Financial results

Drop in profits at Barry Callebaut after factory shutdown earlier in year

By Anthony Myers contact

- Last updated on GMT

Peter Boone, CEO of the Barry Callebaut Group, at the launch last month of its '2nd Generation Chocolate' innovation. Pic: Barry Callebaut
Peter Boone, CEO of the Barry Callebaut Group, at the launch last month of its '2nd Generation Chocolate' innovation. Pic: Barry Callebaut

Related tags: Barry callebaut, Chocolate, Cocoa, Cocoa bean, Sustainability

Barry Callebaut caught the market by surprise by rescheduling its Full-Year Results 2021-22 analysts and media call to Tuesday instead of today (Wednesday 2 November) after the figures were published early due to an ‘unforeseen event’. The world’s largest chocolate supplier and maker also reported a drop in full-year operating profit due to the cost of the temporary shutdown of its factory in Belgium following a salmonella outbreak earlier in the year.

The Zurich-based Group said operating profit fell 2.3% to 553.5 million Swiss francs ($557.6 million), missing analyst forecasts of 586.5 million francs.

In its statement, Barry Callebaut said profit was hit by the one-off impact of 76.9 million francs related to the salmonella outbreak in June at its main factory in Wieze.

Peter Boone, the Group’s executive told the media it was still on track to achieve its mid-term guidance in its 2022-2023 business year. "Our Wieze factory runs again at normal capacity, though we will still experience an impact in the first quarter 2022-23 as we are catching up on delayed volume. I want to thank all the colleagues involved for their relentless work in the cleaning of the factory and all our customers for their loyalty and cooperation​.”

Innovation

BC 2nd gen choc 900
BC's '2nd Generation Chocolate'. Pic: Barry Callebaut

At a launch in Venice last month, Barry Callebaut introduced a breakthrough innovation in redesigning how chocolate is made. With advances in the process of farming, fermentation and roasting of cocoa beans, it said chocolate lovers can indulge in the purity of cocoa flavours, as the recipe for the new '2nd Generation Chocolate' contains only the essential ingredients. Dark chocolate is made from only cocoa and sugar, whereas milk chocolate contains dairy as well. By introducing this innovation, Barry Callebaut said in the statement it is supporting brands and artisans to launch innovative and exciting chocolate creations in confectionery, bakery, pastry, desserts and ice-cream.

Sustainability

Also this year, Barry Callebaut collaborated with Conseil Café Cacao (CCC) in Côte d’Ivoire on a traceability trial project in the region of Aboisso, that includes the merging of the Group’s data with government-owned farmer data. The aim of the trial project is to feed the learnings into a consolidated national farm database, currently being built by the CCC.

In its annual report, released with the annual figures, it said it needs to “add fresh ambition​” to its Forever Chocolate Plan. “In fiscal year 2022-23 we will present a set of sharpened targets, using our ongoing Forever Chocolate targets for 2025 as a springboard​,” it said.

Our sixth Forever Chocolate progress report, covering fiscal year 2021-22, shows that we continue to scale up our activities by partnering with customers as well as societal and industry stakeholders to create tangible impact on the ground, while at the same time publicly advocating for policies to make sustainable chocolate the norm​.”

Raw materials costs

On average, the cocoa bean price increased by +4.2% versus prior year. While the global bean supply and demand expectations for 2021-22 indicate a deficit, large stocks carried from prior-year surpluses allow for sufficient bean supply, which should lead to an overall more balanced situation, the Group confirmed.

The world market price for sugar increased on average by +18.7%. This was due to a substantially lower Brazilian crop and a macro-environment impacted by high energy prices and geopolitical uncertainties. Sugar prices in Europe increased on average by +56.4% during the fiscal year 2021-22. Robust demand was confronted with low supply due to reduced acreage and dry weather.

Mid-term guidance

Despite the disruption, volume growth was within the range of Barry Callebaut's mid-term guidance for increases of 5% to 7%. But it missed its goal of raising its operating profit in local currencies at a higher level than volumes, with only a 0.1% increase.

Supported by the consistency of our growth strategy and the strength of our innovation pipeline, we are on track to achieve our mid-term guidance in Fiscal Year 2022-23​,” said Boone. “We are presenting a strong set of results, delivering profitable volume growth throughout the year, supported by all Regions and segments, particularly Gourmet & Specialties. Our broad geographic footprint and customer base, together with our sharpened business model and strong balance sheet, continued to build a solid foundation for growth​.”

Reuters reported its shares were up 0.5% on the Swiss exchange after the release of the results.

Change to the Executive Committee

In a separate announcement, the Group said Olivier Delaunay, Chief Operations Officer, is to leave Barry Callebaut with Jo Thys appointed COO effective January 1, 2023

‘After successfully serving as the Group’s Chief Operations Officer (COO) since September 1, 2019, Olivier Delaunay has decided to leave Barry Callebaut for personal reasons. The Board of Directors has appointed Barry Callebaut’s current President Asia Pacific and member of the Executive Committee, Jo Thys, as new COO, effective January 1, 2023.’

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