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Barry Callebaut restores growth as Petra integration advances

By Oliver Nieburg+

03-Apr-2014
Last updated on 03-Apr-2014 at 12:29 GMT

Barry Callebaut net profits up 2.7% for H1 2014
Barry Callebaut net profits up 2.7% for H1 2014

Barry Callebaut has returned to net profit growth in its half year results as it further integrates the cocoa ingredients business acquired from Petra Foods.

The company’s sales for the first six months of fiscal 2013/14 grew 21.5% to CHF 2.9bn ($3.3bn) and net profit was up 2.7% to CHF 119.6m ($135m).

For the same period last year, the company’s net profit fell 7.4% as it contended with acquisition costs for its high-profile buy of Petra Foods’ cocoa ingredients business and capacity constraints in Europe.

The rise for this term was attributed to the further integration of the Petra Foods business and gains in emerging markets. Mexico and Brazil were highlights in the Americas, while China, Japan, Indonesia and Malaysia were the strongest performers in Asia-Pacific.

Petra contribution

Barry Callebaut’s CFO Victor Balli said during a media conference today: “The recently acquired cocoa business brought our combined global cocoa business to a new level with an additional CHF 380m ($429m) turnover, plus seven additional factories and almost 2,000 new colleagues.”

“We managed to turnaround the cocoa business acquired from Petra Foods. Prior to the acquisition it generated losses – now for the first half of this fiscal year it has already contributed positively with CHF 12.9m ($14.5m) to the group’s operating results.”

The company grew its sales volumes by 17.6% to 876.297 metric tons driven by additional capacity from the Petra Foods acquisition.

The overall chocolate market grew volumes 3.2% over the same period, according to Nielsen data.

Petra purchase price update

Barry Callebaut said it could achieve a CHF 30m ($34m) operating profit for the Petra business for the full-year.

Callebaut CEO Juergen Steinemann said: “We are still in dispute about the final purchase price, the discussions are ongoing….it will take certainly another few months.”

Petra Foods has accused Barry Callebaut of ducking out on almost $100m in the purchase price for Petra’s cocoa ingredients business, a claim Callebaut disputes.

Other drivers

Barry Callebaut added that half year growth was fueled by long-term outsourcing and strategic partnerships such as supply deals with Mondelēz and Hershey and the firm’s gourmet & specialities business.

Excluding the Petra Foods acquisition, emerging markets accounted for 28% of the firm’s sales volume, up from 22% the same period last year.

‘Challenging environment’

The company said the operating environment for the six months had been challenging.

“Currencies in many markets weakened especially in emerging markets therefore imports from Europe became more expensive. On top of that GDP growth slowed down in many emerging markets,” said Steinemann.

“We saw some significant price increases for certain raw materials particularly cocoa beans and milk powder,” he continued.

However, higher raw material prices do not impact Barry Callebaut because it passes these costs to its customers for most of its business.

Balli said: “The supply deficit [for cocoa beans] is not as big as it is said in the market – we believe we have a pretty good harvest.”

The company expects 6-8% average volume growth for the full year and EBIT per metric ton restored to pre-acquisition levels by 2015/16 (CHF 256 per metric ton).

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