dividend Share Buy Back Capital Increase Other 2018

+652-257

-223

-120 +87+2


Balance Sheet


6 976

7 250

5 500

6 000

6 500

7 000

7 500

2017 2018

60.1% 61.9%

0%

10%

20%

30%

40%

50%

60%

2017 2018

-154

-13

-200

-100

0

2017 2018

Total Assets in CHF million Equity B/S Ratio in % Net Financial Position in CHF million

Strong equity further strengthened

42


Sustainability Update


Investments>CHF 10m p.a.

Lindt & Sprüngli Farming Program

5 March 2019 44

Lindt & Sprüngli Farming Program for Cocoa

covering 5 countriesGhana Ecuador Madagascar

013

3257

79 86

2013 2014 2015 2016 2017 2018

Overall ~50% traceable and

verified cocoa products

Papua New Guinea

97% traceable

cocoa beans

86% traceable and verified cocoa beans

Dom. Rep.

90% hazelnutsfrom ITA or sustainable

programs in TUInvestor conference FY2018

Maître Chocolatier Suisse Depuis 1845 5 March 2019Investor conference FY2018 45

86%of cocoa bean supply chaintraceable &

verified


More than72,500 farmersare part of the

Program


Training and knowledgetransfer toincrease

productivity


> 10,000 farmers

benefitting from additional

incomeopportunities


60 new

boreholes in Ghana


Outlook


Outlook - Environment


Overall flat chocolate consumption in developed markets

Focus on growing premium segment in developed- and well performing emerging (BRCS+J) markets

Trend to «healthy» & low-sugar high-protein snacking products

Focus on Lindt premium product portfolio and indulgence (high cocoa / low-sugar; high protein nuts / almonds)

Emerging brands with specific sustainability- / ingredients positioning

Continue and communicate substantial sustainability efforts and results through the Lindt & Sprüngli Farming Program

Importance of omni channel brand presence

Extend development of stores, e-commerce & cooperation with e-platforms of trade partners

Increasing supply chain complexity Strive for global efficiency in the supply chain through ongoing projects in planning / purchasing / logistics / production

Environment Opportunities Lindt & Sprüngli


The Group confirms its mid- to long-term goal of an organic sales growth target of

5 – 7% combined with an average increase in EBIT of 20 – 40 basis points.

For the 2019 financial year, the Group expects organic sales and profit growth to be in

those targeted mid- to long-term brackets

Outlook - Summary



Chocolate Competence Center

Update


Milestone – Topping Out Ceremony

5 March 2019 54Investor conference FY2018

Maître Chocolatier Suisse Depuis 1845Maître Chocolatier Suisse Depuis 1845

Q&A

Investor conference FY2018 5 March 2019


DISCLAIMER


This presentation contains forward-looking statements which reflect Management‘s current

views and estimates. The forward-looking statements involve certain risks and uncertainties

that could cause actual results to differ materially from those contained in the forward-

looking statements. Potential risks and uncertainties include such factors as general

economic conditions, foreign exchange and commodity price fluctuations, competitive

product and pricing pressures and regulatory developments.

Documents

Investor Conference Financial Year 2018