Barry Callebaut Bucks “Sluggish” Chocolate Market as Volumes Pick Up in Q2


12 Apr 2017 --- The Barry Callebaut Group, the world’s leading manufacturer of high-quality chocolate and cocoa products, saw sales volume growth picking up to +3.5% in the second quarter (first quarter -0.4%), leading to a topline growth for the first six months of fiscal year 2016/17 of +1.4% to 946,782 tons. This contrasts with the -2.1% decline of the global chocolate confectionery market during the same period (Nielsen, Aug 2016-Jan 2017). 

Growth was fueled particularly by outsourcing, i.e. the successful integration of the Halle factory acquired from Mondelez International, but also Gourmet & Specialties and emerging markets contributed. Sales volume in chocolate was up +3.5%, while the intentional phase-out of less profitable contracts in cocoa, now completed, led to a decline of -5.0%.

Antoine de Saint-Affrique, CEO of the Barry Callebaut Group, notes to FoodIngredientsFirst: "We had very good chocolate sales in the last quarter, which was largely growth based. This came in emerging markets and obviously in gourmet and decoration business, but also in places like Europe." 

"It is a mix of different things. We gained traction from outsourcing deals. We kept incredible momentum behind our gourmet and specialty business and we have overall good momentum everywhere. Ultimately, it is down to the consistency of the business model, which is made out of outsourcing, driven by innovation and gourmet specialties and overall from emerging markets, even though that was a bit more subdued in the last quarter." 

In terms of examples of the company's successful outsourcing strategy, he notes. "Not so long ago we opened a chocolate factory in Indonesia, which largely operates for one of the biscuit leaders there. It is working out very nicely. We are providing them with product and helping them to get better quality and innovative products onto the market. Another example is the acquisition of the Mondelez factory in Halle, Belgium. It was concluded at the end of 2016 and is now up and running and delivering chocolate to them. We have a long term contract in place with them of 30,000 tons per year." 

Sales revenue outpaced volume growth, rising by +2.5% in local currencies (+3.3% in CHF) to CHF3,538.7 million (US$3515 million), due to a better product mix and partly offset by lower raw material prices.

Click to EnlargeGross profit amounted to CHF464.0 million (US$461 million), corresponding to +6.2% in local currencies (+6.0% in CHF). The increase, which is significantly above the reported volume growth, was fueled by a good product and customer mix, the successful execution of the Cocoa Leadership program and a more supportive cocoa products market.

Operating profit (EBIT) amounted to CHF238.4 million, an increase of +19.3% in local currencies (+18.8% in CHF) as a result of the good gross profit. EBIT per ton increased by +17.6% in local currencies (+17.1% in CHF) to CHF251.8. Excluding the non-recurring positive effect of CHF16.3 million related to acquisition activity, the EBIT increase was +11.1% in local currencies. On this adjusted basis, the Group achieved a recurring EBIT per ton of CHF234.6, which is an increase of +10.0% in local currencies (+9.1% in CHF).

Net profit was up +32.6% in local currencies (+31.7% in CHF) to CHF142.1 million, due to the strong increase in EBIT, lower net finance costs and despite a higher effective tax rate. Excluding the non-recurring effect, it was up +18.9% in local currencies to CHF125.8 million.

Net working capital increased by +1.2% from CHF1,382.3 million in the prior year period to CHF1,398.4 million, below the Group’s growth. This is the result of the Group’s focus on inventories and lower cocoa bean prices, and it comes on top of the significant decline in prior year, which was impacted by some positive one-offs.

Net debt amounted to CHF1,454.9 million, down by -5.4% from CHF1,538.2 million in the prior year period. The decrease was mainly driven by the repayment of debt as a result of our focus on cash flow.

Free cash flow for the 6-month period was CHF-29.0 million, which reflects the seasonality from the cocoa main crop. The comparable period in the prior year resulted in an inflow of CHF220.4 million, including some positive one-off effects. Based on the company’s hedge strategy, the impact of significant changes in raw material prices and currencies is reflected in the cash flow with a certain time lag. On a rolling 12-month basis, free cash flow was CHF154.6 million.

Looking ahead, CEO Antoine de Saint-Affrique said: “While markets remain volatile, we have built a healthy chocolate portfolio and expect the good momentum to continue. We will pursue the implementation of our Cocoa Leadership program and consistently execute our ‘smart growth’ strategy. On this basis, we confirm our mid-term guidance.” This is on average for the 3-year period 2015/16 to 2017/18: 4-6% volume growth and EBIT above volume growth in local currencies, barring any major unforeseen events.

Strategic milestones in the first half of fiscal year 2016/17 were:
• “Expansion”: On December 31, 2016, Barry Callebaut completed the acquisition of the chocolate production facility of Mondelez International in Halle, Belgium. The transaction also includes a long-term agreement for the supply of an additional 30,000 tons of liquid chocolate per year to Mondelez International. Furthermore, capacity expansions were announced in the company’s chocolate plants in California, US, and in Singapore. The opening of the first chocolate factory in Indonesia was also an important milestone for the Group.
• “Innovation”: Barry Callebaut completed more than 700 new R&D products, including a new range of chocolate and fruit fillings with low water activity for confectionery and bakery creations. La Morella Nuts, part of the Barry Callebaut Group, extended its portfolio with a new range of organically grown Mediterranean nuts. Carma, Barry Callebaut’s Gourmet brand for Swiss chocolate, released Black Zabuye 83%, a black Edel Couverture with 83% cocoa content.   
• “Sustainability”: In November Barry Callebaut launched its new sustainability strategy “Forever Chocolate”, with the ambition to have 100% sustainable chocolate by 2025. In order to make sustainable chocolate the norm, “Forever Chocolate” includes four targets that the company expects to achieve by 2025 and that address the biggest sustainability challenges in the chocolate supply chain: child labor, farmer poverty, its carbon and forest footprint and sustainable sourcing. See also: and for some great stories on how Barry Callebaut is putting sustainability to action.

Barry Callebaut’s sales volume in region EMEA (Europe, Middle East, Africa) recorded volume growth of +4.4% to 429,867 tons. Western Europe managed to grow in all business units, benefiting from volumes coming on stream as a result of the additional supply agreement with Mondelez International and the acquisition of the vending business from FrieslandCampina. Eastern Europe continues to operate under unfavorable market conditions. Sales revenue in Region EMEA grew by +5.8% in local currencies (+ 4.7% in CHF), slightly above the volume growth, to CHF1,470.9 million.

Operating profit EBIT increased considerably by +13.6% in local currencies (+12.5% in CHF) to CHF162.4 million, including the one-time income of CHF16.3 million related to the acquisition as part of a partnership agreement. Excluding this non-recurring effect, EBIT increased by + 2.3% in local currencies (+1.2% in CHF).

Barry Callebaut’s sales volume growth in the Americas was flat at +0.4% or 252,068 tons, versus the strong base from the prior year. Gourmet and South America continued to grow strongly. Sales revenue in the region went up by +1.3% in local currencies (+2.9% in CHF) to CHF841.1 million. A significant profitability improvement of + 11.1% in local currencies (+11.5% in CHF) was achieved due to a much more favorable customer and product mix, as well as a better leverage of costs in the region. EBIT came in at CHF78.5 million.

Barry Callebaut’s Region Asia Pacific had a very strong first six months, recording sales volume growth of +14.6% to 46,872 tons, spread across all divisions. Sales revenue went up by +11.6% in local currencies (+14.0% in CHF) to CHF184.5 million, in line with volume growth. EBIT increased by +12.7% in local currencies (+13.6% in CHF) to CHF20.9 million, benefiting from the good performance of both Food Manufacturers and Gourmet & Specialties products, as well as strong cost discipline.

The intentional phase-out of less profitable contracts has now been completed. For the first six months of the current fiscal year, sales volume in Global Cocoa decreased by -5.0% to 217,975 tons. Sales revenue declined by -2.5% in local currencies (+0.2% in CHF). As announced earlier, EBIT improved by +76.8% in local currencies (+74.3% in CHF) to CHF19.7 million as a result of the successful implementation of the Cocoa Leadership program. EBIT per ton went up to CHF90.3, an increase of +83.5% in CHF.

Cocoa beans futures prices collapsed by -32% during the first half of the fiscal year (from 2,274 GBP/MT on 01/09/2016 to 1,544 GBP/MT on 28/02/2017). Fundamentally, the price drop reflects good weather conditions which will lead to a record crop in Ivory Coast and a big surplus in the 2016/17 cocoa season overall. The combined cocoa ratio has further improved over the first half of the current fiscal year due to a tight product supply situation and lower cocoa bean prices.

The April/May 2017 issue of The World of Food Ingredients will feature a detailed interview with Antoine de Saint-Affrique, CEO of the Barry Callebaut Group on the company’s strategy and innovation pipeline. 

By Robin Wyers

To contact our editorial team please email us at

Barry Callebaut


With annual sales of about CHF 6.7 billion (EUR 6.1 billion / USD 6.8 billion) in fiscal year 2015/16, the Zurich-based Barry Callebaut Group is the world’s leading manufacturer of high-quality chocolate and cocoa products – from sourcing and processing cocoa beans to producing the finest chocolates, including chocolate fillings, decorations and compounds. The Group runs more than 50 production facilities worldwide and employs a diverse and dedicated global workforce of close to 10,000 people. The Barry Callebaut Group serves the entire food industry, from industrial food manufacturers to artisanal and professional users of chocolate, such as chocolatiers, pastry chefs, bakers, hotels, restaurants or caterers. The two global brands catering to the specific needs of these Gourmet customers are Callebaut® and Cacao Barry®. The Barry Callebaut Group is committed to make sustainable chocolate the norm by 2025 to help ensure future supplies of cocoa and improve farmer livelihoods. It supports the Cocoa Horizons Foundation in its goal to shape a sustainable cocoa and chocolate future.

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