Capacity constraints and initial costs for its acquisition of Petra Foods’ Cocoa Ingredients Division were also cited.
Operating profit (EBIT) fell 2.1% to CHF 173.8m ($185.9m), while sales dropped 2.4% to CHF 2.4bn ($2.6bn).
Cocoa price drop harms sales
Juergen Steinemann, CEO of Barry Callebaut said: “Our EBIT was impacted by the unfavorable combined cocoa ratio as well as additional factory and supply chain costs due to our strong growth in some regions causing capacity constraints.”
Callebaut passes raw material prices to customers in 80% of cases. This means that when cocoa prices drop, customers pay less.
Callebaut said its sales fell because the cocoa terminal price declined GBP 1,700 in early September 2012 to GBP 1,429 at the end of February 2013, reducing prices for its own cocoa ingredients.
However, sales volumes still grew 7.8% to 745,256 tons, faster than the global chocolate confectionery market which experienced 1.5% growth over the period.
To keep pace with demand, the company is currently constructing a chocolate factory in Eskişehir, Turkey, and a cocoa factory in Makassar, Indonesia, due in fall 2013. Chocolate factories are also planned in Santiago, Chile and in Takasaki, Japan, for Q1 2014.
Petra buy costs
In December last year, Callebaut announced it would acquire the cocoa ingredients division of Singapore-based Petra Foods for $950m. First costs relating to the acquisition impacted the firm’s half-year profits.
Ratings agency Standard & Poor’s last week downgraded Callebaut from a BBB- corporate rating to BB+ and handed it a negative outlook because it said the Petra buy was a more aggressive financial policy than anticipated.
Outlook
Steinemann said: “We expect cocoa processing results to increase in the second half of our fiscal year."
“Our cost base will grow at a slower pace than volume, except for non-recurring costs related to the closing and integration of the acquisition of the Cocoa Ingredients Division from Petra Foods. Considering all this, we are confident of delivering on our mid-term guidance.”
In its full-year 2012 results last November, Callebaut forecast 6-8% volume and operating profit growth until 2014/15.