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.