Barry Callebaut’s ‘smart growth’ strategy sees successful results in fiscal year 2018-19
Barry Callebaut recently stated that their sales volumes grew 5.1% to 2.14m tonnes in the 12 months to August 31, while net profit rose 6.9% in local currencies to CHF 368.7 million as they have officially released their full-year results for their financial year 2018-19.
CEO of Barry Callebaut, Antoine de Saint-Affrique stated: “We committed to pursuing our successful ‘smart growth’ strategy. Good growth momentum, a strong innovation portfolio and discipline in execution make us confident of delivering on our renewed mid-term guidance. This is 4-6% volume growth and EBIT above volume growth in local currencies on average for the 3-year period 2019/20 to 2021/22, barring any major unforeseen events, which is consistent with our prior mid-term guidance.
The chocolate maker also stated in a media conference held at the company’s headquarters in Zurich that they expected to pass on higher prices to its customers and expected other producing countries to also raise their prices while still supporting the joint Living Income Differential (LID) initiative introduced by Ghana and Cote d’Ivoire that adds on an extra $400 on cocoa sales for the 2020/21 season.
In addition, Barry Callebaut expanded in the fiscal year under review across all Regions. In Region Europe, Middle East, Africa (EMEA), the integration of Inforum, a Russian B2B producer of chocolate, compound coatings and fillings, acquired in January 2019, is well on track. In April 2019, Barry Callebaut signed a Memorandum of Understanding with the Government of Serbia to build the Group’s first chocolate factory in Southeastern Europe.
The plant in Novi Sad is expected to be operational by 2021 and will serve as a regional hub, driving further growth in the Southeastern European market. In August 2019, Barry Callebaut opened its CHOCOLATE ACADEMY™ Center in Antwerp, the 23rd globally. In the same month, Barry Callebaut announced the construction of its new Global Distribution Center in Lokeren, Belgium, to further improve its customer service.
The logistics hub is expected to be operational by 2021 and will further drive efficiency. The Group also deepened its presence in Region Asia Pacific, e.g. by opening a CHOCOLATE ACADEMY™ Center in Beijing, China, and by laying the first stone for the construction of a new chocolate and compound manufacturing facility in Baramati, India, one of the fastest growing chocolate markets in Asia.
Barry Callebaut also strengthened its partnership with Garudafood, one of the largest food and beverage companies in Indonesia, by opening in August 2019 its second chocolate manufacturing plant in Rancaekek. To keep serving its customers optimally, the Group accelerated the expansion of its chocolate production capacities in the Region Americas. In March 2019, Barry Callebaut inaugurated a new cocoa processing unit in Abidjan, Cote d'Ivoire, which will expand the Group’s capacity in the country by +40% by 2022.
In May 2019, Ruby, the fourth type of chocolate, was officially introduced in the United States, the world’s largest chocolate and confectionery market, and Canada. Ruby is now available in more than 50 countries worldwide. Barry Callebaut also extended its dairy-free chocolate product portfolio in the United States, tapping into growing customer demand for dairy-free chocolate.
Furthermore, Barry Callebaut’s sugar reduced solutions, like the new dark and milk chocolate with only 1% added sugar, cater to the desires of wholesome choice consumers and continued to grow by double-digits. In August 2019, Bensdorp, the premium cocoa brand of Barry Callebaut, introduced “Natural Dark”. It enables food manufacturers to deliver dark cocoa creations with an intense chocolate taste and a 100% clean label. Innovation momentum continued in September 2019, when “Cacaofruit Experience”, a new Food & Drink category including ‘Wholefruit Chocolate’, was officially introduced in San Francisco.
In February 2019, Barry Callebaut successfully placed a EUR 600 million equivalent Schuldscheindarlehen. This transaction improves Barry Callebaut’s debt and liquidity structure by extending the average maturity and diversifying its sources of financing. At least two-thirds of the proceeds will finance sustainability-related projects to support cocoa farmers and their communities.
Given the debut in the Schuldscheindarlehen market, the Group repaid in August 2019 its outstanding 5.375% Senior Note, due 2021, in the amount of EUR 250 million. This led to one-off finance costs of CHF 33.0 million in 2018/19 but is expected to have a positive impact of around CHF 10 million on net finance expense as from fiscal year 2019/20. The ongoing roll-out of its SAP system, more efficient business processes as well as digital solutions will continue to contribute to the Group’s cost competitiveness.
In order to support the Group’s goals to have more than 500,000 cocoa farmers in its supply chain lifted out of poverty and to become carbon and forest positive by 2025, Barry Callebaut joined two initiatives at the United Nations Climate Action Summit in New York in September 2019. Barry Callebaut co-signed the One Planet Business for Biodiversity (OP2B) coalition, a coalition of food and agriculture companies determined to protect and restore cultivated and natural biodiversity within their value chains.
The Group also signed the vision statement for the "Just Rural Transition" initiative. This platform is committed to transforming by 2030 the way in which food is produced and consumed. The company’s investments in sustainable value chains were acknowledged in July 2019, when Sustainalytics ranked Forever Chocolate as the #1 sustainability strategy out of 178 food companies.