Barry Callebaut braces for possible pandemic impact by bolstering liquidity

17 Apr 2020 --- Chocolate and cocoa products giant, the Barry Callebaut Group, is bracing itself for the potential impacts of coronavirus on its business by drawing on a €1 billion (US$1.09 bn) credit facility to shore up liquidity. The manufacturer says it has not experienced any major disruption to its production operations, however, due to uncertainty in the financial markets, its taken a precautionary decision to draw the full amount of its Revolving Credit Facility (RCF).

“COVID-19 is a major unforeseen event. While we have put in place precautionary measures to support the continuation of our operations, its impact on business growth and profitability cannot be quantified at this stage as it depends on the duration and severity of the pandemic,” says CEO Antoine de Saint-Affrique as the company releases its half-year results, 2019/20.

“In the meantime, we remain committed to our mid-term guidance for the period ending with fiscal year 2021/22. Our global footprint, a strong innovation pipeline, diversity in customers and channels, in combination with the diligent execution of our proven ‘smart growth’ strategy, give us a sound basis to overcome the COVID-19 pandemic.”

Barry Callebaut says it delivered strong profitable growth in the first six months of fiscal year 2019/20. All regions continued to materially outperform the global chocolate confectionery market.

Sales revenue increased by 5.8 percent to CHF 3.8 billion (US$3.9bn). The group increased its sales volume by 5.4 percent to 1,103,728 tons in the first six months of fiscal year 2019/20 (ended on February 29, 2020). Sales volume in the chocolate business grew by 5.2 percent. Growth was supported by all Regions and key growth drivers: Outsourcing (+1.8 percent), Emerging Markets (+10.6 percent) and Gourmet & Specialties (excluding Beverage, +3.6 percent). Sales volume in Global Cocoa grew 6.5 percent. Excluding the first-time contribution from the consolidation of Inforum, organic growth was 4 percent.

However, the company notes that while Food Manufacturers and Global Cocoa are less affected, Gourmet sales volumes are impacted by government restrictions on access to shops and restaurants. In China, there are signals of strong demand recovery, but the overall progression of the COVID-19 pandemic remains volatile and difficult to predict.

“We are taking all necessary measures to protect the health of our employees and their families. We keep contributing every day to the continuity of the global food supply chain,” de Saint-Affrique adds. 

State-of-the-art chocolate expansion and business highlights
The Group also highlighted some of its milestones so far this year. 

In March, Barry Callebaut began the construction of its first chocolate factory in Southeastern Europe. The state-of-the-art facility will be located in Novi Sad, Serbia, close to the country’s capital Belgrade. The factory, with an initial annual production capacity of over 50,000 tons, will serve as a regional hub from which Barry Callebaut can address the rapidly growing chocolate markets of Southeastern Europe.

In January, the company inaugurated its revamped Chocolate Academy Center in Banbury, UK which is part of a global network of 23 such facilities. It will help to meet the growing demand for innovative and high-quality chocolate products in the UK and better serve one of the largest chocolate markets in the world.

In February, Barry Callebaut also introduced the 100 percent dairy-free ‘M_lk Chocolate’. The new chocolate satisfies the growing demand of consumers for plant-based products, particularly among Millennials and Centennials. Dairy free ‘M_lk Chocolate’ is part of Barry Callebaut’s growing portfolio of ‘Plant Craft’ products ranging from chocolate, cocoa, nuts, fillings and decorations. Also in February, the Group’s Gourmet brand Mona Lisa launched ‘Mona Lisa 3D Studio’, the world’s first personalized 3D printed chocolate at scale, made from Belgian chocolate. The launch revolutionizes the world of chocolate craft by combining industry-leading production technology, bespoke design and Barry Callebaut’s chocolate expertise – allowing chefs to craft their unique creations and reproduce them rapidly and affordably, no matter how intricate or specific the design.

Also so far this year, the fourth type of chocolate, Ruby is continuing its success by entering the ice cream category with launches of ‘Magnum Ruby’ and ‘Häagen-Dazs Ruby Cacao’.

By Gaynor Selby