Strong first half performance from Barry Callebaut

Related tags Cent Chocolate Switzerland Cocoa solids Barry callebaut

Barry Callebaut, the Swiss chocolate producer, has continued to go
from strength to strength despite depressed consumer spending and
the strength of the Swiss franc. As in Q1, first half figures were
boosted by the Stollwerck acquisition in Germany.

After a solid start to the year boosted​ by the acquisition of the Stollwerck group, Swiss chocolate producer Barry Callebaut has continued to improve in the second quarter of the year.

The company has reported a 44 per cent increase in sales for the six months to 28 February to SF1.9 billion (€1.3bn), which helped push up operating profit (EBIT) by 25 per cent SF130.4 million. Net profits for the half were ahead 13 per cent to SF75.9 million.

But the strength of the Swiss franc continued to play an important role during the first half, reducing both sales and profits. In local currency terms, operating profits were ahead 31 per cent, while net profit rose 20 per cent and sales increased 52 per cent.

These good results have been achieved in stagnating and in some regions even contracting chocolate markets. Market shares for Barry Callebaut in the segment of chocolate for industrial customers as well as for artisanal users were further enhanced.Overall sales volumes increased by 17 per cent to 480,497 tons from 411,826 tons in the prior-year period, despite a 10 per cent planned reduction in sales of cocoa to third-party customers.

Sales volumes from the food manufacturers business unit, which supplies chocolate and compounds to industrial customers, grew 4 per cent to 270,312 tons thanks to the successful launch of new chocolates and compounds in all its major markets. In value terms, the division's sales reached SF826.6 million, a 12 per cent rise.

Growth from the gourmet & specialties business unit, which serves professional users such as chocolate makers, pastry chefs, hotels and restaurants, was 3 per cent in volume terms (to 55,605 tons) and 8 per cent in value (to SF249.7 million). This increase was largely the result of the unit's focus on high-margin products, the introduction of a single pricing policy for all distributors serving NAFTA countries and the enhanced quality of vending mix products, allowing for higher selling prices.

In line with Barry Callebaut's intention to grow this business unit's share of total sales, the company recently acquired​ Dutch-Belgian chocolate company Luijckx, which specialises in manufacturing and trading high-quality chocolate products and decorations.

Once again, Stollwerck contributed significantly, with volumes from the consumer products arm up 232 per cent on the previous year to 92,453 tons, due almost entirely to the consolidation of the German company. In value terms, Stollwerck contributed SF415.1 million of the unit's total sales of €536.6 million.

As in the first quarter, sales revenues grew faster than sales volumes due to the increase in average cocoa bean prices in the period, the company said.

Barry Callebaut stressed that it was impossible to estimate likely full year figures from the first half performance, mainly due to the seasonal nature of the business. The peak period for the company is between late August and the end of March, as a result of the Christmas and Easter business, with sales dropping substantially in the spring and summer months. Expenses, however, are spread equally across the fiscal year.

As far as the geographical spread of Barry Callebaut's business is concerned, western Europe accounted for 325,270 tons (or 67 per cent of total volumes), rising 27 per cent on the previous year. Again, Stollwerck was the main reason for the significant increase acquisition.

Sales volumes in Eastern Europe (4 per cent of the total sales volume) grew 4 per cent to 17,822 tons, while in the Americas, volumes were down by 2 per cent as a consequence of reduced cocoa sales. The Americas accounted for 22 per cent of total sales volumes, or 104,568 tons.

Volumes in Asia/Pacific jumped by 14 per cent as the company strengthened its sales team there. This region's share of total volumes amounted to 3 per cent, or 15,297 tons. Volumes in Africa and the Middle East decreased by 2 per cent against the background of the difficult political situation in several countries there. The region contributed 4 per cent or 17,540 tons to total volumes.

Patrick De Maeseneire, chief executive officer of Barry Callebaut, commented: "Despite generally flat or even declining markets and the depressed consumer mood, we were able to enhance our leadership position in chocolate for industrial customers as well as for artisanal users with market shares of 39 per cent and 35 per cent respectively.

"The currently prevailing political and economic uncertainties make forecasts very difficult. Having said this, barring any major unforeseen event, I am confident that we will be able to exceed the SF200 million EBIT threshold for full fiscal year 2002/03."

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