Zurich / CH. (bc) Swiss Barry Callebaut Group, the world’s leading manufacturer of high-quality chocolate and cocoa products, announced on April 11 its financial results for the first 6 months of Fiscal Year 2017/2018 up to February 28, 2018. CEO Antoine de Saint-Affrique said: «We had a very strong performance in the first six months of the current fiscal year, which was supported by all product groups and regions, as well as our key growth drivers. This resulted in the continued improvement of our profitability, driven by a favorable mix, operational leverage and a more supportive market».
Q1 2017/2018 Group Key Sales Figures
|(in mio.CHF, unless otherwise stated)||Change in local currencies||Change in CHF||H1-2017/2018||H1-202016/2017|
|Sales volume in tonnes||8.0%||1,022,565||946,782|
|Operating profit (Ebit)||12.3%||16.1%||276.8||238.4|
|Operating profit (Ebit) (recurring)||20.6%||24.6%||276.8||222.1|
|Ebit per tonne (recurring) in CHF||11.6%||15.4%||270.7||234.6|
|Net profit (recurring)||32.9%||37.5%||173.0||125.8|
|Free Cash flow||N/A||N/A||39.0||(32.1)|
In the first six months of fiscal year 2017/18 (ended February 28, 2018), the Barry Callebaut Group grew its sales volume by +8.0 percent to 1,022,565 tonnes, which is significantly above the global chocolate confectionery market growth rate of +2.5 percent. The Group’s growth in the second quarter was +8.1 percent. The strong volume growth was supported by all key growth drivers: Gourmet + Specialties (+7.1 percent), Outsourcing (+8.1 percent) and Emerging Markets (+11.0 percent), as well as the gradual recovery in market demand. Sales revenue declined by –1.8 percent in local currencies (+0.3 percent in CHF) to CHF 3,549.9 million, mainly due to lower cocoa and other raw material prices, which, based on the company’s cost-plus model, are for the majority of its business passed on to customers.
Gross profit amounted to CHF 553.0 million, corresponding to +15.5 percent in local currencies (+19.2 percent in CHF). The increase, which is significantly above volume growth, was fuelled by a good product and customer mix, and a more supportive market environment.
Operating profit (Ebit) improved by +12.3 percent in local currencies (+16.1 percent in CHF) and amounted to CHF 276.8 million, as a result of the increased gross profit. The increase of recurring Ebit was +20.6 percent in local currencies (+24.6 percent in CHF). On a recurring basis, the Group improved its Ebit per tonne by +11.6 percent in local currencies (+15.4 percent in CHF) to CHF 271.
Net profit for the period was up +17.6 percent in local currencies (+21.7 percent in CHF) to CHF 173.0 million. This was due to the strong increase in Ebit as well as lower net finance costs and despite higher income tax expenses due to a one-off impact of tax reforms in Belgium and the US. On a recurring basis, the net profit for the period was up +32.9 percent in local currencies (+37.5 percent in CHF).
Net working capital decreased by -16.0 percent from CHF 1,398.4 million in the same prior year period to CHF 1,174.7 million. The growth-related impact was offset by lower average raw material prices compared to prior year.
Free cash flow for the 6-month period under review increased to CHF 39.0 million compared to CHF – 32.1 million in prior year. This is largely due to the higher profitability, whereas all other items were largely offsetting. The free cash flow on a rolling 12-month basis amounted to CHF 546.7 million. This is the result of a stronger operating profit, lower working capital and continued discipline on capital expenditure (CAPEX).
Net debt amounted to CHF 1,208.4 million, down by –16.9 percent from CHF 1,454.9 million in the prior year period as a result of debt repayment out of the generated cash flow.
Outlook: Good portfolio visibility and diligent ‘smart growth’ execution
Looking ahead, CEO Antoine de Saint-Affrique said: «We continue to see healthy market dynamics. We have good visibility in our portfolio and together with the diligent execution of our ‘smart growth’ strategy, we feel confident to deliver on our 4-year guidance».
Strategic milestones achieved in the first six months of fiscal 2017/2018
- Expansion: The integration of the recent acquisitions of D’Orsogna Dolciaria in Italy, in October 2017, and Gertrude Hawk Ingredients in the US, in December 2017, further expanding Barry Callebaut’s value-adding Specialties + Decorations business, is well on track. Furthermore, to keep serving its customers optimally, Barry Callebaut invested in the expansion of its global chocolate production capacity in Region EMEA, Singapore and Region Americas.
- Innovation: Since its launch in September 2017 by Barry Callebaut, the fourth type of chocolate: Ruby, is hitting the consumer market. The first consumer-facing Ruby products were introduced in Japan and South Korea. Barry Callebaut also announced the launch of Ruby for the Gourmet + Specialties customers under the Callebaut brand. Furthermore, inspired by wine, coffee and craft beer categories, Barry Callebaut introduced a sensory language and tasting ritual for chocolate in January 2018. These tools will enable brands and artisans to help consumers appreciate chocolate even more than they do today. In addition, Barry Callebaut’s sugar-reduced solutions are enticing customers and growing by double-digits.
- Sustainability: Barry Callebaut launched its first Forever Chocolate pilot in Indonesia. This is the first in a series of five pilot programs planned in cocoa origin countries that are intended to test theories of change in the quest to accelerate impact in sustainable cocoa production. Barry Callebaut is partnering with Dutch Wageningen University + Research which is providing the Group with robust, scientific support to provide the baseline and analytical framework against which the outcomes can be assessed.