Barry Callebaut completes KLK acquisition

By staff reporter

- Last updated on GMT

Related tags Barry callebaut Tonne Metric system Malaysia

Barry Callebaut has successfully closed its acquisition of a 60 per
cent stake in Malaysia's KLK Cocoa - a strategic move expected to
give the Swiss firm leverage to expand in the high-potential
Asia-Pacific region.

The transaction, details of which have not been disclosed, was first announced at the end of March but was dependent on receiving approval from the Ministry of International Trade & Industry in Malaysia.

KLK, which employs some 360 people and has an annual production capacity of 70,000 metric tonnes for cocoa products and 10,000 tonnes for chocolate, will now change its name to Barry Callebaut Malaysia Sdn Bhd.

The existing management team will remain in place.

While the Malaysian company will benefit from the expertise and West African sourcing network of its new majority shareholder, Barry Callebaut stands to gain access to an established Asian customer base that includes multinationals across Malaysia, Japan, India and Australia as well as its own brands, KLK Cocoa, Selbourne and Mayer.

Barry Callebaut will also be able to increased sourcing of lower-prices cocoa beans from Indonesia.

Laurent Pipitone, senior statistician with the International Cocoa Organisation, told in March that a tonne of Indonesian beans costs on average $200 less than the same amount from West Africa because they tend to be poorly fermented.

However since quality tends to be less of an issue in Asia and the US than it is in Europe, the Indonesian beans will be used to meet demand in these markets.

Barry Callebaut has recently revealed other investments to build its Asian business.

For instance, in January it opened a chocolate factory near Shanghai with capacity for 25,000 tonnes.

It has also signed an agreement with Japan's Morinaga to acquire a modern chocolate factory, coupled with a long-term supply agreement, doubling its sales volumes in the high-end Japanese consumer market.

Zurich-based Barry Callebaut reported annual sales of more than CHF 4 bn in 2006/7.

Last month it said that profits for the first half of the year remained stable as high input and expansion costs offset overall sales volume increases.

For the period ending 29 February, operating profit increased by only 1.3 per cent to CHF 200.4m, the company said.

The company blamed the stagnation in part on expansion costs.

During the period the company opened two new factories in emerging markets, integrated four new production sites in North America and Europe and drew up three large outsourcing contracts, said chief executive officer Patrick De Maeseneire.

The company said that the results were also impacted by "exceptionally high and volatile raw material prices", during the six months - in particular the cost of cocoa and milk powder.

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