Barry Callebaut Net Profits up 11.3%

10 Apr 2006

10/04/06 Barry Callebaut, the world’s leading manufacturer of high-quality cocoa and chocolate products, announced its half-year results for the period ended February 28, 2006. Operating profit (EBIT) strongly increased by 10.8% to CHF 177.0 million and net profit (PAT) grew by 11.3% to CHF 112.7 million. EBIT per tonne, the key indicator for operational performance, went up by 12.4% to CHF 320 per tonne, up from CHF 285 per tonne in the same prior-year period. All business units contributed positively to the increase of this ratio.

Sales revenue grew by 8.4%, mainly due to increased physical bean sales, positive exchange rate effects and moderately higher cocoa bean prices. Excluding these effects, Barry Callebaut’s sales revenue slightly decreased. Sales volumes went down by 1.4% mainly due to the discontinuation of unprofitable contracts in the consumer business. Without this, sales volumes and revenue on a comparable basis would have increased.

Barry Callebaut noted that it achieved this result despite expected shifts of volumes from the second to the third quarter due to Easter being three weeks later than in 2005 and also despite lower sales of semi-finished products as a consequence of the company’s growing in-house need for cocoa liquor and butter in order to manufacture the increasing quantities of chocolate sold to customers.

Patrick De Maeseneire, CEO of Barry Callebaut, said: “During the first six months of fiscal year 2005/06 we have been able to further grow our profitability, and we have made considerable progress in our European consumer business. We are pleased with our half-year results, especially in view of a late Easter in 2006.”

Sales revenue recorded in the Industrial business segment grew by 16.4% to CHF 1,316.0 million compared to CHF 1,130.1 million in the same prior-year period.

In the Cocoa business unit sales revenue increased by 44.9% to CHF 364.6 million, up from CHF 251.7 million. This increase resulted from the significantly higher sales of cocoa beans in the second quarter. As mentioned earlier, reported sales volumes include only processed goods but no raw material sales. Adjusted for these raw material sales, revenue of the Cocoa business unit decreased by 6.8% compared to prior year.

The Food Manufacturers business unit managed to increase sales revenue by 8.3% to CHF 951.4 million, up from CHF 878.4 million in the previous year. Excluding positive foreign exchange effects as well as the impact of a slight increase in the cocoa price, organic sales revenue growth was approximately 5.3%. This increase is mainly attributable to volume growth.

Operating profit (EBIT) for the Industrial business segment increased by 11.4% to CHF 109.5 million in the six-month period ended February 28, 2006, up from CHF 98.3 million in the prior-year period. The business units Cocoa and Food Manufacturers both contributed to the strong increase in operating profit. The above-mentioned physical bean sales did not have a significant impact on the profitability of the business segment.

After a severe winter in Russia, work on Barry Callebaut’s new factory near Moscow resumed. The factory is scheduled to start operations at the beginning of 2007. In China, Barry Callebaut has continued to evaluate several alternatives for establishing a regional presence with own production capacities in order to obtain better access to this important market.

Looking forward, CEO Patrick De Maeseneire said: “Our business is seasonal. With the late Easter holiday this year, some volumes are expected to shift from the second to the third quarter. Efficiency improvements in our European consumer business are coming along as planned, and we are confident we’ll make further progress and achieve profitability for this business unit in fiscal year 2005/06. We expect a further decline in the combined (cocoa) ratio, having an effect on the profitability of our Cocoa business unit in the second half of this fiscal year as well as in 2006/07. Nevertheless, and despite changes in the accounting standards (IFRS) with regard to employee stock ownership programs, we confirm the communicated financial targets for the 3-year period 2004/05 through 2006/07. This as always, of course, barring any major unforeseen events.”