ZURICH, SWITZERLAND – Barry Callebaut AG, the world’s leading manufacturer of high-quality cocoa and
chocolate products, continued its robust growth with a sales volume increase of
7.8% in the first six months of fiscal year 2009/10 (ended February 28, 2010)
against the background of a global chocolate market that was declining until the
end of 2009 and only started to pick up as of early 2010. All regions
contributed to this growth. The regions in which Barry Callebaut invested most
in the past three years – Asia-Pacific, the Americas and Eastern Europe – showed
the strongest growth rates (24.4%, 13.1% and 11.5%, respectively). In terms of
product groups, Gourmet & Specialties recorded excellent sales volume growth of
18.1%. The strength of the Swiss franc – Barry Callebaut’s reporting currency –
versus most other major currencies had a negative impact on the Group’s
half-year results. Sales revenue went up to CHF 2,656.5 million, which is an
increase of 8.4% in local currencies and of 4.5% in CHF. Based on improved
capacity utilization as well as lower energy, staff and maintenance costs, Barry
Callebaut achieved solid operational improvements. These, however, were offset
by the lower combined cocoa ratio as anticipated (negative impact of approx. CHF
23 million) and unfavorable currency translation effects (approx. CHF 6
million). In addition, in the period under review there were fewer one-off gains
than a year ago, when a non-recurring EBIT contribution resulting from the sale
of the consumer products business in Asia was recorded (CHF 16.5 million).
Operating profit (EBIT) came in at CHF 208.8 million (- 1.7% in local
currencies; -4.5% in CHF). As a result of improved financing costs and tax
optimization, net profit for the period increased to CHF 145.7 million, or plus
5.3% in local currencies (+1.6% in CHF).
Outlook
Juergen Steinemann, CEO of Barry Callebaut, said: “As we forecasted in November
2009, the first half of the current fiscal year was characterized by a
challenging environment with the global chocolate market continuing to slightly
decline, a very low combined cocoa ratio, record cocoa bean prices and severe
currency translation effects. We have dealt with these external factors well.
Against this challenging background I am more than pleased with our strong
volume growth, which was supported by the further implementation of outsourcing
contracts, and our operational achievements. I am particularly satisfied that
the emerging markets in which we invested heavily in past years have developed
well and that our high-margin Gourmet & Specialties business has recorded
excellent growth, driven by our increased focus on this business, investments
and our ability to exploit market opportunities, leading to market share gains.
For the second half of the fiscal year we expect the global chocolate market to
continue to slowly recover and the combined cocoa ratio to improve; the
movements on currency markets are more difficult to predict. For the 3-year
period 2009/10 through 2011/12 we are confident that we will be able to achieve
our average three-year financial targets( )and continue to significantly
outperform the global chocolate market.”
Overview of performance by region in the first six months of fiscal year 2009/10
Global chocolate market
In the period under review, the global chocolate market declined by 1.4%* in
volume terms. It had bottomed out by the end of calendar year 2009 and then
showed some slight improvements with consumption in many countries of Western
Europe as well as in the U.S. growing again as of early 2010. According to the
same market data, the chocolate market of Western Europe increased by 2.1%
between September 2009 and January 2010*. Eastern Europe was affected later by
the global economic crisis than Western Europe and showed a significant drop of
8.6%*, driven by double-digit declines in Russia and Ukraine. The decline of
chocolate consumption in the U.S. decelerated and was -1.9%*. Chocolate
consumption in China went down by 4.6%*.
* Source: Nielsen Sept 2009-Jan 2010
Global Sourcing & Cocoa[3]
Cocoa terminal market prices jumped aggressively during the initial months of
the current fiscal year, reaching a 33-year high in December 2009 in London due
to a poor main crop in West Africa and heavy speculative buying. This was
followed by a partial correction initiated in February, most notably in New
York, where speculative funds partly reduced their positions. The world sugar
price has reached a 30-year high due to a deficit production for the second crop
in a row; for the first time in history it has surpassed the EU sugar price.
Strong corrections took place in the last 4 weeks, bringing the world sugar
market to the levels of last summer. After a period of heavy increases and
slight corrections the dairy market is currently stabilizing, reflecting a
fragile supply-and-demand balance on a worldwide scale.
Global Sourcing & Cocoa increased the volume of cocoa products sold to
third-party customers by 10.2% to 105,886 tonnes, driven primarily by strong
cocoa powder sales in the Americas. Sales revenue grew 19.7% to CHF 447.6
million, boosted by high cocoa powder prices. Compared to the fall of 2009, the
combined cocoa ratio has further deteriorated with cocoa butter prices remaining
under pressure and cocoa powder prices showing ongoing strength. This had a very
negative impact on the company’s cocoa processing profitability in the amount of
approx. CHF 23 million. Operating profit (EBIT) consequently dropped 26.3% to
CHF 23.2 million. The (forward) combined cocoa ratio has shown an improvement
since early February which is expected to positively feed through to the Group’s
profitability as of summer 2010.
Region Europe
Western Europe showed signs of a recovery of chocolate consumption (in volume
terms) but some traditional chocolate markets such as France and Switzerland
were still negative. While Turkey recorded very strong growth, Eastern Europe as
a whole is still affected by the profound economic crisis in Russia. In this
mixed market environment, Barry Callebaut’s Region Europe increased its sales
volume overall by a very satisfactory 4.6% to 392,426 tonnes. Gourmet &
Specialties products made a very significant contribution, partly because of a
relatively early Easter holiday this year, partly because of a slight recovery
of the premium segment, acquisitions and market share gains. Sales revenue,
which amounted to CHF 1,645.0 million, was negatively impacted by the weak euro
and GBP against the Swiss franc; revenue was up 2.7% in local currencies and
down 0.4% in CHF. As a result of operational improvements, cost saving
initiatives and margin improvements, operating profit (EBIT) increased
significantly to CHF 165.4 million, up 17.0% in local currencies (+13.1% in CHF).
Despite a volume decline, Consumer Products showed good EBIT growth. Eurogran, a
Danish vending mix specialist acquired in summer 2009, as well as Spanish
chocolate maker Chocovic, acquired in December 2009, made a positive
contribution to the sales volume and the EBIT. The Chocovic integration into
Region Europe is on track.
Region Americas
The chocolate confectionery market in the Americas showed a mixed picture with
signs of improvement in some segments (e.g. cakes, pies and pastry) while other
segments still performed negatively (e.g. foodservice, full-service
restaurants).
In this fragile market environment, Barry Callebaut’s Region Americas was able
to grow itssales volume by 13.1% to 136,833 tonnes, driven by volumes phased in
under the existing outsourcing contracts, regional accounts as well as strong
sales of Gourmet & Specialties products, especially to the bakery and large
confectionery segments. At CHF 460.7 million, sales revenue was up 15.8% in
local currencies; due to the impact of the weak US dollar versus the Swiss franc
the growth rate was 7.3% in CHF. Increased supply chain costs resulting from
production transfers due to overfilled factories in the U.S., higher
amortization and depreciation costs on investments, a dilutive product mix as
well as temporary margin pressure due to stiff price competition in the market
resulted in a decline of operating profit (EBIT) to CHF 42.3 million (-5.5% in
local currencies or -12.2% in CHF). The ramp-up of production at the chocolate
factory in Mexico is progressing as planned. The new chocolate factory in
Brazil, specializing in Gourmet & Specialties products for the Latin American
market, will be operational in May 2010.
Region Asia-Pacific
With the exception of Japan, the economies of Asia-Pacific overall have all
emerged from the global economic crisis and GDP growth rates are starting to
improve. Sales volume jumped 24.4% to 24,391 tonnes. Main drivers were strong
sales to industrial customers in South Korea, Malaysia, Australia and New
Zealand with growth rates above 30%. In China where the chocolate market was
still declining sales volume went up by 15%. Gourmet & Specialties products saw
a double-digit sales volume increase; there was still a slightly higher demand
for the locally produced brands but the imported Gourmet & Specialties products
made a strong comeback. Sales revenue grew significantly to CHF 103.2 million,
up 22.3% in local currencies (+17.1% in CHF). Excluding the CHF 16.5 million
one-off contribution from the sale of the Asian consumer business Van Houten
Singapore recorded in the same prior-year period, operating profit (EBIT) went
up 55.7%.
Development by product group in the first six months of fiscal year 2009/10
Food Manufacturer Products increased its sales volume by 8.6% to 411,134 tonnes,
driven by solid growth in all regions as well as the ongoing implementation of
previously signed outsourcing contracts. While growing 8.1% in local currencies,
sales revenue growth in CHF was 2.7% due to negative currency translation
effects; sales revenue stood at CHF 1,349.1 million.
Operating profit (EBIT) for the Industrial Products Group (Cocoa Products and
Food Manufacturers Products) was CHF 141.4 million, up 0.9% in local currencies
(-2.1% in CHF). Operational improvements were offset by the drop in the combined
cocoa ratio as well as by adverse currency effects.
Gourmet & Specialties Products further accelerated sales volume growth compared
to the first quarter of the fiscal year as a result of an increased focus on the
business with artisanal customers, strengthened distribution, an adjusted
product range and market share gains. Sales volume went up significantly by
18.1% to 70,900 tonnes, with all regions and brands (both international and
local) contributing and supported by scope effects resulting from the
acquisitions of Eurogran in Denmark and Chocovic in Spain. Business in the
bakery, pastry and confectioners segments was holding up while the
Hotel/Restaurant/Catering (HORECA) segment was still weak. Sales revenue
amounted to CHF 382.3 million, up 16.5% in local currencies (+12.9% in CHF).
Consumer Products underwent a change in scope due to the divestment of consumer
activities in the previous year, which had an impact on sales volume and sales
revenue. Consumer Products managed to grow sales in Scandinavia, Austria and
Italy but was impacted by a volume decline in France and Germany. The latter
went down because of the weak consumer sentiment and the termination of
contracts with large retailers due to unsatisfactory prices. Tablets, bars and
pralines performed well; seasonal products declined. Sales revenue stood at CHF
477.5 million (-6.0% in local currencies and -7.7% in CHF).
Operating profit (EBIT) for the Food Service/Retail Products Group (Gourmet &
Specialties and Consumer Products) was CHF 99.0 million, down 2.9% in local
currencies (-4.9% in CHF), mainly as a result of the aforementioned one-off gain
of CHF 16.5 million related to the sale of Van Houten Singapore in the same
prior-year period. Excluding this effect, EBIT went up 15.3%.
For more detailed financial information see Barry Callebaut’s “Half-year results
2009/10 – Letter to Investors” posted on the company’s website (www.barry-callebaut.com/reports).
Barry Callebaut (www.barry-callebaut.com):
With annual sales of about CHF 4.9 billion / EUR 3.2 billion / USD 4.3 billion
for fiscal year 2008/09, Zurich-based Barry Callebaut is the world’s leading
manufacturer of high-quality cocoa and chocolate – from the cocoa bean to the
finished product on the store shelf. Barry Callebaut is present in 26 countries,
operates about 40 production facilities and employs about 7,500 people. The
company serves the entire food industry, from food manufacturers to professional
users of chocolate (such as chocolatiers, pastry chefs or bakers), to global
retailers. Barry Callebaut is the global leader in cocoa and chocolate
innovations and provides a comprehensive range of services in the fields of
product development, processing, training and marketing. The company is actively
engaged in initiatives and projects that contribute to a more sustainable cocoa
supply chain.
Source:
Barry Callebaut
