Barry Callebaut Reports Strong Growth

Growing twice as fast as the global chocolate market, Barry Callebaut’s sales volumes increased by 6.3% percent to 588,125 tonnes in the first semester of the current fiscal year. Sales revenue rose 4.1% to CHF 2,307.2 million.

03/04/07 Barry Callebaut AG, the world’s leading manufacturer of high-quality cocoa and chocolate products has published its results for the first six months of fiscal year 2006/07 ended February 28, 2007. Growing twice as fast as the global chocolate market, Barry Callebaut’s sales volumes increased by 6.3% percent to 588,125 tonnes in the first semester of the current fiscal year. Sales revenue rose 4.1% to CHF 2,307.2 million, while operating income (EBIT) increased to CHF 190.0 million, representing a 7.3% rise.

The EBIT improvement was achieved despite the earlier communicated deterioration in the combined (cocoa) ratio, which had a negative impact of approximately CHF 10 million on operating income at the Cocoa unit. The Consumer Products North America business unit, which is currently under review as part of the group’s strategic repositioning in that region, also had a negative impact on EBIT. These effects were compensated by a good operational performance at the other business units, Food Manufacturers, Gourmet & Specialties and Consumer Products Europe. Net profit (PAT) rose by 11.1% to CHF 125.2 million.

Patrick De Maeseneire, CEO of Barry Callebaut, said: “Our businesses with industrial and artisanal customers continued to deliver strong results, and our European consumer business is doing well. I am pleased with our results for the first six months of our current fiscal year, especially in light of the adverse impact of the lower combined (cocoa) ratio and an unsatisfactory business development in our North American consumer business. With an additional 30,000 tonnes of sales at Food Manufacturers, the outsourcing trend within the chocolate industry was confirmed. We have firmly established ourselves as the outsourcing partner of choice, enabling us to further accelerate our profitable growth.”

The Industrial business segment focuses on selling cocoa and chocolate products to industrial food processors and consumer goods manufacturers worldwide.

Sales volumes were 407,190 tonnes, which represents an organic growth of 11.4% from 365,679 tonnes in the same prior-year period. Sales volumes of Cocoa products sold to third-party customers amounted to 72,711 tonnes, which is a plus of 13.8%. Volumes were pushed to compensate for the margin decline caused by the deteriorating combined (cocoa) ratio. Sales volumes in the Food Manufacturers business unit were 334,479 tonnes, a 10.8% increase compared to the same period in the previous fiscal year. Key drivers were increased outsourcing volumes from existing and new customers. Sales revenue recorded in the industrial business segment rose 9.9% to CHF 1,300.1 million compared to CHF 1,183.5 million in the year-ago period. Including the impact of above-average physical bean sales in the same prior-year period, revenue would have declined by 1.2%.

Looking ahead, De Maeseneire said: “The combined (cocoa) ratio will continue to have a negative effect on profitability in the second half of the current fiscal year. This negative effect will, however, phase out by the next fiscal year. Raw material prices have increased considerably and Easter is one week earlier this year. Nevertheless, our portfolio with industrial customers looks strong and we expect continued good volume growth in the second half of the current fiscal year. We are on track to reach our 3-year financial targets for the period 2005/06 through 2007/08, and our exciting new outsourcing projects make us confident that we can confirm these. This, as always, barring any major unforeseen events.”