- Sales volume picking up: +2.0 percent (+3.9 percent in Q2), outperforming a currently weak global chocolate confectionery market (-1.5 percent)
- Significant profit increase: EBIT up 8.7 percent (+13.0 percent in local currencies), net profit up 10.7 percent (+16.3 percent in local currencies)
- Solid top- and bottom-line growth driven by Western Europe and Americas, outsourcing and Gourmet
- Mid-term financial targets confirmed, subject to currency translation impacts
Juergen Steinemann, CEO of the Barry Callebaut Group, said: “As forecasted, we had a good second quarter after a slow start to the year. Our volume growth accelerated, much in contrast to the currently weak global chocolate confectionery market. All growth drivers contributed to our growth, especially outsourcing and partnerships and Gourmet. Our business in our main regions Western Europe and Americas performed particularly well. Despite a weak cocoa products market and a negative currency translation effect, we significantly improved our profitability thanks to our continued focus on product mix, margins and cost management.”
During the first half of fiscal year 2014/15 (ended Feb. 28, 2015), the Barry Callebaut Group—the world’s leading manufacturer of chocolate and cocoa products—increased its sales volume by 2.0 percent to 893,437 tonnes, supported by its growth drivers outsourcing and Gourmet. With +3.9 percent, volume growth accelerated in the second quarter. This solid growth was achieved amid a currently weak global confectionery market that declined by -1.5 percent in volume.
From a regional perspective, volume growth was particularly good in the Group’s main regions Western Europe and Americas. Volume growth further benefited from a strong performance of the two global Gourmet brands Callebaut® and Cacao Barry®, boosting overall sales volume in the Gourmet & Specialties Products business significantly by 6.0 percent.
Sales revenue grew by 11.6 percent (+14.5 percent in local currencies) to CHF 3,244.2 million, driven by higher cocoa bean prices compared to last year and increased sales of higher value products.
Gross profit went up 5.8 percent (+9.5 percent in local currencies) to CHF 446.2 million as a result of a more favorable product mix (more focus on specialty products and Gourmet). Overall, though, the combined cocoa ratio had a negative impact on the profitability of the Group’s cocoa processing activities.
On top of the strong base of last year, operating profit (EBIT) rose by 8.7 percent (+13.0 percent in local currencies) to CHF 219.2 million thanks to the higher gross profit as well as tight cost control.
The Group also improved its EBIT per tonne by +6.6 percent to CHF 245.3 (+10.8 percent in local currencies).
Net profit was up 10.7 percent (+16.3 percent in local currencies) to CHF 132.4 million, driven by the solid EBIT performance.
Overall, the currency translation impact on the Group’s EBIT level was CHF -8.7 million, resulting in part from the recent appreciation of the Swiss franc against the euro.
Outlook: Top- and bottom-line growth expected to continue, targets confirmed
CEO Juergen Steinemann on the outlook: “We expect sales volume growth to further accelerate in the second half of our fiscal year, supported by all growth drivers. Our focus on product margins and cost control will drive further profitable growth, which will help to offset the challenging cocoa market. Subject to the expected negative currency translation impact on our bottom-line, we confirm our mid-term targets.”
Strategic milestones in the first six months of fiscal year 2014/15:
- Expansion: Signing an outsourcing agreement with World’s Finest Chocolate, strengthening the Group’s manufacturing footprint in North America. Barry Callebaut’s new chocolate factory in Pune, India, is now operational. In total, production capacity at 15 existing factories was expanded during the period under review. Barry Callebaut opened new Chocolate Academy™ centers in Germany (Cologne) and Russia (Moscow) further promoting its leading position in the Gourmet sector. In early June, the Group will open its 19th Chocolate Academy center in Tokyo, Japan, capitalizing on its presence in the world’s mega cities.
- Innovation: Barry Callebaut reached an important milestone in the area of reformulated chocolates, in which the Group was granted a patent for a special manufacturing process for reduced fat milk chocolate. The optimized cocoa fermentation method using newly developed yeast will make it possible to produce chocolates with flavor profiles tailored to customer requests.
- To further strengthen its cost management and Cost Leadership position, Barry Callebaut intends to bundle transactional activities across Europe in a Shared Service Center (SSC) in Łódź, Poland, over the next 24 months.
- In the recent past, the industry has made significant steps to increase the use of sustainable cocoa, also through the foundation of “CocoaAction” led by the World Cocoa Foundation (WCF). As a founding partner, Barry Callebaut is actively participating in the implementation of "Cocoa Action". The Group has also stepped up its own Sustainable Cocoa activities in order to best support its customers to reach their commitments to switch to sustainable cocoa in the coming years. For this, Barry Callebaut will expand its own sustainability program, the Quality Partner Program (QPP), to Ghana and Indonesia as well as to Brazil. Biolands, the company’s direct sourcing program, will be further rolled out to Ghana.