Barry Callebaut, the Swiss company which is the world's leading manufacturer of high-quality cocoa and chocolate products, has published its first set of quarterly results in line with the provisions set out as part of a new refinancing package, and the results make encouraging reading.
The company saw strong improvements in both sales and profits during the quarter. Volumes up 19 per cent to nearly 277,000 tons helped lift revenues by 48 per cent to SF1.06 billion (the faster rate of growth in value sales coming from a massive hike in cocoa prices), while net profits for the three months to November were up 20 per cent to SF48.5 million. Operating profits were ahead 18 per cent to SF79.3 million.
"The company made further progress towards its strategic objectives to enhance its leadership position in chocolate for industrial customers as well as for professional users, to build a successful consumer products business through the restructuring and integration of Stollwerck and to focus its sales of cocoa products to key customers," Barry Callebaut said in a statement.
This shift in focus, away from the volatile raw materials market (no more so than at the moment with troubles still ongoing in the Ivory Coast, the biggest cocoa-producing market in the world) towards more stable, higher-margin consumer markets is clear. Sales volumes in the cocoa arm were deliberately scaled back by 10 per cent but were offset by a 5 per cent rise in volume sales to food manufacturers and a 4 per cent rise in volume sales of gourmet and specialty products.
But the greatest improvement came in the consumer products arm, where volume sales surged 259 per cent as a result of the acquisition last year of the German confectionery group Stollwerck.
Total revenues from the cocoa division were higher than the previous year at SF139.1 million (SF98.1 million in 2001) with the increase in cocoa prices offsetting the 10 drop volumes as the company continued to focus sales on a handful of major customers.
Revenues from the food manufacturers business unit, which supplies chocolate and compounds to industrial customers, increased by 10 per cent to SF462.7 million, due mainly to increased sales prices once again linked to the cocoa bean price rise. Particularly strong sales were generated in Asia-Pacific, the company said.
Turnover from the gourmet & specialties business unit, recently expanded with the acquisition of Luijckx and whose customers are professional users such as chocolate makers, pastry chefs, hotels and restaurants, rose by 8 per cent to SF136.7 million during the quarter. This increase was largely the result of the unit's strategy to focus on the high margin segment and to drop low-margin customer label activities.
In the consumer products business unit, sales revenues increased by 368 per cent, from SF68.0 million to SF318.4 million, with SF250.8 million of the increase attributable to the Stollwerck acquisition. The dual strategy of offering branded products as well as private label products to the market has paid off, according to Barry Callebaut, leading to above average market share gains in the rapidly growing hard discount segment in Germany, promising sales growth in the branded products, and new contracts with international food retailing.
In Western Europe sales volumes increased by 31 per cent to nearly 184,000 tons or 69 per cent of the group's total sales volumes, again due mainly to the Stollwerck acquisition. Sales volumes in Eastern Europe (4 per cent of the total sales volume) declined by 1 per cent to nearly 10,000 tons, while volumes in the Americas (North and Latin America) were down by 3 per cent as a consequence of lower cocoa sales. The Americas accounted for 21 per cent of total sales volumes.
Volumes in Asia/Pacific went up by 16 per cent as a result of a major sales and marketing drive there, and sales to that part of the world now account for 3 per cent of total volumes. Volumes in Africa and the Middle East grew by 2 per cent to a little under 9,000 tons, or 3 per cent of total volumes.
Commenting on the troubled political situation in the Ivory Coast, Barry Callebaut said that its three cocoa processing plants there were now working once again after a one-week shutdown earlier in the year, and that all prior orders should be met. The company has nonetheless increased its purchases of cocoa beans from Ghana, Indonesia and Nigeria in order to offset potential further upheavals in the Ivory Coast.
While the company was clearly pleased with its results during the quarter, it stressed that they came during its peak business period - which extends roughly from August to March and is influenced greatly by the Christmas and Easter periods - and that as such the same levels of growth would not necessarily be seen in all four quarters of the year.
That said, the second three-month period of the year looks set to be a good one. Patrick De Maeseneire, chief executive officer of Barry Callebaut, said: "The outlook for the second quarter 2002/03 is positive. Sales recorded so far for the second quarter seem to point towards a good Easter business."