Barry Callebaut Reports Good Progress on Integration of Acquired Cocoa Business

15 Jan 2014 --- In its first quarter of fiscal year 2013/14 (ended November 30, 2013), Barry Callebaut - the world's leading manufacturer of high-quality chocolate and cocoa products - increased its sales volume by 19.5% to 463,996 tonnes. Excluding the recently acquired cocoa business, the Group's volume growth was +4.6% for the period under review.

In comparison, the global chocolate confectionery market expanded by 3.4% in volume. Most regions and all Product Groups contributed to the solid growth, driven by emerging markets (+19.1% stand-alone) as well as the Gourmet & Specialties Products business (+9.7% stand-alone).

Sales revenue was up 22.4% in local currencies (+21.4% in CHF) and came in at CHF 1,515.3 million. On a stand-alone basis, sales revenue grew 6.4% in local currencies (+5.5% in CHF) to CHF 1,317.5 million. This reflects the volume increase as well as higher average raw material prices, in particular for cocoa beans, cocoa butter and milk powder.

Juergen Steinemann, CEO of Barry Callebaut, said: "We have had a solid start into the new fiscal year. Our three key growth drivers - geographic expansion, outsourcing & partnership agreements, and our Gourmet business - have maintained their momentum, with emerging markets and Gourmet delivering particularly strong growth. The integration of the acquired cocoa business continues to make good progress. As of the beginning of the fiscal year, all integration-related workstreams have been transferred into our operational activities and are on track as planned."

CEO Juergen Steinemann looking ahead: "We will continue to work along our strategic pillars. We are focusing on the successful integration of the recently acquired cocoa business and on further improving our product margins. I am confident we will reach our mid-term financial targets[4]."

Strategic developments in the first 3 months of fiscal year 2013/14
• Under its strategic pillar "Expansion", Barry Callebaut opened its first chocolate factory in Eskisehir, Turkey. In addition, the company completed the move of its Japanese chocolate factory to Takasaki, near Tokyo, and opened the new regional headquarters for its Region Asia-Pacific in Singapore. Barry Callebaut also inaugurated its 16th CHOCOLATE ACADEMY(TM) center on the premises of its EEMEA headquarters in Istanbul.

• Early September, the EU Commission approved Barry Callebaut's health claim submission on cocoa flavanols, underpinning the company's aspiration to be a leader in "Innovation".  

• In response to growing demand in Western Europe and in order to further strengthen its "Cost Leadership" position Barry Callebaut expanded the production capacity of its factory in Wieze (Belgium) by 23,000 tonnes. Further capacity optimizations in the region are under way.

Sales volume in Region Europe increased 1.5% to 204,075 tonnes. In Western Europe Barry Callebaut focused on further increasing product margins and still faced some capacity constraints. The Gourmet business and the Beverages division showed a good performance. In EEMEA, the Food Manufacturers and the Gourmet & Specialties Products businesses recorded strong growth, in particular in Russia, Turkey and the Middle East.

Overall sales revenue in the Region grew by 11.5% to CHF 696.6 million, faster than sales volume growth as a result of higher raw material prices and a more favorable product mix.

Region Americas continued to grow strongly across all regional markets: Sales volume went up 10.3% to 115,753 tonnes. Growth in NAFTA was fueled by the company's global and national accounts in the industrial business as well as by the Gourmet business. In South America, both the industrial and the Gourmet business showed double-digit growth.

Sales revenue in the Region rose 5.9% to CHF 317.6 million, at a slower pace than volume due to currency translation effects.

In Asia-Pacific, Barry Callebaut's sales volume was up 7.4% to 16,648 tonnes. The Food Manufacturers Products business regained growth momentum, in particular with the company's global accounts. Growth in the Gourmet business was influenced by the weakness of some local currencies.

Sales revenue increased by 3.0% to CHF 62.7 million at a slower pace than volume as a result of currency effects.

Sales volume in the segment Global Cocoa went up 91.0% to 127,520 tonnes, mostly driven by the recently acquired cocoa business from Petra Foods. Stand-alone sales volume increased 4.4% to 69,687 tonnes.

Sales revenue for the total business grew by 66.8% to CHF 438.4 million; on a stand-alone basis sales revenue decreased by 8.5% to CHF 240.6 million, reflecting lower cocoa powder prices.

The integration of the acquired cocoa business from Petra Foods is on track. It has moved from a project to being part of the business.

Cocoa terminal market prices kept increasing in the period under review, reaching a two-year high on November 20, 2013 at GBP 1,782. With strong arrivals from the two most important cocoa origins, Côte d'Ivoire and Ghana, market players gradually reduced their deficit expectations. This slowed the bullish momentum in cocoa prices, which closed at GBP 1,745 per tonne at the end of November.

Prices on the world sugar market were mainly driven by investment fund activities. The reduction of their long positions in October and November brought the market price of sugar to its lowest levels since July 2010. EU sugar prices continued to decline because of special measures to increase supply.

Both world and European market prices for milk powder remained rather stable at high levels. Prices were supported by a more short coverage of the industry with regular demand on the market.