Good morning, everybody. Hello. Here in Kilchberg, in our Home of Chocolate. Hello also to all participants who join us online. Welcome to the presentation of the full year results 2025 of Lindt & Sprüngli, Kilchberg. I will quickly walk you through the highlights of 2025, and we'll take a closer look to the regional performance. I will hand over to our CFO, Martin Hug, who will outline the financial results 2025 and explain our progress on our sustainability. I will take over again and outline our growth agenda and the outlook for this year and for the years to come, and then we will open the floor for questions and answers. Let me come quickly to the results of 2025. With 12.4%, we had a very strong organic sales growth.
It was the strongest absolute sales growth that we ever achieved. We improved our EBIT margin from 16.2%- 16.4%. We generated an EBIT of CHF 971 million. Our earnings per share grew by 8.5%. Our free cash flow was, as expected, slightly lower than in the years before with 7.5% due to the higher value of our inventory. We operated in a challenging market environment. I think this is not a surprise for any one of you. The cocoa price volatility forced us to implement the highest price increases that we ever implemented in the history of the company. Geopolitical tensions as well as the global trade wars and tariffs caused weak consumer sentiment across the globe. Despite all these developments, we could achieve strong results.
We were preparing for our global expansion. As you know, we generate the major part of our sales in Europe and in North America. Outside of Europe and North America, we still have many white spots on the map. We brought out the teams in Bulgaria, Saudi Arabia, UAE, India, China, and Malaysia to open retail stores there and also to conquer these markets in wholesale. You can also see that already in the last years, we opened stores in Chile, in New Zealand, in Mexico, et cetera, and I will elaborate here how the global retail expansion worked. We grew 20.8% in our retail division, mainly by comp store growth, a key part, but also by expansion. We opened 53 new stores in 2025.
We did not only open more stores than in the past time, we also upgraded the footprint of our stores. We opened two flagship stores in prominent locations in major cities. In March, we opened in Piccadilly Circus. That's a place with 80 million consumers passing by every year. In autumn, we opened in Vienna, Kärntner Straße 1, which is the most prominent location, a store on two floors with more than 500 square meters selling area, and it will be our strongest flagship store in the group. As mentioned, we conquer also new countries. To mention, it takes quite some time. It takes time to open a branch. It takes time to implement the software.
It takes time to look for locations, but this will, for sure, bolster the growth story of the years to come and of the future. We launched our biggest innovation in the history of the company by reacting agile to a social media trend that all of you have realized. It was the Dubai style chocolate. Within five weeks, we came out with a handmade version of the Dubai style chocolate, exclusively sold in our own retail stores, creating a huge buzz in social media, but also in classical media. Within 12 weeks, we launched these products in the grocery stores, and then we rolled out consecutively globally.
You can see that we did not only launch it under the brand Lindt, but also Ghirardelli and also Russell Stover launched their own version of Dubai style, and we were ahead of competition with all three brands. What did it do for our brand? It did not only create a huge awareness, as I mentioned, the social media buzz, but it also strengthened our brand equity, positioning ourselves as a dynamic brand, and we unlocked new consumer groups, namely the Gen Z that is mainly active in social media, and we brought awareness and relevance to them. The story goes on. Beginning of this year, we launch Tokyo style chocolate, which is a recipe matcha strawberry, which is another global trend, probably not as hyped as Dubai style chocolate, but for sure, global and continuously growing.
We see already very encouraging first offtake figures of our matcha strawberry chocolate. Coming to the regional performance, here you can see the split. We generate 50% of our sales in Europe, and we grew 15.3% in Europe last year, which was clearly above our expectations. It means that the brands are well established, very strong. Price elasticity is low, so the price increases could be translated more or less one-to-one into growth. North America, as you remember, it represents 37% of our total sales. We had a very soft start. We were a bit nervous in the beginning of the year.
You remember we published 3.5% growth, but we accelerated tremendously, had double-digit growth in the H2 year. We ended the year with an organic growth of 8.9%, clearly outperforming the market, gaining share in the North American market. Rest of the world, 11.7% organic growth was slightly below our expectations. I will come to this. Let me start with Europe. Europe, you can see we literally grew in all countries double digit. In many countries, closer to 20% or even 30%. In the big countries, Germany 13%, France 15.5%, UK close to 15%, Italy close to 12%, in Switzerland 13%. You have probably also read in the news that in some countries we had issues with big customers.
Here in Switzerland, it was a big topic that we had a discussion with Migros at the end of the year. This did quite cost us some of the growth rates that we had intended. Despite also in France, we had some issues in North America, we were with some customers in a longer period of negotiations until they accepted the price increases. I would say the growth could have even been stronger without these frictions. Still, the key growth drivers were mainly the dark Excellence tablets. They outperformed last year, and we have seen that the price increase was pretty well accepted, and dark tablets are trending again. Of course, all pistachio-based recipes. It's not only the Dubai-style recipe, but we have a Lindor pistachio as a ball. We have a Lindor pistachio as a tablet.
We have Excellence Pistachio, and all these products are trending very strong. Retail expansion, as mentioned, and double-digit organic growth and increased profitability across all European markets. Coming to North America, very strong result at Ghirardelli, 16.2% growth. Ghirardelli is very strong in the baking business, and the baking business is booming currently in the U.S.. Also in the beginning of this year when we see the Circana figures, and we are number one in this business and outperformed the market there. Also the retail stores are performing well. Lindt U.S.. Lindt U.S., as mentioned, had a weak start and a strong acceleration in the H2. Also very strong sales of Dubai Style chocolate in the H2 that contributed to this growth.
Russell Stover, we saw some issues with the acceptance of the price of the higher prices, and we also had some issues with customers, therefore, a slight decline. Canada, +8.8%. Mexico, we had some one-time impacts with evaluation of trade term and inventories. This will be back on track in, as of 2026. Coming to rest of the world, we generated CHF 780 million with a growth of 11.7%. You can see most of the countries growing double-digit. Australia is a historically high growth rate with 9.6%. Japan, Brazil, very healthy. China, South Africa, global travel retail, Chile, all healthy growth rates, with the exception of the distributor business. We mentioned it already last year at the half-year conference.
We had also again here, the distributors did not believe in the significantly higher prices. We had long discussions in the H1. H2, we were growing double-digit again, and they accepted the price increases. We demonstrated together with them that consumers do accept it. We have a strong momentum in the H2 and also now in the beginning of 2026. I hand over now to Martin Hug, and he will guide you through the financial results, 2025.
Thank you,Adalbert . Welcome as well from my side to this year's Financial Results conference. Welcome to everybody here in the room. Special welcome as well to everybody who is watching this online. You know, we have already seen quite a strong set of numbers last year. Organic growth above our guidance of 9%-11%, 12.4%. EBIT margin right at our guidance because we guided actually for the lower end of 20 basis points-40 basis points. Free cash flow also came in healthily considering the fact that our inventories, the value of our inventories was much higher, CHF 320 million higher actually than one year ago because of the high cocoa bean price. 7.5% also right within our expectations. Earnings per share is a new record.
We improved it massively over the last five years, as you will see on one of my next charts. The net debt came in as expected as well as at roughly CHF 1.1 billion below our EBITDA, which is almost at CHF 1.3 billion. Looking at the organic sales over the last five years. Actually, out of the last five years, in four years, we grew double digits, 13%, 11%, 10%, and now this year more than 12%. On average, over the last five years post-COVID, we have been growing almost 11% CAGR. In Swiss francs, out of the last five years, in four years, the Swiss franc strengthened compared to the other major currencies like the euro and the US dollar.
Therefore, the Swiss franc growth in four years out of those five years is lower than organic growth. Still, overall, we added CHF 450 million to our top line in absolute last year. From a growth driver perspective, yes, it was a year where we increased prices massively 19%, so it was definitely our growth was driven by price. Volume mix came in better than we expected initially at -6.6%, so we had a better elasticity than we anticipated. Then from a Forex perspective, as I mentioned before, we are roughly at -4%. Looking at the different segments, Adalbert has already shown this by country, so I'm not going to spend too much time on this chart here.
We see we had an acceleration in Europe from 9.5% to more than 15%. We also accelerated in North America to roughly 9% growth in 2025. In rest of the world, as expected, we grew double-digit. I think what is really interesting is H1, H2. In Europe, we had a slightly lower growth in H2, as we also anticipated and communicated in July, because almost 18% growth is obviously not sustainable in Europe. What is really great is how we accelerate the growth in North America. Whilst we grew only 3.6% in H1, we grew almost 12% in H2. That's even above our expectations. Rest of the world also accelerating more or less double the growth in the H2 than in the H1.
In all major markets in rest of the world, like Australia, Brazil, China, Japan or South Africa, we grew double-digit. Okay. Now let me move on to the costs. Material costs. Some of you may now say, "Hey, did you actually overdo it, 19% price increase?" The answer is actually no, if you look at this here. Our material expenses increased quite massively compared to 2024, which means that the 19% price increase was not quite enough to offset that. So the fact that we increased our EBIT margin by 20 basis points is not because of our price increases, it's actually because of good cost management, which I will show you on the next two charts or three charts. So material expenses now are at 37.5% and have increased quite substantially. The main reason is cocoa.
When you look at the chart of cocoa, I mean, we are now looking back to 2021. You could even extend that chart and look back to the 1970s. Let's say from more or less mid- to end-1970s till 2023, more or less, the cocoa market was relatively flat, roughly between GBP 1,700 and GBP 2,000 per metric ton. Then we saw the huge increase coming mainly from the fact that we had not great crops, and so we didn't have that much supply and we had good demand, right? We had a deficit for three seasons or four seasons. Now, since we are in the 2025-2026 season, which started in October, we have a surplus. We have relatively weak demand in the chocolate markets, and we have a good crop.
We have a surplus of roughly 300,000 tons. That's the reason why the market came down. The big question is now, of course, where will the market go from here? What I can say is that a lot of the, let's say, fundamental issues like diseases like swollen shoot disease, right? Lots of the cocoa trees in West Africa has swollen shoot disease, which leads to a lesser crop. Those structural things, they are not necessarily gone. It's obviously unknown where the market will go from here, from this GBP 2,500, which is more or less 50% higher than three years ago, but substantially less lower obviously than one year ago. It's difficult to say where the market will go.
It would not surprise me if we had a bit of a correction next week in the market again, because oftentimes when markets go in one direction, it's too quick, you have kind of a correction later on. What I should also say is, when I look now into the future, we see Iran crisis, et cetera, et cetera. We have cost pressure from other areas as well, not just cocoa, right? Packaging material costs will go up. If fuel prices go up, our costs for transportation will go up. Sustainability not related to Iran, et cetera, is a cost that will go up in the future. Even though cocoa bean prices are coming down, of course there are, in the current environment, there are other costs that may go up and will go up.
Personnel expenses is one area that we have managed quite carefully, and I think, we see here the results. In 2021, we have had a ratio to sales of 21.5%, and now we are down to 19%. We've improved the ratio here by 250 basis points, all going straight to the EBIT margin, which is a good achievement, I think. Operating expenses include, for example, marketing expenses. Marketing expenses in absolute, we have increased. The decrease of CHF 50 million here is coming from the other costs that are in here, mainly supply chain costs. We've managed the supply chains quite well in North America and Europe and in rest of the world. We also have maintenance and repair. We have certain fixed costs in our sales force that we also managed quite carefully.
We have initiated quite a lot of cost savings programs, efficiency increase programs, which led to this good result here of almost 300 basis points decline. Depreciation stayed flat compared to 2024, but the ratio came down 30 basis points from 5.4%- 5.1%. Again, helping our EBIT margin and helping to offset the negative impact from the material expenses. That leads to our operating profit, which is up almost 10%. Actually, what I think is even more interesting, it's up more than 50% compared to 2021, right? We are coming from CHF 645, getting to CHF 971. So that's a 51% increase since 2021. So we went up 90 basis points, 60 basis points, and now 20 basis points. I think quite a good trajectory. EBIT by segment.
A lot of this increase in our EBIT margin is coming from North America, especially the financial community was always criticizing us a little bit because of the lower EBIT margin in North America. It was actually at 7.7% in 2021. Since 2021, we increased it by 600 basis points in North America. We also kept it high in Europe at close to 20%, even increasing it slightly more in 2025. Rest of the world is a market as Adalbert Lechner showed you, where we are actually expanding. We are founding new subsidiaries. In the beginning, typically, a new subsidiary is not that profitable. We are investing more in marketing, we are investing in the supply chain infrastructure, et cetera. That led to a slightly
Well, to a decrease in our EBIT margin to 10%. From here, actually, we are planning to increase it again because a lot of the investment has been done. EBITDA also in line with our expectations, +7.6%. The tax rate has been relatively stable, right? Over the last five years. We are now at 21.3%. We had some noise in 2023 because of the Swiss tax reform. But other than that, the tax rate has been relatively flat. Net income, again, a relatively you know, as expected, a performance with +8.1% in 2025. Capital expenditure has gone up in the last five years.
We were at roughly CHF 230 million, and we announced already couple of years ago that we are expecting CapEx, capital expenditure investments of more or less 6% of revenue. In the last three years, we were slightly below the 6%. In 2025 at 5.6% with CHF 330 million. Free cash flow, I mentioned, we had a negative impact from our inventory of CHF 320 million. If you take that out, our free cash flow would be at CHF 760 million, more or less, so higher than the year before. Going forward, we are quite positive on our free cash flow because this negative inventory net working capital impact, you can just have once, right?
Going forward, if cocoa remained at high levels, we would have zero impact, and if cocoa came down, it would rather have a positive impact on free cash flow. Earnings per share. I think this is also, financially speaking, a very good performance, very healthy performance. Great performance actually from 2021, up 54% from 2,050- 3,164. That's the highest level we have achieved so far in a very difficult environment, right? I mean, we have gone through inflation, we have gone through cocoa inflation, post-COVID. It was a bumpy road here. You don't necessarily see it here on the picture. It was not easy to manage it, but I think the company managed this quite well. Net financial position is coming in at CHF 1.1 billion, CHF 1,073 million.
We had the free cash flow of CHF 446 million, and then we gave back CHF 680 million to the shareholders. On the one side, with a dividend of CHF 345 million, and then we had the share buyback still running in 2025, giving back or buying back CHF 333 million. We also had a capital increase of CHF 200 million. We are still at a healthy level. We normally compare this net financial position with our EBITDA. As you have seen, EBITDA is close to CHF 1.3 billion, which gives a 0.84x multiple. We as a company have defined this multiple to be between 0.5x and 1x, so we are right more or less in the middle.
That is also the reason why we increased the dividend, because we have really a very healthy situation from a financial point of view and why we are also launching a new share buyback as of June 2026. Super healthy equity ratio at 54.5%. We are increasing the ordinary dividend just based on what I said to CHF 1,800. That's what we are proposing to the AGM. That will bring us to a dividend yield of 1.5%. Payout ratio will be slightly above the 50%. It will now be close to 58%. But it still gives us some room for further improvements in our dividend also in the next years. This is actually, it was the thirty first time in a row that we increased our dividend.
Market cap coming in at CHF 27 billion. Since 2022, we had a steady increase. In 2021, you may remember that the stock markets in general had a very high valuation, and our stock had a price-earnings ratio of around 60 at year-end 2021, so this was not a sustainable level. Overall here as well, I think quite a healthy performance from a stock market performance. New share buyback based on the financials. You can see that we can afford a new share buyback. We have very healthy net debt to EBITDA multiple. We have 54% or more than 50% equity. We expect good free cash flow also the next two or three years. Predictable free cash flow. Therefore, we are launching a CHF 1 billion share buyback as of June 1.
We will finish the current share buyback in the next couple of months. This gives us now some time to plan the next one of CHF 1 billion over three years. That's a snapshot of our financials. Now I move on to sustainability. In sustainability, you may remember we had a strategy for 2025. This strategy, obviously we now concluded it, and we had to work on a new strategy. We also launched 2030 strategy. I will show you also quickly on one chart how that looks like. Now from a 2025 point of view, what are our key achievements?
We said we defined all our priority materials outside of cocoa and said we want to be at 80% sustainable sourcing for those raw packaging materials, and we achieved 93.2%, so we actually clearly overachieved versus our original target that we set a few years ago. That's good news. From a cocoa sourcing point of view, we achieved 100% sourcing through our farming program or other responsible sourcing standards. From a climate perspective, you may remember that we launched a science-based target. Our goal, we set the medium-term targets till 2030 and long-term targets till 2050. We are now well on the way to achieve that.
We have made roughly 20% progress to achieve our 2030 targets, which I think is also good news. Packaging recyclability, our goal was to get to 90%, and we are at 92.4%. Also good news that we overachieved this important target. EcoVadis is an organization that measures organizations to see how far they are in sustainability targets and sustainability tasks, et cetera. We got actually a silver medal. We are top 7%. I think this is really a great achievement as well and shows from a neutral entity basically how they see Lindt from the outside. Cocoa sourcing. Cocoa being the most important raw material from a sustainability point of view because of the different challenges we have in the different origin countries.
In 2025, we further strengthened our child protection strategy, and we were supported by the ICI organization, which is an expert organization for child labor remediation systems. That was well on the way, and we made a lot of progress in this area. We also launched our Living Income pilot program. In addition to that, you may have read that there's a new initiative called TogetherCocoa. The Big Five manufacturers, Nestlé, Hershey, Mondelez, Mars, and Lindt, are jointly trying to improve the situation or to close the living income gap in West Africa. We are creating a foundation together based in Switzerland. Together we are going to tackle, let's say, the living income gap in West Africa. We also launched an agroforestry project in Ivory Coast, in Côte d'Ivoire.
We have to target to get to 20,000 hectares, and we are roughly at 3,000 hectaresnow. Also good progress there. Last but not least, all our cocoa is now Rainforest Alliance certified, which is also good news. You will actually see that from 2026 also on our packaging. Gradually we will include that in our packaging. Okay. I promised you that I will give you a quick, let's say snapshot of our new strategy 2030. Here you have it basically. It, it's indulgence rooted in responsibility. This strategy is centered around the three areas, sourcing with purpose on the one side, then caring for the environment and valuing people. Then around those three areas we have further, let's say, projects, and we have defined KPIs behind all of those areas.
For example, supporting cocoa excellence. There are several KPIs to measure that, and it's also published in the annual report. As you now see in the annual report, we have an integrated report where you also see non-financial numbers. In the future you'll also see that in our annual report. One area is reducing emissions, so we will explain how we do that and what we have achieved. One goal is to champion health and safety. As I said, I mean, these are just three examples. In all of those we will report against it. We have defined targets for all of those areas. You have seen good progress in sustainability actually in 2025. Also good progress that we have now a new 2030 strategy. From a financial point of view, I think we have quite a few key highlights, right?
Top line, we grew close to 11% over the last five years, double-digit, above our mid-term guidance of 6%-8%. EBIT margin or EBIT absolute, we actually grew by 51% compared to 2021. Our earnings per share in a very difficult environment, we increased by 54% over the last five years. I think those are definitely three very important achievements. As a consequence of that and as a consequence of the positive free cash flow that we expect, we are launching a new share buyback, and we are increasing our dividend to CHF 1,800. Very solid set of numbers. Adalbert will now show you how the future looks like and how we will achieve our 6%-8% in the mid-term. Thank you.
Thank you, Martin. Well, one thing is a strong performance in the past time, and the other thing, of course, is how is the outlook for the future. Taking the last five years that Martin has elaborated, we were forced to increase prices by more than 40% in the last four years. For three years we did not see any impact on volumes. Last year was the first year where we saw a slight negative volume mix effect of minus 6.6%. For us it's the clear priority how to get back to volume growth as soon as possible. This is what I would like to outline together with you.
First of all, we have to further strengthen our brand, because if the prices go up, the brand equity has to be stronger so that consumers accept the premium. We have to increase the visibility of our brand because we are an impulse brand. We are not on the purchasing list of consumers. People go to the supermarket, and we have to make sure they see our brand, and we convince them to end in their shopper basket. Of course, we have to be perfect in execution at all touchpoints. To give you an example, in our own retail stores, we did not see any price elasticity at all.
We could pass on the price increases with no volume decline, and this has to do that consumers are simply impressed by the perfect execution, by the friendly service, et cetera. What makes us confident that we will get back to volume growth pretty soon? First of all, we have a stronger than ever brand equity. I will show you some facts and figures to this. We will focus on the core and on key innovations as we did last year, and we have a filled pipeline with innovations. We will work on the visibility, and we will work on physical and mental availability of our brand, and we will continue to accelerate the expansion in new markets and especially behind our global retail division.
This is something we are proud of. Last year, Kantar, the very reputable company, did their yearly brand study where they evaluate the brand value across all categories. For the first time, we were the number one chocolate brand in value, and we were even within the top 10 food and beverages brand, if you see here between Nespresso and Nescafé, with a calculated brand value of CHF 9.4 billion. We were ahead of all other chocolate brands. If we see the track record of the last 20 years here, you can see that we were significantly accelerating our growth rates from 6.5% CAGR between 2005 and 2019 to 10.1% CAGR between 2021 and 2025.
It's a slightly differing figure from Martin because you started as of 2020. I excluded 2020 because it was the COVID dip. I said, if we really see like-for-like growth from 2021-2025, it is a double-digit growth in this area. You can also see here in 2025, with CHF 448 million organic growth, it was the strongest organic growth that we ever achieved. This also shows that we enjoy a healthy momentum that makes us confident that we can continue this momentum also in the future. However, we have to highlight that the growth was mainly driven by volume in the years 2005-2019, and it was strongly driven by price in the years 2021-2025. You can see it down there.
Price contributed 8% to the growth, and volume mix only 2.1%. In last year, it was even negative. Why do we believe that we have a huge headroom still for the years to come? If we compare ourselves with the big players in the chocolate market, we can see that we are still relatively small player. With 5.8% market share, we compare ourselves to 12.6% share of Mars, 12% Mondelez, Ferrero 10.6%. You could say now, "Okay, you are premium. You can never get to these market shares that your competitors enjoy." If we see our market shares in those markets where we are established for decades, like here in Europe, we have market shares between 10%-22%.
We believe there is no argument why we could not have 12% also globally. We know which areas we have to address. We know where we have to grow above market average. If you see here, especially in rest of the world, we have a market share of 2%. In Europe and North America, we have a market share of 7%, and in all regions, we continue to grow market share. It is a question of time that we also end up in the region of the other competitors above 10% market share. This makes us confident that we can achieve our 6%-8% for many years to come.
There is an interesting and also for us surprising study that we did on GLP-1, because also we heard the rumors that GLP-1 drug users are cutting back on their chocolate consumption, and the outcome of a Circana analysis, and Circana is consumer data, it's offtake data, was rather surprising for us. First of all, non-GLP-1 users, the market grew 4.1% in the total market, and in GLP-1 users, it grew 8.7%. GLP-1 users were eating more chocolate than non-GLP-1 were increasing their chocolate consumption more than non-users. Especially dramatic is the difference for premium chocolate.
Our interpretation is those consumers who are sacrificing on indulgence as they cut back on all high-calorie or high daily intake categories like I don't know, pasta and pizza and potato chips, they still are longing for some kind of indulgence. They are upgrading obviously to premium products under the motto less is more. A small treat, a small reward with moment of please instead of mindless munching For us, it was rather calming to see that GLP-1 is not exactly a threat for us especially in those markets like the U.S., where the penetration of GLP-1 is in the meantime rather high.
Our data tells us that 15% of U.S. households already have one consumer who uses GLP-1 drugs, and they represent 17.5% of the total chocolate sales. We all know that with the approval of GLP-1 drugs in pills, the penetration will most likely even further increase, and we will also see an increase in Europe and outside of the U.S. If we see the channels in which chocolate is sold, you can see in the line here, 43% of chocolate is sold in classic wholesale trade channels. That's also the backbone of our business. We are well established here, but still we see a strong potential, especially in extending shelf space, being more visible also on secondary displays and on promotions.
We expect a high single-digit growth in this biggest part of our business. Confectionery stores still represent 7% of the global chocolate market, and we play in this area mainly with our own stores. As you have seen, we generate nearly CHF 1 billion in our more than 620 own retail stores. Here we expect a strong double-digit growth rate as it was also in the past time an overproportional driver of our growth. E-commerce represents 6% of the total global chocolate market. Also here, we expect to grow double digit. We have an overproportional share in e-commerce as we are a gifting brand. Impulse products are of course less ordered online, but gifting products have a strong share in the e-commerce.
There is a huge channel, especially in Asia, but also in the US. It's the convenience channel, not only gas stations, but also 7-Eleven, smaller kiosk stores, and we are very weak in these channels, and we prepared an aggressive program to grow stronger in this important channel. We expect also high double-digit growth rate in this area. We have the so-called global travel retail for duty-free business. It's the Wolters and Heinemann, etc. We are one of the strongest brands there, and we expect to grow in line with the market. In this area, you have seen that we have reduced the outlook for 2026.
One reason is that we expect a kind of a slowdown in tourism, especially from Asia, that go through the Middle East hub. We will be affected not only here. The key effect that we expect is consumer sentiment with increased energy costs, increased fuel costs and hence a dampened consumer sentiment and spending preparedness. Then there is another channel, discounters, representing 14% of the total chocolate market. Within these discounters, you have so-called soft discounters, which have a high share of brands and a wide assortment, and you have the hard discounters. You know them here also from Switzerland. We decided already a long time ago not to cooperate with these hard discounters.
Because we believe for our brand and for our brand equity, we need an environment that gives our brand a certain stage, that also communicates the premium equity of our brand, and we don't see this in the hard discounters. This is why we had a red sign here. We have minimal presence, and we do not want to participate. We believe that we are better off strengthening the cooperation with all the other channels and giving them the opportunity to clearly differentiate and also to clearly sharpen their profile with a brand that is not represented in this channel. Where do we see tailwinds to support our growth ambitions? We see a trend which is around for decades, I would say. This is a premiumization overall in all categories, but mainly also in chocolate.
We are the number one brand benefiting from this trend, as we are the biggest premium chocolate brand on the globe. We see a growing middle class, especially in Asia, Middle East, et cetera. This growing middle class, of course, is striving for better products, is upgrading to premium products. We see around the globe an aging population, and an aging population means more hedonistic. It also means that they are striving more for indulgence, striving also for premium products. This is in favor of us. In terms of gifting cultures, we see also a higher cultivation around the globe. People spend more on premium gifts. We were hoping that consumer sentiment is improving. Actually, I should have put a question mark around this.
The developments in the last weeks are certainly a watch-out and a question mark behind this. This was actually our assumption for this year. We also see another trend. Availability of products is no longer an issue. Around the globe, you can order any product online. You have delivery services that deliver the products within 10 minutes, within one hour, within same day. What people are looking for is a shopping experience, and that's what we provide in our own stores, and that's also where we see that our brand is strengthened and our brand delivers experience that also help us then in the awareness and in the perception of the brand outside our own stores in the grocery stores. The last trend is the so-called health trend.
We see it year after year increasing, that people are going more to a mindful indulgence, and also this means that they go for premium brands instead of for cheap chocolate that they eat in bigger quantities. This brings me to the outlook. As mentioned, we have lowered the outlook this year to 4%-6% organic sales growth, but we stick to our improvement of EBIT in the area of 20 basis points-40 basis points. We confirm our medium- to long-term outlook, 6%-8% as of 2027 onwards and 20 basis points-40 basis points improvement of EBIT margin per year. As mentioned, why did we decrease the organic sales growth? We have seen for the first time price elasticity H2 in 2025.
We have expected that this would be kind of a sticker shock, which we have experienced also in the past time. It's not the first time that we increase prices. Consumers normally get accustomed to the new price points after six months, and then they get back to their old routines and to the brands that they have always bought. In the beginning of this year, we also saw clear acceleration. We saw clear improvement of the volumes. However, the Christmas business was also relatively weak. Then when we saw that all the geopolitical tensions in the Middle East kicked in, we saw clearly that we saw again consumers holding back, consumers being insecure and consumer sentiment suffering because everyone is worried about, as I mentioned, energy prices, fuel prices, et cetera.
What is the impact to them? How long does it last? We saw also travel restrictions and tourism suffering. We also suffer in tourism, not only in global travel retail, we also suffer in our retail stores. If you take our flagship stores in London, in Paris, in Vienna, in Zurich, in Munich, in Hamburg, they have a huge share of Asian tourists. If this would stay for a couple of months that the tourism is coming down, it will have an impact on our business and therefore, as a cautious outlook, we said we go down to 4%-6%. With this, I would say, Martin, please join me. We are here for your questions.
Ja, guten Morgen. Johannes Ritter, FAZ. I would like to know this impact of the Iran war, how much does it affect you already? How much is the percentage of sales that you're having in that region? Maybe also connected to the question, how much is due to travel restrictions now being affected? Secondly, with your Dubai chocolate, is there a problem now with this name? Do you have to change it or, what's your reaction to that? Last one on pricing. You mentioned the lower cocoa prices. What does that mean for your pricing for this year? For example, for the Gold Bunny or for Easter time, will it be cheaper than last year? Or, what will you do on the pricing front?
Let me start with the first question. I can not give you precise figures, of course, but let's say the sales in Middle East and the sales in the impacted area from the Iran crisis, they are negligible. That was never the reason why we corrected our guidance. The sales in global travel retail are more significant for us. The key reason as mentioned was not that we are concerned about global travel retail or Middle East. The key concern is that we were already on a very low consumer sentiment in the U.S. and in Europe, and we saw that it was improving. Inflation came down.
All the insecurities with tariffs were improving because people got used to it and saw, okay, it's still the business is going on. Into this upward trend, we suddenly now saw a shock with oil prices going up by 30%. You have seen the headlines in Germany about the fuel prices, more than EUR 2 for diesel, etc. This was a setback or is it okay? It will not help. The consumers are, I always say, in champagne mood and go for premium chocolate. We would see this cautious behavior that we have especially seen last year also in the Christmas business, where the total market suffered severely.
We said, "Okay, it will take some time to normalize this." The impact is more on global consumer sentiment and less on the sales in this region. Your second question, are we concerned about the name Dubai Chocolate? I don't think that anyone links now this conflict to Dubai. I mean, Dubai was a collateral damage, I would call it. Clearly, the conflict is between Israel and Iran. If the name would be Tehran Chocolate, I would be more worried. But I think Dubai Chocolate is. Also, we see the offtake figures, is still a very popular recipe.
We have achieved a huge trial rate last year, and we measure also the repeat purchase rate, and the repeat purchase rate is in line with our strongest brands. We are not worried that this is a one-day wonder, but this is a product which is here to stay. As you have also seen, we started with one product. It was the milk tablet. We extended to a dark variation, to a white variation. We extended it into all usage occasions. We offer Easter eggs, we offer Valentine's hearts, we offer pralinés. And as mentioned, we already extended another city line with Tokyo style. For sure, this is a new product range which addresses younger target group and offers attractive exotic recipes.
If Dubai is certainly still, let's say it stands more for this recipe with kadayif and less for the city. You mentioned pricing. Martin, would you like to kick in here?
I can start. You know, in cocoa, you saw actually when the cocoa prices went up, the most players in the chocolate industry that did not increase the prices immediately because typically the chocolate industry has a coverage of cocoa beans of around, I would say, six months-12 months, right? You have normally a lagging effect when the market goes up, but you have the same lagging effect when the market comes down. In general, we do not expect also from a competitor point of view to have an immediate decrease in cocoa, in chocolate prices. Private label typically has a bit shorter coverage. They are probably more in three weeks to three months-six months range. There we may see a quicker decrease.
For now, especially because lots of the other costs go up, I mentioned logistics go up now driven by the higher fuel price, packaging material costs will go up, et cetera, et cetera.
Hazelnuts prices.
I'm not expecting actually in the chocolate industry an immediate impact from this. From an Easter price point of view, Easter 2026, I mean, that's a different story, right? Because Easter prices are typically set six months or seven months before in summer.
This is kind of like the same as what happened in 2025 from a price increase perspective. Easter prices typically in the market, they will be at a higher price than last year, not just for Lindt, but also for our competitors.
How much will they increase?
The Easter prices will still increase double-digit versus last year. That's implemented already across the countries.
Marc Kowalsky, Bilanz. If I remember right, almost every year since you took over Russell Stover, you report new problems with this company. In hindsight, would you do this acquisition again?
That's a hypothetical question that doesn't make sense to answer. Russell Stover is part of our portfolio. We have benefited, I would say, in aggregating the logistical and whole supply chain in the U.S. We benefit today in distribution, in logistics, in shared service, in IT, et cetera. In this respect, it made us bigger and stronger. Does the development of Russell Stover in terms of sales make us happy? Certainly not, yeah. In the beginning, we did streamlining. We saw that the price elasticity is bigger on weaker brands, and Russell Stover is for sure a weaker brand. We also do not have the funds to support Russell Stover in the same way as Lindt and Ghirardelli, because they simply have the critical mass, are bigger or have higher margins.
I think Russell Stover, as a part of the portfolio, fulfills its role. It helps us to have a stronger footprint and be a more efficient player in the market. As a brand, we are a bit. We are working hard to stabilize the sales.
I wouldn't underestimate what Adalbert Lechner said, you know, that, let's say, the impact on our profitability, as you have seen in my charts as well, overall, that we are working together in supply chain, for example. We are able to bring down costs, right? If you look at the North American segment, we have improved from 7.7%- 13.7%, our EBIT margin, and mainly also driven by the fact that we are improving massively our supply chain costs, which we wouldn't have been able to do without Russell Stover.
Selling it off again is not an option then?
It's not an option that we evaluate at the moment. Please. Sorry, you were first.
John Revell, Reuters. A couple of questions, if I may. You increased prices quite a lot last year, and obviously, then there's a bit of pushback by consumers. What's the kind of plan with prices for this year? Are you still gonna increase prices or you're actually gonna cut prices after things have gone up quite a lot? That's the first question. Secondly, can you just give us a bit more kind of color on the mood amongst consumers out there? You say travel retail and people. Is it people just traveling less, or just people feeling less jolly when they are traveling? Or just a little bit more detail on why you think the customer sentiment is obviously hitting your outlook.
Finally, when do you think you're gonna get back to organic, the volume sales growth? Is that gonna be this year, do you think? Or at least that's a priority for you guys, but when you're aiming for that. Thank you.
Let me first explain why we increased prices like we did. We increased prices by 19%. If we compare this in the market with other players, it's on the high side within branded products. It's lower than private label did. Why is it on the high side within branded products? It has to do with our recipes. In our recipes, we don't use wafer a lot, with one exception. We don't use plant oils. We use cocoa butter, which is the most expensive ingredient at all. You will find cocoa butter. We use high contents of cocoa. We sell our Excellence tablets up to 100% cocoa, 99% cocoa. We have a 90% mild with an additional component of cocoa butter, which gives it a better melting properties.
It is due to our premium recipes that we were forced to increase prices higher than most of our competitors. Still, we lost margin. Our gross profit came down by 270 basis points, as Martin has shown. It's not that we increased prices to fill our pockets or out of funds. We were forced to do it, and we did it cautiously. We passed on only part of the cost impact to consumers. In part, we could, as Martin also has outlined, compensate with efficiency increases and with cost-cutting measures. That's number one. Number two, yes, we have in the H2 of the year, we saw price elasticity because it was the fourth consecutive price increase.
We saw also an improvement already in the figures that we saw in January and in February, and we saw a very different behavior channel to channel. In our own retail stores, consumers accepted the price increases pretty well. We had some countries like Europe, where you've seen a growth of 15%, where the acceptance was also higher. We saw areas where our brands are probably a bit weaker, like in the distributor markets or even in the U.S., where the price elasticity was higher. We expect that the consumers will accept these prices in the course of this year. To your question, what will happen this year? In the H1, we still will see price increases. Why? We have a spillover of the price increases we implemented H2 2025.
As Martin has outlined, we see a double-digit price increase in the Easter business. In the H1, we will see substantial price increase, and we also expect negative volume. To your question, when do we expect to get back to volume growth again, we expect in the H2 when we also cycle against the period where the volumes has dropped already last year, that we get back to volume growth and as of thereon, we hope that we see the old dynamic that we always saw that the growth is mainly driven by volume for 2027. Your second question, travel retail, et cetera, consumer mood. As mentioned, in travel retail, we expect mainly that we will see a lower number of passengers at the airports.
Today, most of the Asian tourists travel across the hubs in Middle East, be it Doha, be it Dubai, et cetera. We see at the moment this is completely closed, and the question is, even if it opens and like, Trump said yesterday, the war is more or less over, let's hope that he's this time right, not like in Ukraine when he also announced that it would be over in 24 hours and the reality is a bit different. Let's say it would be over. I still think it will take time for consumers to regain trust to use this hub, also in the months to come, and this should be an impact on the passenger numbers. What was the last question?
Volume. When volume picks up again.
Well, I said it already.
Yeah.
Yeah.
Any further price increases in addition to the spillover from last year, are you gonna increase prices again this year on top of that, do you think?
Yes. Partially. In some areas, we have to increase prices on dark tablets because dark tablets are, if you have 100% cocoa, so the impact of cocoa is still high, and Easter. That's it.
As a percentage you can give to this year, you might do price-wise?
It will be mid-single-digit in this area for the full year. Jud.
Hi. Thanks. Some of my questions have already been answered, but if you could brief us on how you say you talk about the weak sentiment around Christmas. Could you give us a bit of color on how the Christmas season went, how the consumers adapted through price increases? There was also this tough negotiations. For instance, in France, there was a major supermarket chain that refused to distribute the Christmas range. Could you brief us on where you are now in this negotiation with that retailer? The question is, do you still intend to increase prices with the time lag? The negotiations were really tough throughout the years with major retailers. This time they have some quite strong arguments to ask for more promotions, price reductions.
There's a lot of arguments on their side. The consumer sentiment is weak. In Africa, Ivory Coast and Ghana, the price that is gonna go to farmers is gonna be more than halved. If the producers get 1/2 the price, why wouldn't you yourself cut the prices you're billing to consumers?
Well, that's a couple of questions in one question. Let me start with the first. At the moment, all frictions with our customers are solved. As you have probably read, since beginning of the year, we cooperate with no restrictions with Migros. The E.Leclerc issue in France has been solved, so we have a full annual agreement with E.Leclerc. You know also in France that by end of last week, we had to find an agreement with all customers and all price increases were accepted. Also, in the U.S., the price negotiations are closed. This is not a risk anymore. Also, to be clear, our competitors went out with price increases. So it comes as no surprise to our retail partners.
I think from this side we do not expect. What we of course saw Easter business. What we have seen, this was your first question. What we have seen in the Christmas business is the price increases itself. You know, we are a category which is not in the focus of every consumer. Consumers do not know by heart what is the price of an Excellence tablet or also of a teddy of Lindt. They buy it once a year or twice a year. What happened is that there was a huge press campaign also across the globe. Chocolate is getting more expensive. Chocolate is now so super expensive. Cocoa prices soared, et cetera.
I think the awareness in the Christmas business that chocolate prices are higher was driven by several factors and public communication and consumers were more aware. What we observed is that especially products with high out-of-pocket prices suffered. Let's say the tablets in the area of EUR 3 or CHF 3 , even if they were higher than the year before, that was fine. But if there is a Lindor 500-gram carton, which is a typical gift at Christmas, and suddenly the price tag is close to CHF 30 or EUR 30 , we really saw substantial volume declines. This, we will tackle this. We will address it with price-pack architecture.
In most of the countries, we will add incremental sizes for the next Christmas season so that we have more affordable prices. We have a 47-gram corner that sells them below EUR 20 or below CHF 20 . We have seen already in countries where we did it that we can absorb them or address these volume declines. The situation of farmers, Martin Hug,
Well, just in general, with regard to price decrease, right? That's a bit early days as well. It's early days. You know, the chocolate industry has not really increased prices in line with the cocoa market. If you look at lots of our peers, they had a significant decline in their EBIT margin. You have seen in our case, we lost 270 basis points on the gross profit margin. We have actually not increased prices in line with the cocoa market, right? The cocoa market had to drop significantly even to be back to square. I would also say, as I mentioned, cocoa market may go up again. I mean, there's still a long way to go now till 2027, a lot can happen. I would not assume right now that the cocoa market will stay where it is today.
I mentioned all the additional costs. I mean, we will have—we have massive headwinds from packaging material costs, from logistics costs, et cetera, et cetera. In reality, it's far too early to discuss price decreases right now. From a cocoa bean perspective, yes, I mean, we have kind of two different worlds, right? We have the world of Latin America and of West Africa or Africa outside of Ghana and Ivory Coast. In Ghana and Ivory Coast, we have quite a regulated market where the farmer only gets about 50% or 60% of the world market price, while everywhere else, the farmer gets the world market price. Everywhere else, it's not an issue. Now, if you say Ghana and Ivory Coast, it has not been an issue because the market was very high, right?
The farmers got really a decent income. Yes, in West Africa, in Ivory Coast and Ghana, with this farm gate price, there is a problem. That's why also the chocolate industry is now working together on this TogetherCocoa initiative with what I mentioned, Nestlé, Mondelez, Hershey, Mars, Lindt. We work together on trying to close this living income gap. We believe if we do this together, and we still have to find the right way to do that, we don't have found that yet, but we are creating a foundation jointly, and then we are tackling this living income gap together. I think that's the best way to try to solve it.
We have written questions from the webcast, and I will read them and then answer them. We have a question from Ivo Ruch from Finanz und Wirtschaft. How do you justify the dividend increase? The 20% increase far exceeds profit growth, is your question. I will take this as a first part, and then Martin, you can also elaborate on it. Yes, in this year, the 20% increase exceeds the profit growth. If you take it cumulated throughout the last years, then what Martin has explained, where the EBIT grew by 50%, I think we just had room to catch up. And altogether, I think the dividend increase is in line with the profit increase.
Look, I think if you analyze dividends or share buybacks, you look at the balance sheet, you look at the equity ratio, in our case, you can tick that one. It's almost 55%. Then you tend to look also at net debt to EBITDA. It's also ticked because it's well below one. I mean, lots of our peers, they are above two or three as a ratio. We expect very strong free cash flow in the next two years or three years. We are in a business that is more or less predictable. Now, of course, this year we are taking down the forecast slightly, but at the end of the day, we still have a relatively predictable business, right? Also a more or less predictable free cash flow.
We are confident about this increase in the dividend.
There's a second part of the question of Ivo Ruch. Are you ready to invest in lower prices given the decline in cocoa and the competitive retail environment? First of all, we have to evaluate the situation by the end of the year. We have, on the one side, a relief on cocoa price. We have, on the other side, increases in other raw materials, increases in sustainability, decarbonization costs, et cetera. We will see what the total mix gives. We also expect that we have a tailwind from this side, and then we will evaluate how we distribute it. First of all, we have to regain margin because we sacrificed margin in the years. Then we want to support behind the brand because a key.
Our key objective is to regain volume growth again. Of course, we also do not exclude price decreases if we have room from the cost side. We have another question from Simon Harvey, Just Food. It does not seem volume mix will rebound into positive territory this year if further double-digit pricing is planned. What is management expecting? To be clear on this, we said double-digit pricing on Easter. For the full year, we said mid-single digits. That's a difference. Yes, at the moment, we expect a slightly negative volume mix also for this year. We expect negative volume mix H1 and a flat to positive volume mix in the H2. As of H2, we expect volumes to grow again.
In the combination of half year one and half year two, it might be slightly negative. Are there further questions from the audience, please?
Thank you. Hans-Jürgen Maurus, Deutschlandfunk und Kilchberg. I have two questions. Number one, does the very strong Swiss franc
Does not hit you in any way, or do you just hedge it? If you do so, could you tell us what the dimension is? The second point, as you mentioned already, the Middle East war and the direct and indirect effects. Are there any, at the moment, supply chain issues to worry about? Maybe what do you hear from the logistics companies at the moment? Thank you.
Okay.
Let's start with the Swiss franc. You know, the Swiss franc impact is mainly on our top line because we are reporting in Swiss francs, right? As you probably saw, organic growth typically is higher than our Swiss franc growth. From a cost perspective, because we are producing the majority that we sell in the U.S., for example, we also produce in the U.S. A lot that we sell in Germany or France, we also produce in those countries. Therefore, on our costs, the Swiss franc impact is not that material, and we can easily manage it. It's more the top line, right? The top line has a certain impact because we're reporting. Then Middle East supply chain?
Middle East supply chain, as mentioned, our business in the Middle East is moderate. So far we also ship products via Red Sea, for example, to Saudi Arabia. We have, at the moment, of course, some restrictions, but we don't expect them to be temporarily, so that's not a big thing. We see more the effects of drivers for inflation that might impact the sentiment of consumers globally.
A shout.
Here is a question.
That was quite a shout. Just a follow-up on the GLP question.
Yeah.
Obviously, you've got your statistics for the U.S.
Mm-hmm.
Do you think that's mirrored as a global phenomenon as well? Have you got any sort of insights for that globally and, yeah, how do you see it?
At the moment, it's the only facts that are available.
Right.
The penetration of GLP-1 drugs in Europe is still very low. You probably read that we are on the verge of the approval of GLP-1 pills in Switzerland. I think we can learn from the consumer behavior in the U.S. and we would of course expect that it's not so much different outside of the U.S. Rita?
You said volume went down last year, so does that mean that you also lost market share?
No. We gained significantly market shares in value as our price increase was higher than competition, and we could keep the volume share flat because the total market suffered in volume. That's the answer. Herr Benz had a question.
Yes. Thank you very much. Sorry about a follow-up on prices. You already said quite a lot, but, you know, lowering prices would also be a means to reignite volume growth, of course. I still don't understand why you are so defensive in that. I mean, cocoa prices have come down a lot, and I guess consumers expect calmer prices to come down. When are you starting to lower prices again? Can we expect something for the H2 of the year, or when the time has come that you will start actually?
As Martin has mentioned, all branded goods manufacturers are covering their cocoa normally in the area between 12 monthsand 15 months due to good reasons. We go to our retail partners with a price list. We offer a price that is valid for a full year. We cannot speculate and say, "Okay, we offer a price list with this price," and then we start to buy the cocoa beans probably at a much higher price. Especially in a volatile period like this, when we offer the price list to our retail partners, we are normally covered with cocoa physically and with futures. This means that for this year, the decline that we saw recently has no impact. We can evaluate the situation for 2027.
As I've mentioned, we consciously also sacrificed on our margin. Long term, this is not a healthy situation. Now we could cover it now with cost initiatives, but at the end, we want to have a healthy P&L with a decent margin also that allows us to reinvest in expansion of retail stores, in advertising, in promotions, et cetera. Once we have re-established this healthy P&L, we will also consider or we will address the pricing issue. There are several means in RGM or Revenue Growth Management. We can increase the level of promotions, which probably has a bigger impact on volumes than addressing the list prices.
We can partially address price points where we see the biggest drops in volume. It must not mean that, widespread, we lower the prices. I would say this is a decision that we have to take in autumn 2026, so it's too early to say anything. As Martin has said, we have seen in the last years the cocoa price coming down like this and within months it was back. When it went up to 10,000, it happened within two months, I think. We first have to see where the situation is with our coverage for 2027, and then we will make a decision. We do not exclude, of course, those prices can come down.
Because it wouldn't be ideal either to decrease prices and then six months later to increase them again, right? I mean, that's not the way how the chocolate industry typically works.
I understand you negotiate prices only once a year because, for example, with Migros, I think there were price increases last summer, so in the middle of the year.
Mm-hmm.
Are there instances where you negotiate twice a year, for example?
Yes. It can happen, and it's sometimes even announced already in the beginning of the year. Yeah. For example, beginning of the year, we tell them, "Okay, Christmas, we will go up," or, "We will have a second round of price increases in autumn." For example, in Germany, we print the price tags on the packaging, so it is not meaningful to do this changeover too often. We do it at the end of the summer when inventories is low, and then we fill the shelves with the new products with the new prices. There are different behaviors from market to market. In the U.S., it's more February, March. In France, it's regulated by the law. This is from country to country different.
A couple more questions.
Ir-
Sorry.
Shall I?
Yeah. Go ahead, please.
Irina Kiselyova from the Tages-Anzeiger. Just two days before the war in the Middle East started, you announced the Home of Chocolate in Dubai. Ernst Tanner communicated this in the Swiss media, and he said that you worked on the contract with the government very hard. Will this be open in 2026, or is there a timeline now?
I think this was never announced by Ernst Tanner that it will be opened in 2026 because we were just like we are just closing the terms and deal with Dubai. The plan to open is significantly later. This is a, you know, long-term project. We even if Dubai is now facing all these issues, we believe that the future in this region will be great. We have the opportunity to cooperate with the ministry there and open a chocolate museum like we have it here in Kilchberg. This is a project that is already running now for several years. Until this museum will open, I think it's more 2028 or 2029.
By then we hopefully have a stable situation again.
Yeah. Just to follow up. With the buyback, can you give us a little bit of reasoning why you decided to do the buyback? Couldn't you think of, I know, something better to do with the money? I know, buy something or build some more factories, maybe. That's the first question. Secondly, Martin, you said about the cost, it could be price increases in packaging and transportation because of the oil situation. I know it's very early days, but is there any kind of quantification of how much that could be perhaps moving forward? Just a number you could say to that, perhaps.
Let me take the first part. Why buyback and why not an acquisition or buying or building some factories? Our clear focus, I've said this since day one, is organic growth. We have demonstrated last year that we grew CHF 448 million organically. If you monitor the global chocolate market, you will hardly find any premium chocolate company in this magnitude. I prefer to grow CHF 448 million with our existing brands, strengthening these brands, capitalizing the investment that we put behind them, filling the idle capacity in factories instead of having the complexity of another CHF 440 million small brand that we would have within our portfolio.
I think it's certainly not the preferred option that we go for. Why then a share buyback? I think you should also see that we have a kind of a dilution of the capital with a stock option program. Anyhow there is also a need for a share buyback. Martin, you can explore what is the benefit of a share buyback for our investors.
What about organic investment, though? I know more shops or more.
Yes. I would say, I mean, we also have to balance here the speed that we can digest. With 53 new stores on a total of 620 stores, I think, our people were rather at the limit. We only go for stores where we feel confident that this is the right location, that we will be profitable. This also holds true for flagship stores. We are not interested in any flagship store for image reasons. A flagship store has to deliver the same profitability as the smallest store in the most tiny area. I think we have a decent investment in our expansion and still have money left over for
You see that we actually invest 6% of sales, which is higher than four years or five years ago. It's more than CHF 300 million. We are not holding back when we see an opportunity, when we see a payback. I think that's important to bear in mind. You know, our strategy is to have a balanced approach, dividends and share buyback. We are not leveraged. Our balance sheet is not leveraged at all, so it's not kind of going to change the dynamics a lot from a balance sheet perspective. Then from a price, your other question was about cost impact. That's too early to assess. I think it will hit first in our logistics, surely. When a truck goes to a gas station, it will cost more. Secondly, will potentially be some packaging materials.
Thirdly, probably also container costs will go up, right? Even though our typical route to Asia is not through Middle East, but around Africa, it may still have an impact on the container prices, potentially, for sure.
M&A is not a theme at all then, buying anything?
Look, we evaluate everything that comes on the table, but so far there, we believe that organic growth is for us the preferred route. We have some written questions that I would like to present to you. Verena Kainrath from Der Standard in Austria. Austria is introducing a new law against shrinkflation. With less content in the same packaging, to what extent does Lindt use this instrument to offset higher costs? Very clear statement from our side, we never did anything like shrinkflation. Our tablets, our chocolate tablets, are since 180 years 100 gram, and they will be also 100 gram when cocoa prices go up. This is why we preferred also the painful way to increase prices instead of lowering the content.
We clearly said we will not play with the trust of our consumers into our brands. What I explained, and I think you referred to this, is that we have, of course, different price packs in the market, especially for Lindor. Yeah, we offer Lindor in a four-pack. We have Lindor in 75 grams. We have Lindor in 100 grams. We have it in 200-gram Cornets, and we have it in 500-gram Cornets. What I said is, if we see that 500-gram Cornets are really way too high in the export price, we can add another size with 337, but that's not shrinkflation. That is a price pack architecture. We offer different sizes. You have another question. You mentioned your new flagship store in Vienna.
It is flanked by two other shops almost within shouting distance. In 2027, Lindt will also open a new chocolate experience world in Vienna. How many Lindt shops can a city center sustain? Isn't there a risk of market saturation emerging here? It's a very valid question. I don't know who has ever been recently in Vienna. It is impressive to see within, I think, 800 meters, three Lindt stores, and I can tell you all of them work fantastically. We were surprised about the low cannibalization when we opened the flagship store in Kärntner Straße 1, and we have opposite of the Stephansdom another store. It suffered slightly, but less than we expected and all three stores are profitable and are very strong.
The reason is that the stream of tourists in Vienna goes more or less through one channel, and that's the Kärntner Straße. So you have all the tourists there. Everyone goes through the Kärntner Straße to the Stephansdom, and on this route we have three different stores. Yes, we are very proud that we will open in 2027 in Kursalon Hübner on 6,000 square meters, another experience center with a museum, with a shop and with a coffee, and I'm sure this will be an enrichment for the city of Vienna. There is another question from Tanja Fries in Lebensmittel Zeitung. What impact does the decline in volume have on factory capacity utilization? Martin.
Well, we have seen that last year our volume was down 6.5%. At the same time, we have seen that our operating costs improved massively as percentage of sales, so it shows that we have been able to offset it. Of course, there is an impact from lower volumes because you have less cost absorption, fixed cost absorption. In our numbers you cannot see it, meaning that we have been able to compensate it, which is good news.
Are there further questions here in the audience? If not, I would say thank you for your interest, thank you for your attention, and have a great day, and have a golden Easter time. Thank you.
Thank you very much.