Financial results

Barry Callebaut announce 8.7% rise in sales volumes as Russia exposure hits share price

By Anthony Myers contact

- Last updated on GMT

Barry Callebaut's Campbellfield  facility in Australia. Pic: Barry Callebaut
Barry Callebaut's Campbellfield facility in Australia. Pic: Barry Callebaut

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Strong chocolate sales and a recovery in its gourmet business with restaurants helped sales volumes rise 8.7% in the six months to the end of February, while net profit climbed 3.1%.

In its statement to the media, the Group said the strong growth was supported by all Regions and its key growth drivers: Outsourcing (+7.3%), Emerging Markets (+8.7%) and Gourmet & Specialties (+29.5%). Sales volume in Global Cocoa grew by +4.0% to 227,951 tonnes.

Snapshot

  • H1 sales volumes up 8.7% to 1.165 mln tonnes
  • Recurring net profit rises 3.1% to 212.1m CHF
  • Group is still operating three factories in Russia
  • Shares down almost 6% due to continued Russian exposure

Peter Boone, CEO of the Barry Callebaut Group, said: “In the first six months of fiscal year 2021-22, we continued our strong growth trajectory, well ahead of the underlying chocolate confectionery market. A strong performance across the board, in particular in chocolate, delivered strong volume, solid profitability and continued good cash generation​.”

Russia operations

During a conference call to the media, Boone was questioned by journalists on its policy to keep operating in Russia, where it employs 500 staff in three factories.

"We are under enormous pressure just watching the images we get from the war,​” he said, adding the question of whether to stay in Russia was raised “internally and externally​”, but it was important to protect the jobs of staff in Russia.

"It feels right because we are in contact with our 500 colleagues in Russia, they clearly have not asked for this decision by the Russian government. For us, it feels like the right thing to do to stay close for our employees and our customers​," noting the Group’s chocolate and cocoa went into various products in the country, including drinks and breakfast cereals.

Boone told the media Barry Callebaut has stopped new capital investment in the country and Russia represented less than 5% of group volumes. He also said the company was taking a CHF 5m ($5.4m) impairment to reflect the increased risk of customer default in the country.

Jean-Philippe Bertschy, a Vontobel analyst, told Reuters: "The exposure to Russia with close to 5% of the group’s volume as well as the flattish EBIT per tonne despite strong volume growth could partly explain the share price drop​."

Expansion

In March 2022, Barry Callebaut completed the expansion of its chocolate factory in Campbellfield, Australia, which the Group acquired in 2020. The new factory lines significantly enhance the total production capacity of the factory and its range of offerings, allowing for the first liquid chocolate deliveries in Australia.

Earlier this month, Grupo Bimbo, the world’s largest baked goods company, and Barry Callebaut extended their strategic supply agreement, originally signed in 2012. Under the new global long-term agreement, Barry Callebaut will continue to supply chocolate and compound to Grupo Bimbo in Mexico, several countries in Central America, the US, Canada and Uruguay.

Innovation

Earlier this year, Callebaut launched Callebaut NXT, a range of dark and milky tasting chocolates for chefs and artisans made from 100% plant-based ingredients. Callebaut NXT is produced in Norderstedt, Germany, the first fully dairy-free facility dedicated to supplying at scale chocolate guaranteed to be free of detectable traces of dairy.

Also at the beginning of this year, Barry Callebaut’s presented new innovations: Elix, its cacaofruit elixir and the first nutraceutical fruit drink, and Cacao Barry’s Evocao WholeFruit chocolate, a unique chocolate made from 100% pure cacaofruit, which made it to the finals at the World Food Innovation Awards 2022.

UK redundancies

In March, Barry Callebaut began a consultation process on the potential closure of its chocolate factory in Moreton, in Lancashire, which employs over 40 permanent workers. The group said in its half-year statement it would continue to invest in the modernisation of its factory footprint in the UK "to better balance production capacity and demand in the UK and that it is an important market for the Group​".

Sustainability

Barry Callebaut claimed that since mid-2021, more than 50,000 native trees have been planted under its long-term reforestation project in Côte d’Ivoire and it will continue to scale over the next three years to reach the objective of planting 150,000 trees on 300 hectares.

Outlook

Looking ahead, Boone said the Group was confident of delivering on mid-term guidance.

I am profoundly heartened by the way our colleagues across the globe have come together to support those in need. Our strong team, our global footprint and our cost-plus model make us confident that we can deliver on our mid-term guidance in a continued volatile market environment​.”

Although achieved on a low comparison base, the latest results are well ahead of the Group’s pre-COVID-19 volume in the fiscal year 2018-19. Excluding the first-time consolidation of Europe Chocolate Company (ECC) as of September 2021, organic volume growth in the period under review was +7.9%. Chocolate volume grew by an outstanding +9.9%, clearly outpacing the underlying global chocolate confectionery market (+2.0%).

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