Cocoa prices, which closed in on multi-year highs on Tuesday, look likely to remain firm, chocolate maker Lindt & Spruengli said as its highlighted "challenging" conditions and curbed expectations for its 2009 results.

The Swiss confectioner, which sells in North America under the Ghirardelli brand as well as its own, said that it expected the "challenging situation" in many commodity markets to "continue… for the time being".

However, Lindt, which is also a big user of milk and sugar, said the forecast applied "especially" to cocoa, whose price is being underpinned by forecasts of a fourth successive season of production falling behind demand in 2009-10.

The comments come a week after analysts at Deutsche Bank forecast that Lindt's operating profits would fall nearly SFr60m short of company guidance of SFr360m for this year if cocoa costs remain near their current levels.

"The recent cocoa price increases provide downside risk to 2010 profits guidance," Deutsche Bank said.

Lindt said in Tuesday's statement that it expected a "gradual improvement" in consumer sentiment in the second half of 2010, after an initial period marred by softer demand and exchange rate fluctuations, as well as higher commodity prices.

'Challenging situation' 

The forecast came as the group said that operating profits for last year would come in towards the lower end of previous guidance of SFr260m-280m.

Sales during 2009 had hit SFr2.52bn, a 1.9% fall in Swiss franc terms but, excluding currency effects, 2.3% higher.

"In view of the challenging situation on the markets for premium and luxury products, this sales growth… is a satisfactory result," Lindt said, adding that its US brands had been America's fastest growing last year.

'Low point of sentiment'

The results were termed "in line" by Deutsche Bank, who flagged that the potential for weaker 2010 guidance might "create some volatility near term" in Lindt shares.

A potential revision of forecasts on March 16 would, nonetheless, "mark the low point of sentiment" and create an "attractive buying opportunity", Deutsche added.

However, analysts at London broker Icap ditched its "buy" rating on Lindt, saying the multiples at which the chocolate group's shares were trading looked "stretched"

Lindt shares ended 1.3% higher at SFr2,278.

On commodity markets, London cocoa for March closed up £28 at its day high of £2,318 a tonne, within £20 of a December top which was the highest for a spot contract since 1977.

In New York, cocoa for March stood up 1.9% at $3,464 a tonne in late deals, less than $50 below last month's 40-year high for a near-term lot.