Chocolate consumer unit cuts into Barry Callebaut profit

Barry Callebaut, the world's largest supplier of bulk chocolate, plans to cut costs in Europe as the Swiss firm posts a fall in revenue for nine month figures.

The firm said full year figures will fall below its long-term average growth rate of 8 to 10 per cent, to just 2 to 3 per cent.

Nine-month net profit rose 29 per cent to CHF101.8 million (€6.8 m) but sales revenue fell 2.5 per cent due to lower cocoa prices and currency effects.

Announcing the results today, Callebaut said difficult market conditions, "an unfavourable business mix and price pressure," in Germany had prompted it to ramp up restructuring in its European consumer products division.

The firm will set aside CHF49 million and write off SF45 million in assets in the three months to August to reorganise its European consumer products business.

"Cost savings and improvements in the gross margin as a result of the restructuring programme are expected to reach between CHF40 to 50 million in year three," said the firm.

For the cocoa business, sales revenue fell by 8 per cent to CHF373 million, down from CHF403 milllion, knocked by the "lower underlying cocoa bean prices, lower sale prices for powder, and negative currency effects."

The global firm processes some 520,000 tonnes of cocoa annually out of a market of 3.1 million tonnes.

Looking ahead, Patrick De Maeseneire, CEO of Barry Callebaut said he expects the fiscal full year result from operations, before restructuring costs, to meet ``market expectations.''

The chief executive said sales in June were "good,'' and August will be "decisive" as production for Halloween and Christmas begins "and the ice cream business will be in full swing, leading to additional demand if the weather is hot."