Lower cocoa beans and sugar prices take a toll on Barry Callebaut’s nine-month sales

The company said it applies a “cost-plus”​ business model, meaning it passes on raw material prices directly to its customers for the majority of its business.

Breaking down raw materials

Barry Callebaut said: “On average, cocoa beans prices decreased by 12.2% versus the prior year,”​ even though they increased by 19.9% during the first nine months of fiscal year 2017/18.

“The reason for the price increase in recent months was a lower than expected global cocoa surplus due to slightly lower cocoa production in West Africa, in combination with higher demand and significant fund activity,”​ it added.

On the dairy side, the price saw a rebound in the beginning of 2018 due to weaker production figures after a “considerable downward price correction”​ for all dairy products in the last quarter of 2017, according to Barry Callebaut.

Additionally, the world sugar market lost more than 20% due to good crops in Asia and Europe, resulting in a sugar surplus, said the company.

“In Europe, a record crop led to a sharp reduction of domestic prices,”​ it said.

Growing volume sales

Despite the declining sales, Barry Callebaut grew its sales volume by 6.9% to 1,512,853 tons during the period.

“We achieved very good volume growth across all regions and product groups in a global chocolate confectionery market that grew 2.5% year-over-year,”​ the company said.

It noted the volume increase was supported by all key growth drivers: gourmet and specialties (7.8%), outsourcing (6.2%) and emerging markets (8.8%).

Among all Barry Callebaut’s operating markets, Asia Pacific witnessed the highest volume growth, increasing by 14.8% to 79,542 tons during the nine-month period, while EMEA (Europe, the Middle East and Africa) experienced highest revenue growth at 6.5%, reaching CHF 2.32bn ($2.32bn).

Barry Callebaut said it is on track to deliver on its four-year guidance – growing volume sales by 4% to 6% on average between 2015/16 to 2018/19.