Barry Callebaut reports 7.4% decline in H1 net profit

Swiss cocoa and chocolate products manufacturer Barry Callebaut has reported that its net profit declined 7.4% to CHF116.4m ($124.5m) for the first half of 2012-13, compared with CHF125.7m ($134.4m) for the same period in 2011-12.

The company stated that the decline in profits can be attributed to lower EBIT in combination with an increase in net financial expenses and taxes.

For the period ended 28 February 2013, sales revenues decreased 2.4% to CHF2.39bn ($2.55bn), compared with CHF2.44bn ($2.61bn) due to lower average prices for cocoa ingredients – cocoa beans, cocoa butter, and cocoa powder.

Sales volume during the period increased 7.8% to 745,256t compared with 691,061t a year ago.

Operating profit (EBIT) for the period decreased 2.1% to CHF173.8m ($185.9m), while gross profit increased 5.5% to CHF357.3m ($382.2m).

Barry Callebaut chief executive officer Juergen Steinemann said that the EBIT was impacted by the unfavourable combined cocoa ratio as well as additional factory and supply chain costs due to strong growth in some regions causing capacity constraints.

"Based on our four strategic pillars, Expansion, Innovation, Cost Leadership and Sustainable Cocoa, we will continue to deliver robust volume growth."

The company expects cocoa processing results to improve in the second half of the fiscal year and cost base to increase at a slower pace than volume, except for non-recurring costs related to the closing and integration of the acquisition of the Cocoa Ingredients Division from Petra Foods.

In Europe, sales volume rose by 5.8% to 377,458t despite a challenging market environment in the southern part of the continent, with overall sales revenue in the region increasing 3% to CHF1.18bn ($1.26bn).

In the Americas, the company’s sales volume increased 13.6% to 200,434t, and the overall sales revenue in the region rose 3.6% to CHF567.2m ($606.81m).

In the Asia-Pacific region, overall sales volume rose 11.9% to 30,915t, driven by driven by strategic partnerships in the Food Manufacturers Products business, while sales revenue increased 1% to CHF118.1m ($126.34m).

Sales revenues in the Global Sourcing & Cocoa segment decreased by 18% to CHF520.1m ($556.42m), primarily because of lower sales prices for cocoa ingredients.

Meanwhile, the company’s Food Manufacturers Products business reported 2.6% increase in sales revenue to CHF1.45bn ($1.55bn), while its Gourmet & Specialties Products business recorded a sales revenue increase of 4.8% to CHF416.4m ($445.48m).

In December, Barry Callebaut announced plans to acquire the Cocoa Ingredients Division of Petra Foods as part of its efforts to support the further growth of its chocolate business.

The acquisition is expected to boost Barry Callebaut’s presence in fast growing emerging markets to almost one-third of the company’s sales volume and allow it to capitalise on the growth rates in these markets for cocoa powder-based applications in beverages, compound chocolates, fillings, bakery products and ice cream.

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Image: Barry Callebaut CEO Juergen Steinemann said that the company grew in all regions and product groups due to strategic growth drivers outsourcing and emerging markets. Photo courtesy of Barry Callebaut.