At its Capital Markets Day in London (Wednesday 1 November), investors reacted positively to the new chief executive's turnaround plan after hearing details on how it will boost sales volumes and earnings. The company's shares were up 4.7% at Wednesday’s close.
Feld was brought in from the Group’s main shareholder, Jacobs Holding, in April, replacing Peter Boone, with a remit to overhaul the group with cost cuts, board changes, and investments in an effort to rebuild investor confidence after a series of setbacks over the past 12 months has hit its share price.
As well as changes at board level, key staff in Barry Callebaut’s communications and marketing team have left the Zurich-headquartered Group in the past couple of months, including Christiaan Prins (Vice President Corporate Communications), Bas Smit (Chief Marketing & Innovation Officer) and Frank Keidel (Senior Media Relations Manager).
Rising cocoa prices
The Group’s sales volumes have suffered since the start of 2023 with rising cocoa prices and lower consumer spending as inflation-hit shoppers bought fewer chocolate bars – along with a serious shutdown at its main factory in Wieze, Belgium, due to a salmonella outbreak.
In September, Feld unveiled a strategy for the next two years, including 500 million Swiss francs ($550 billion) in investments and annual cost savings of 250 million francs. In London, Feld said 75% of the savings should flow to its bottom line, helping it build towards a 10% operating margin goal after 2026.
"The road will be long and bumpy, given the current environment and the increasing sustainability requirements in the coming years," Vontobel analyst Jean-Philippe Bertschy told Reuters.
The Group’s strategy is to expand gourmet confectionery, vegan and gluten-free chocolate, as well as the Asia-Pacific market and Feld said he predicts a "24-month transition", as it creates the platform for growth.
“Our purpose is to create the world's best chocolate solutions for our customers - now and in the future. As the leader in the attractive, growing chocolate ingredients market and given our strength in sustainability and innovation, we are ideally positioned to outgrow the market.
“Our strategic growth priorities in combination with our BC Next Level investment programme, set the course for sustainable, profitable growth and higher cash generation. We will deliver to our customers better value, service, quality, and sustainability and make Barry Callebaut a much more resilient and profitable business, creating long-term value for all our stakeholders,“ he said.
Barry Callebaut’s four strategic long-term growth priorities include:
- Deepen outsourcing partnerships: for customers who want more sustainable and innovative chocolate solutions. Barry Callebaut aims to win two thirds of outsourcing partnership volumes expected to come to the market.
- Launch Gourmet 2.0: Barry Callebaut will move closer to markets and customers to better serve foodservice and artisanal customers and chains by broadening the focus across premium and mainstream market segments, simplifying its brand portfolio, and modernizing its routes to market.
- Scale up Specialties: the Group will double the size of its core specialties business by increasing the penetration of its highly differentiated specialty offerings in high growth areas such as gluten-free, vegan, single origin, and other specialty chocolates.
- Move to “fair" market share in the region Asia-Pacific (APAC): its ambition is to double the size of its APAC business to deliver value market share in line with the wider Group, by putting in place localized strategies built around the new country clusters to offer solutions tailored to local markets, with optimized distribution leveraging the digital enhancements delivered by BC Next Level.
The Group said it still aims to inspire modern cocoa farming practices and be one of the main players in the future of sustainability for the industry. The Group sees execution against its own industry-leading sustainability ambitions as a key commercial differentiator and as a key source of alignment between itself, its customers and the end consumer.
Snapshot: Barry Callebaut Full-Year results for the fiscal year 2022/23
- Growth in Q4 of +3.9%, bringing full year sales volume to 2.3 million tonnes (-1.1%)
- Sales revenue of CHF 8.5 billion, up +9.7% in local currencies (+4.7% in CHF)
- Operating profit (EBIT) of CHF 659.4 million, up +12.2%1 in local currencies (+5.6%1 in CHF)
- Net profit of CHF 443.1 million, up +9.6%1 in local currencies (+3.4%1 in CHF)
- Adjusted free cash flow2 of CHF 251.8 million impacted by raw material prices
- Proposed dividend of CHF 29.00 per share, a payout ratio of 36%