Successful ‘smart growth’ strategy sees Barry Callebaut hit sales target despite weak quarter

By Anthony Myers

- Last updated on GMT

Barry Callebaut's flagship Chocolate Academy in Wieze, Belgium. Pic: Barry Callebaut
Barry Callebaut's flagship Chocolate Academy in Wieze, Belgium. Pic: Barry Callebaut

Related tags Barry callebaut Cocoa results

Barry Callebaut announced sales volumes grew 5.1% to 2.14m tonnes in the 12 months to August 31, while net profit rose 6.9% in local currencies to CHF368.7m ($371m), the world’s leading manufacturer of cocoa products said in its full-year results for fiscal year 2018-19.

In a media conference call held at the company’s Zurich headquarters, the chocolate maker also confirmed that, while it supported the joint Living Income Differential (LID) initiative introduced by Ghana and Côte d'Ivoire that adds on an extra $400 on cocoa sales for the 2020/21 season, it expected to pass on higher prices to its customers and also expected other producing countries to also raise their prices.

We have a cost-plus model so we transfer the movements of commodities to our customers​,” Barry Callebaut’s chief executive Antoine de Saint-Affrique told reporters and analysts.

The group’s chief financial officer, Remco Steenbergen, said that, because Côte d'Ivoire and Ghana represent approximately 70% of the cocoa market, “we expect the other countries to also raise prices and take the advantage​”.

Steenbergen said the general cocoa market supply and demand was balanced.

De Saint-Affrique said “it had been a rich and transformative year for the group​” and it remains committed to pursuing its successful ‘smart growth’ strategy.

Good growth momentum, a strong innovation portfolio and discipline in execution make us confident of delivering on our renewed mid-term guidance. This is 4-6% volume growth and EBIT above volume growth in local currencies on average for the three-year period 2019-20 to 2021-22, barring any major unforeseen events, which is consistent with our prior mid-term guidance​,” he said.

Cost leadership and sustainability are at the core of Barry Callebaut’s business model, De Saint-Affrique said. Cost leadership is making the group the preferred out-sourcing partner in the industry and its focus on outsourcing contracts, its business with chefs and artisans, and emerging markets allow it to outperform the market.

In February 2019, Barry Callebaut successfully placed a €600m ($665m) equivalent ‘Schuldscheindarlehen’. This transaction improves Barry Callebaut’s debt and liquidity structure by extending the average maturity and diversifying its sources of financing. At least two-thirds of the proceeds will finance sustainability-related projects to support cocoa farmers and their communities, it said in a statement.

Our business is extremely predictable in the medium term, but there is quite a bit of variation from quarter to quarter​,” De Saint-Affrique said, after revealing volume growth slowed in the final quarter of the group’s fiscal year from the previous quarter. But he was confident for the coming year as it was “working on a pipeline of outsourcing opportunities and was also looking at bolt-on acquisitions​”.


Regarding sustainability, De Saint-Affrique said in July this year Barry Callebaut’s Forever Chocolate programme was ranked number one in the annual Sustainalytics ranking​.

We are proud of progress, but need to keep moving at pace and strengthen the impact we have​. We try to do so on the ground, by leveraging new technology, working with farmers and a number of partners, governments, NGOs and universities to develop models that have a real, positive impact from the ground​,” he said.

In order to support the group’s goals to have more than 500,000 cocoa farmers in its supply chain lifted out of poverty and to become carbon and forest positive by 2025, Barry Callebaut joined two initiatives at the United Nations Climate Action Summit in New York in September 2019.

The group co-signed the One Planet Business for Biodiversity (OP2B) coalition, a coalition of food and agriculture companies determined to protect and restore cultivated and natural biodiversity within their value chains.

It also signed the vision statement for the ‘Just Rural Transition’ initiative. This platform is committed to transforming by 2030 the way in which food is produced and consumed.

De Saint-Affrique said the group is constantly driving at innovation level to track and monitor its carbon footprint. He also said consumer-driven innovation trends such as free-from, clean label and origins, or a more premium experience for chocolate, “were here to stay​”.


Barry Callebaut expanded in the fiscal year under review across all regions, its annual results revealed. In Region Europe, Middle East, Africa (EMEA), the integration of Inforum, a leading Russian B2B producer of chocolate, compound coatings and fillings, acquired in January 2019, “is well on track​”.

In April 2019, Barry Callebaut signed a Memorandum of Understanding with the Government of Serbia to build the group’s first chocolate factory in Southeastern Europe. The plant in Novi Sad is expected to be operational by 2021 and will serve as a regional hub, driving further growth in the Southeastern European market.

Other expansion projects include a new Chocolate Academy in Antwerp, the 23rd globally; a new Global Distribution Centre in Lokeren, Belgium, and a new cocoa processing unit in Abidjan, Côte d’Ivoire, which will expand the group’s capacity in the country by +40% by 2022.


Barry Callebaut officially introduced Ruby, ‘the fourth type of chocolate’, in the United States and Canada earlier this year. Ruby is now available in more than 50 countries worldwide, De Saint-Affrique told reporters.

Barry Callebaut also extended its dairy-free chocolate product portfolio in the United States and introduced ‘Natural Dark’ Bensdorp cocoa that enables food manufacturers to deliver dark cocoa creations with an intense chocolate taste and a 100% clean label.

In September 2019, it launched ‘Cacaofruit Experience’, a new Food & Drink category including ‘Wholefruit Chocolate’, in San Francisco.

I am delighted to announce another set of strong results, with profitable growth and good cash generation. We are also proud to have successfully delivered on our mid-term guidance, which was on average 4-6% volume growth and EBIT above volume growth in local currencies for the 4-year period 2015/16 to 2018/19. On average, we have achieved above-market volume growth of +4.5% and EBIT growth in local currencies of +13.9% per year. These achievements confirm the strength of our long-term ‘smart growth’ strategy,”​ De Saint-Affrique concluded.

Full-Year BC Results Fiscal Year 2018-19 Highlights

  • Sales volume up +5.1%, well above the market growth
  • Sales revenue of CHF 7.3 billion, up +7.8 % in local currencies (+5.2% in CHF)
  • Operating profit (EBIT) up +11.9% in local currencies (+8.5% in CHF)
  • Net profit up +14.2% in local currencies (+10.4% in CHF)
  • Free cash flow of CHF 290 million
  • Mid-term guidance 2015/16 – 2018/19 delivered, on average +4.5% volume growth and +13.9% EBIT growth in local currencies
  • Board members Jakob Baer and Juergen Steinemann will not stand for reelection
  • Proposed payout to shareholders of CHF 26.00 per share, up +8.3%

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