Troubled chocolate maker Barry Callebaut has increased sales volumes during its financial first quarter, but the growth has meant a tumble in profit margin.
Overall sales volume grew in real terms by two per cent during the company's first quarter ended 30 November.
Sales revenues grew by only 1.5 per cent in real terms, once currency fluctuations are removed from the equation.
This means the profit margin dropped to nine per cent in the first quarter ended 30 November from 13 per cent the previous year.
The Zurich-based manufacturer and supplier of cocoa and chocolate products cited a turn around in both its ingredients and its retail businesses as leading to higher revenues and sales.
In particular the company said its food manufacturers unit and its gourmet and specialties unit contributed to the increased profit.
Due to the encouraging sales figures management said it expected growth for the three year period 2004/05 through to 2006/07.
Expected average organic growth is targeted at three to five per cent.
Operational profit growth of 10 per cent.
Management forcasts net profit growth to be in the region of 12 to 15 per cent.
Last year's debt restructuring helped reduce financial costs by 2.4 per cent.
The company was able to increase its net profits by 15.8 per cent to CHF 63.9 million (€41.3m).
Overall volume sales experienced organic growth of two per cent to 299,417 tonnes in the first quarter. Sales revenue increased by 3.8 per cent to CHF 1,198.5 million (€775m), although this figure was boosted by favourable currency exchange rates.
Operating profit was CHF 100.1 million (€65m) a rise of 14.7 per cent.
Sales revenues in the food manufacturers business unit increased to CHF 527.2 million (€341m), a rise of 13.8 per cent.
Volume growth was 166,229 tonnes, an increase of 10 per cent resulting from increased outsourcing and share gains in key markets.
For the cocoa unit there were decreases in both volume and revenue sales.
Barry Callebaut's own growing needs for butter and liquor caused volume sales to drop to 32,918 tonnes.
The firm's increased need for its own ingredients led to the 2.1 per cent decrease. The ratio of powder sold decreased, meaning cocoa unit sales revenues were CHF 112 million (€72m), down 18.3 per cent.
The food service and retail segment of Barry Callebaut also had mixed fortunes.
The gourmet and specialties unit had sales revenues of CHF 157.4 million (€102m), an increase of 9.2 per cent.
Revenues in the consumer products unit however fell to CHF 401.9 million (€260m), a decrease of 2.1 per cent.
The decline is in part due to the deliberate discontinuation of unprofitable customer label contracts, management said.
They stated that the company Christmas business had seen good sales and that its order books for the upcoming Easter season were "looking good".
Company chief executive Patrick De Maeseneire said that the first quarter leading up to Christmas was normally the firm's strongest.
"This year we had a particularly good start into the new fiscal year thanks to solid growth in our business with industrial and artisanal customers and a positive contribution to the operating profit from our European consumer business," he said.