Barry Callebaut Sales Volumes Rise 8%
The Swiss based Barry Callebaut group grew its sales volume by +8.0% in the first 6 months of the 2017/18 financial year, significantly above the global chocolate confectionery market growth rate of +2.5%. The Group’s growth in the second quarter was +8.1%. The strong volume growth was supported by all key growth drivers: Gourmet & Specialties (+7.1%), Outsourcing (+8.1%) and Emerging Markets (+11.0%), as well as the gradual recovery in market demand. Sales revenue declined by –1.8% 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% in local currencies (+19.2% 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 improved by +12.3% in local currencies (+16.1% 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% in local currencies (+24.6% in CHF). On a recurring basis, the Group improved its EBIT per tonne by +11.6% in local currencies (+15.4% in CHF) to CHF 271.
Net profit for the period was up +17.6% in local currencies (+21.7% 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% in local currencies (+37.5% in CHF).
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 guidance3.”
Strategic milestones achieved in the first six months of fiscal year 2017/18
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, has further expanded Barry Callebaut’s value-adding Specialties & Decorations business. Furthermore, 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. Inspired by wine, coffee and craft beer categories, Barry Callebaut introduced a sensory language and tasting ritual for chocolate in January 2018. These tools enable brands and artisans to help consumers appreciate chocolate even more than they do today.
Sustainability: Barry Callebaut launched its first Forever Chocolate pilot in Indonesia. This is the first of five planned pilot programs 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 also partnering with Dutch Wageningen University & Research, providing the group with robust, scientific support to provide the baseline and analytical framework against which the outcomes can be assessed.
Antoine de Saint-Affrique, CEO of the Barry Callebaut Group, 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.”