Barry Callebaut Profits Confirms Mid-Term Outlooks

03/04/08 For the first six months of fiscal year 2007/08 ended February 29, 2008, Barry Callebaut has said that sales volumes increased 10.3% to 612,436 tonnes, growing three times as fast as the global chocolate market. Sales revenue rose significantly by 21.1% to CHF 2,585.0 million, largely driven by higher cocoa bean and other raw material prices and favorable exchange rate developments. Excluding cocoa price and exchange rate effects, sales revenue rose 15.7%.

Profitability was impacted by the following three factors: Sales prices for branded consumer goods could not be increased until January 1, 2008, which resulted in a delay in price adjustments relative to higher raw material costs. The start-up of the new factories in the high growth markets of Russia and China resulted in non-recurring additional costs. As previously communicated, large outsourcing contracts are initially associated with high fixed costs and low capacity utilization, leading to a proportionally lower EBIT per tonne. Despite these effects, which will not affect the next six months of the current fiscal year, an operating profit (EBIT) 2 increase of 1.3% to CHF 200.4 million was achieved. Net profit for the period was stable at CHF 124.4 million, adversely affected by a loss on the sale of a minority interest and a higher average group tax rate.

Patrick De Maeseneire, CEO of Barry Callebaut, said: “During the first six months of the current fiscal year we have made significant investments in our future: We have opened two new factories in emerging markets, integrated four new production sites in North America and Europe and phased in three large outsourcing contracts. We are now optimally positioned to accelerate our profitable growth going forward and we will be able to fully benefit from scale effects. The cost environment will remain challenging. Despite the economic and exchange rate uncertainties and the much lower volume growth expected in the third quarter due to the very early Easter, we are confident that we will reach our mid-term financial targets, which we have defined as averages over a four-year period (2007/08-2010/11). This, of course, barring any major unforeseen events.”