In the first six months of fiscal year 2012/13 (ended February 28, 2013), Barry Callebaut - the world's leading manufacturer of high-quality cocoa and chocolate products - strongly increased its sales volume by 7.8 percent to 745,256 tonnes, significantly outpacing the global chocolate confectionery market. Top-line growth was broadly based, driven by long-term outsourcing agreements and strategic partnerships, Gourmet and emerging markets. All Product Groups and Regions contributed to this growth.
Sales revenue: Based on its cost-plus model, Barry Callebaut passes on raw material prices to customers for 80 percent of its business. The lower average prices for cocoa ingredients (cocoa beans, cocoa butter, and cocoa powder) compared to the previous year translated into lower sales revenue. As a result, sales revenue went down by 2.6 percent in local currencies (-2.4 percent in CHF) to
CHF 2,391.6 million despite the volume growth.
Gross profit increased by 4.9 percent in local currencies (+5.5 percent in CHF) to CHF 357.3 million, driven by higher volume and improved product margins, partly offset by the effect of a lower combined cocoa ratio . In addition, the strong growth in some regions caused capacity constraints, which led to additional factory and supply chain costs.
Operating profit (EBIT) was impacted by ongoing investments in structures, processes and people to accommodate future growth. Additionally, the Group increased its marketing activities for the global Gourmet brands, and incurred first costs related to the acquisition of Petra Foods' Cocoa Ingredients Division. Consequently, EBIT declined by 2.4 percent in local currencies (-2.1 percent in CHF) to CHF 173.8 million.
Net profit for the period from continuing operations decreased by 7.7 percent in local currencies (-7.4 percent in CHF) to CHF 116.4 million, mainly as a result of the lower EBIT in combination with an increase in net financial expenses and taxes.
Outlook - Continuation of robust growth, delivering on targets
CEO Juergen Steinemann on the outlook: "Based on our four strategic pillars, Expansion, Innovation, Cost Leadership and Sustainable Cocoa, we will continue to deliver robust volume growth. The focus on product margins will remain important. We expect cocoa processing results to increase in the second half of our fiscal year. Our cost base will grow 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. Considering all this, we are confident of delivering on our mid-term guidance."
Strategic developments - Closing for Cocoa Ingredients Division acquisition from Petra Foods well on track
In December Barry Callebaut announced its intention to acquire the Cocoa Ingredients Division of Petra Foods in order to support the further growth of its chocolate business. This transaction will boost Barry Callebaut's presence in fast growing emerging markets to almost one-third of the Group's sales volume and enable the company to capitalize on the attractive growth rates in these markets for cocoa powder-based applications in beverages, compound chocolates, fillings, bakery products and ice cream. In addition, the acquisition will strengthen Barry Callebaut's current and future partnership agreements as there is a trend towards combined contracts (cocoa and chocolate products). It will also add Asia as a strong sourcing base next to West Africa. Deal close activities are well on track. A joint integration taskforce has started developing an integration masterplan to be implemented upon the closing of the transaction, which is expected to take place in summer 2013.
As expected, the acquisition of Petra Foods' Cocoa Ingredients Division led to a recent rating action by Standard & Poor's which assigned a BB+ rating to Barry Callebaut AG, down from BBB-.
Barry Callebaut is currently preparing the financing of the acquisition to cancel the bridge loan facility and replace it by issuing a combination of new equity for an equivalent amount of USD 300 million and a USD 600 million Rule 144A/Reg S USD bond offering.
In January Barry Callebaut strengthened its leadership position in Scandinavia through the acquisition of ASM Foods AB in Sweden from Danish Carletti A/S. With ASM Foods, Barry Callebaut is enhancing its portfolio of higher-margin products such as specialty compound chocolates, fillings and inclusions for both its industrial and Gourmet business. In the same transaction, Carletti A/S became Barry Callebaut's first outsourcing partner in Scandinavia. In addition, the Group signed its first outsourcing agreement in South America with Arcor Group in Chile.
In terms of geographic expansion, four factories are currently under construction: A chocolate factory in Eskisehir, Turkey, a cocoa factory in Makassar, Indonesia, both going on stream in fall 2013, as well as two chocolate factories in Santiago de Chile and in Takasaki, Japan, scheduled to be operational in the first half of 2014.
The completion of the sale of the Dijon factory in November 2012 marked the final step in the disposal of all consumer activities.
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