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UPDATE 1-Lindt to keep growing 5-7% after Europe, new stores boost 2019

(Adds detail, background)

ZURICH, Jan 14 (Reuters) - Swiss chocolate maker Lindt & Spruengli wants to keep growing 5-7% per year in the mid-term after strong growth in Europe and the opening of new Lindt stores boosted organic sales by 6.1% in 2019.

Chocolate makers are grappling with sluggish demand as many consumers prefer healthier snacks, but Lindt has so far bucked the trend thanks to upmarket products like Lindor chocolate balls or pink grapefruit-flavoured dark chocolate that people buy as a special treat.

“The market environment continues to be very challenging,” the company based in Kilchberg on Lake Zurich said in a statement on Tuesday, adding it had gained market share in all important countries.

Organic sales, which strip out currency swings and acquisitions, were up 6.2% in its biggest market, Europe, thanks notably to Germany, Austria and the United Kingdom despite Brexit worries.

Growth in North America was 5.4%, a slowdown versus the first half of the year, with Lindt pointing to substantial price pressures in a changing retail landscape.

“Organic sales overall were actually better than expected although surprisingly it is Europe rather than North America that surprised positively,” Kepler Cheuvreux analyst Jon Cox said.

Group sales rose to 4.51 billion Swiss francs ($4.65 billion) in 2019.

The group confirmed it expected to publish a 20-40 basis point improvement in its operating profit margin when it releases full results on March 3.

An extraordinary provision and restructuring costs of around 60 million francs linked to the U.S. market will be offset by a one-time tax benefit of around 60 million francs and thus have no impact on reported earnings, Lindt said.

Kepler’s Cox said the unusually high restructuring charges showed Lindt was serious about improving the margin in North America that has been under pressure since the Russell Stover acquisition in 2014.

$1 = 0.9709 Swiss francs Reporting by Silke Koltrowitz Editing by Michelle Martin

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