Financial results

Barry Callebaut delivers solid profitability as smart growth strategy continues to pay off

By Anthony Myers contact

- Last updated on GMT

Barry Callebaut said it experienced continued volume recovery in its half year results for 2020-21. Pic Barry Callebaut Group
Barry Callebaut said it experienced continued volume recovery in its half year results for 2020-21. Pic Barry Callebaut Group

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Demand for chocolate is showing signs of recovery after a tough year in which the pandemic reduced impulse buying, out-of-home consumption and gift-giving, leading the Barry Callebaut Group to remain confident in delivering mid-term guidance as COVID-19 restrictions begin to lift in Europe and other parts of world.

The Group’s turnover was down 7.5% over one year to CHF3.48bn ($3.80bn), the Zurich-headquartered group reported. In local currencies, revenues remain stable while sales volume fell 2.9% to 1.07 million tonnes.

Profit before interest and taxes (EBIT) was CHF296.7m, which represents a decrease of 4.7% in Swiss francs and an increase of 3.8% in local currencies.

Ben De Schryver, Chief Financial Officer, Barry Callebaut Group, said in a webcast announcement relating to the Group’s Half-Year Results, Fiscal Year 2020-21, that after the CHF8m loss resulting from the closure of the Makassar plant in Indonesia, the profits indicator shows a decline of 2.2% in Swiss francs and an increase of 6.5% in local currencies.

Net profit fell 2.8% to CHF205.7m. Without the above-mentioned extraordinary effect, an increase of 1.0% is recorded.

Barry Callebaut’s results are generally higher than the average forecasts of analysts and the Group remains confident in achieving its mid-term guidance of 5% to 7% average volume growth, and earnings before interest and tax (EBIT) above volume growth for the three years through the business year ending 31 August 2023.

Financial Snapshot:

  • Sales volume down –2.9%, continued recovery in second quarter (–1.3%)
  • Sales revenue of CHF 3.5 billion, flat at 0.0% in local currencies (–7.5% in CHF)
  • Operating profit (EBIT) of CHF 296.7 million, up +3.8% in local currencies (–4.7%in CHF)
  • Net profit of CHF 205.7 million, up +6.9% in local currencies (–2.8%1 in CHF)
  • Strong adjusted Free cash flow of CHF 162.9 million
  • Confident to deliver on mid-term guidance

Antoine de Saint-Affrique, CEO of the Barry Callebaut Group, who announced he is stepping down from the role on 1 September​, told the media and analysts the market was still challenging.

Over the first six months of the fiscal year we have seen continued volume recovery and solid profitability in a still challenging market environment. The disciplined execution of our ‘smart growth’ strategy, in combination with continuous capability building and the successful sharpening of our business model, are the basis for our improving performance​.”

In the conference call, he said Barry Callebaut enjoyed continued volume recovery, and delivered solid profitability due to its ‘smart growth strategy’, and the sharpening of its business model.

He said chocolate volumes were almost back to positive territory in the second quarter. And the recovery was achieved in chocolate in a challenge environment due to COVID-19 restrictions in major markets.

Looking ahead, de Saint-Affrique said: “Whilst the environment remains volatile, our continued focus on customers, our drive for new opportunities and our strong innovation pipeline, together with a sound balance sheet, make us confident that we are coming out of the crisis stronger and to deliver on our mid-term guidance.

Cocoa

The Group’s cocoa volumes were down -9.6% to 219,153 tonnes as it continues to focus on ‘more profitable activities’.

The Group reiterated that it is committed to the application of the ‘Living Income Differential’ (LID) in West Africa​. Sales revenue amounted to CHF 893.7m, down –1.2% in local currencies (–12.7% in CHF). Operating profit (EBIT) amounted to CHF 47.7m, a decline of –6.9% in local currencies (–13.6% in CHF) compared to EBIT recurring in the prior-year period.

Sustainability

At the beginning of the year, Barry Callebaut launched its ‘#oneBC’, its Diversity & Inclusion strategy as it sets ambitious, measurable targets for the Group to improve its gender balance and cultural diversity at senior management level by 2025.

In March, the Group announced a cooperation between Cocoa Horizons and Seekewa, an award-winning start-up from Côte d’Ivoire, on a pilot project to increase and diversify the income of cocoa farmers in the Cocoa Horizons programme.

Income diversification is a key element of Barry Callebaut’s strategy for lifting cocoa farmers out of poverty. The collaboration with Seekewa is another direct outcome of the Group’s involvement with the start-up accelerator MassChallenge​,” the Group said in a statement.

The Americas

Region Americas grew its sales volumes by +4.1% to 299,253 tonnes, well ahead of the underlying regional chocolate confectionery market. Volume growth was supported by both Food Manufacturers and Gourmet. The strong growth with large corporate accounts continued in particular in North America. Gourmet & Specialties volume returned to positive territory, supported by a robust recovery in South America. Sales revenue increased by +3.6% in local currencies (–7.2% in CHF) and amounted to CHF 870.7m. Operating profit (EBIT) grew by +5.8% in local currencies (–5.5% in CHF) to CHF 89.7m on the back of good volume growth and an improving mix.

Expansion

Barry Callebaut opened its first fully segregated dairy-free production facility in Norderstedt, Germany, in February 2021, supplying dairy-free chocolate to the European market, tapping into the growing consumer demand for plant-based indulgence.

Last month the Group announced the opening of a new chocolate factory in Baramati, India, the world’s second most populous country and one of the fastest growing chocolate confectionery markets. The new facility includes an R&D lab and assembly lines capable of manufacturing chocolate and compound in different formats, catering to the needs of international food manufacturers, local confectioneries and semi-industrial bakers and patisseries.

Treat Tomorrow

de Saint-Affrique said Barry Callebaut is launching a ‘Netflix-like experience’ and new initiative in collaboration with customers and experts to carve a plan for ‘new’ chocolate indulgence.

The new Treat Tomorrow​ platform, launched on 28 April, with thousands of professionals already signed up, will mobilise customers and experts to provide knowledge and insights to elicit positive change in the confectionery world for future generations and concentrate on topics that consumers care about – personal health, next generation indulgence, plant-based and sustainability.

Executive committee

As well as Boone taking over from de Saint-Affrique, the Group announced further appointments to the Executive Committee:

  • Steve Woolley appointed President Americas effective September 1, 2021
  • Jo Thys appointed President Asia Pacific effective July 1, 2021.

Full report: Half-Year Results Fiscal Year 2020/21 of the Barry Callebaut Group

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