Zurich / CH. (bc) Swiss Barry Callebaut AG, the world´s leading manufacturer of high-quality cocoa and chocolate products, continued to grow more than twice the market in the first nine months of fiscal year 2010/2011, ended May 31: Sales volume grew within the company´s financial guidance up 7,3 percent to 1’046’141 tonnes. Specifically high growth stems from emerging markets and Cocoa Products for strategic partners, supported equally by Food Manufacturers Products and Gourmet and Specialties Products business. Sales revenue significantly increased by 12,5 percent in local currencies (plus 1,6 percent in CHF), driven also by higher raw material prices.
- Sales volume up 7,3 percent
- Sales revenue up 12,5 percent in local currencies (plus 1,6 percent in CHF)
- Strong growth contribution from emerging markets as well as Cocoa Products for strategic partners
- Reached investment grade, successful refinancing
- New outsourcing agreements
- Growth targets confirmed
Juergen Steinemann, CEO of Barry Callebaut: «We were able to keep the growth momentum in a challenging market environment. We are particularly proud of this achievement in the light of months of political difficulties in C?´te d´Ivoire, now returning to normal. The add-on agreement with Hershey and the new outsourcing contract with Chocolates Turin mark two business highlights. With Moody´s upgrading Barry Callebaut to investment grade we reached another important milestone for our future growth».
Region Europe – Strong growth momentum in Eastern Europe and Gourmet
Overall, Barry Callebaut´s sales volume grew 2,1 percent to 583’896 tonnes, slightly above the overall market which increased by 1,7 percent. In Western Europe, the overall chocolate confectionery market declined by 2,1 percent. Against this, the company´s sales volume in this region was stable, with a positive growth in Gourmet and Specialties Products business. Consumer Products business stabilized against the background of an overall decline of 5,0 percent in the most important market Germany. Eastern Europe kept its growth momentum: The chocolate market continued to grow by plus 7,3 percent. Barry Callebaut significantly outperformed this market with high double-digit sales volume growth, both in Food Manufacturers Products as well as Gourmet + Specialties Products business. Sales revenue in the Region Europe grew with plus 6,3 percent in local currencies. The result was strongly hit by negative currency translation effects (minus 5,7 percent in CHF).
Region Americas – Growth fuelled by Corporate Accounts and emerging markets
Sales volume in the Region Americas continued to strongly increase, up 10,0 percent to 231’537 tonnes, compared to the chocolate market which grew at a rate of 6,2 percent. Within the Food Manufacturers Products business, Corporate Accounts continued to perform strongly and National Accounts developed well despite intense competition. Gourmet recovered from a weaker business in the first six months and is surpassing prior year level. The growth in emerging markets in Central and South America was above average, led by Mexico with double digit growth in sales volume. Sales revenue in the Region was up 13,0 percent in local currencies (plus 2,5 percent in CHF).
Region Asia-Pacific – Business growing double digit in all categories
Chocolate markets in the region again showed strong growth, led by China and India with double digit growth rates1. In the Region Asia-Pacific, Barry Callebaut´s sales volume went up 10,2 percent to 39’168 tonnes, supported equally by double digit growth in the Food Manufacturers Products as well as Gourmet + Specialties Products business where the two global brands, Cacao Barry® and Callebaut®, significantly contributed to the growing sales volume. Sales revenue in the Region again strongly increased by 18,0 percent in local currencies (plus 12,9 percent in CHF).
Global Sourcing + Cocoa – High demand for cocoa products
With the crisis in C?´te d´Ivoire coming to an end early May, cocoa terminal market prices adjusted downwards and stabilized at high levels between 1’800 and 1’900 GBP per tonne. Sugar markets were still suffering of a tight supply situation leaving prices very volatile and at historically high levels. Positive production prospects in the southern hemisphere let milk powder prices drop from their record highs reached end of February. Prices started to climb again towards the end of May.
The segment Global Sourcing + Cocoa strongly increased its sales volume by plus 22,1 percent to 191’540 tonnes, positively impacted by strong cocoa powder sales and Cocoa Products for strategic partners. Driven by the higher raw material prices, sales revenue grew strongly with plus 32,0 percent in local currencies (plus 22,9 percent in CHF).
Other developments
In the period under review, Moody´s Investor Service assigned a Baa corporate rating to Barry Callebaut AG, up from Ba. The company successfully placed a 250 million EUR ten-year bond as well as renewed and amended its long term revolving credit facility. This further improved the company´s liquidity profile and financial flexibility. As announced earlier, Barry Callebaut was able to sign two outsourcing agreements: Hershey awarded the company with additional volume, expanding the supply and innovation agreement signed in 2007. Barry Callebaut also concluded a long-term outsourcing agreement with Chocolates Turin, strengthening its presence in the industrial and gourmet market in Mexico. Under the agreement, Turin will become the exclusive distributor in Mexico for Barry Callebaut´s global Gourmet brands Cacao Barry and Callebaut.
Outlook – Strong business model withstands economical uncertainties
The world economy is facing macro-economical uncertainties such as the rising inflation in emerging markets, the debt crisis in Europe and the soon ending quantitative easing program in the U.S. Independent of this, Barry Callebaut expects the global chocolate market to further grow above two percent. The company assumes that raw material prices – especially cocoa, sugar and milk powder – will remain volatile and at high levels. Barry Callebaut operates a cost-plus model, allowing the company to pass on raw material price changes to its customers. The company believes the (forward) combined cocoa ratio to remain at good levels, partly compensating for the negative currency translation effects. Barry Callebaut remains confident to reach its mid-term financial goals and is therefore confirming its guidance.
