Barry Callebaut Sales Edge Up in Q3
Sales volume growth was driven by several factors: a late Easter; the need of food manufacturers, artisans and retailers to restock; the dynamic development of new markets; and the ongoing implementation of outsourcing contracts.
25/06/09 Barry Callebaut AG has reported that sales volumes were up 2.6% to 895,391 tonnes for the first 9 months of the fiscal year 2008/2009 with growth resuming after reaching a low in November 2008. In the third quarter, Barry Callebaut’s sales volumes significantly accelerated across all regions and businesses and showed an increase of 8.8% – in sharp contrast to the contraction in the global chocolate market. Sales volume growth was driven by several factors: a late Easter; the need of food manufacturers, artisans and retailers to restock; the dynamic development of new markets; and the ongoing implementation of outsourcing contracts. In the period under review, sales revenue in local currencies grew 6.3%, driven by higher sales volumes and higher cocoa bean prices. However, sales revenue was impacted by continued unfavorable currency translation effects. In the group’s reporting currency, Swiss franc, sales revenue went up by 0.9% to CHF 3,639.6 million.
Victor Balli, Chief Financial Officer of Barry Callebaut, said: “We are very satisfied that we managed to regain our growth momentum in the third quarter. The global chocolate market continues to decline in volume terms because consumer sentiment is still worsening in most economies. We attribute our own growth in the face of negative market trends to our geographic expansion, the implementation of outsourcing deals and market share gains. Our order portfolio for the next few months looks very promising and shows good margins. Together with ongoing tight cost control this will help offset the negative impact from declining cocoa butter prices. Therefore we are confident that we will achieve our targets, barring any major unforeseen event.”
In the wake of the current economic crisis chocolate consumption declined in most of the major countries during the first nine months of fiscal year 2008/09 as market data shows. In the top 8 Western European chocolate markets the decline in volume terms was more than 2%, mainly driven by France and the UK. In the US the decrease in consumption was around 8%. However, in Western Europe as well as the US the rate of decline in the period from February to April 2009 eased compared to the September 2008 to January 2009 period. Eastern Europe is still showing a strong single-digit increase on a yearto- date basis, although consumption there slowed down in the last quarter. Chocolate consumption in China has declined; volumes are down 11% on a year-to-date basis. Private label products are still gaining ground in most markets due to the further deterioration in consumer sentiment, leading to increased demand for value-for-money products. – In value terms, market data for some markets, such as Belgium, Brazil, Russia, Spain, Switzerland and the UK, showed an increase because of price mark-ups; in other major markets there was a decline in value terms (France, China).
While Region Europe reported a decline in sales volumes during the first six months of fiscal year 2008/09, in line with the negative market trends in key chocolate countries such as France, Belgium, Italy and Spain, volumes strongly rebounded in Western Europe in the third quarter. Overall sales volumes for Region Europe for the nine-month period came in at 594,982 tonnes, down 1.5%. In the third quarter, sales volumes in Region Europe grew 7.9%, in contrast to the declining market. Sales revenue for the first nine months of fiscal year 2008/09 was considerably impacted by unfavorable currency effects; it came in at CHF 2,546.9 million, which was a plus of 0.7% in local currencies but 6.0% less in Swiss francs compared to the same prior-year period. In the third quarter sales revenue improved and reached CHF 735.1 million, an increase of 5.4% in local currencies (-0.6% in Swiss francs). After the lows of November 2008, the Food Manufacturers business unit benefited from\ revived strong customer demand in a number of markets, such as the UK, Germany, the Netherlands, Poland and the Czech Republic, while some other markets were in decline (Italy, France, Russia). Sales growth in Gourmet & Specialties rebounded in the third quarter but was flat for the full nine-month period. To further develop this strategic business, Barry Callebaut acquired vending mix specialist Eurogran (see press release of June 4, 2009), which will complement the existing Vending Mix & Beverages business grouped within Barry Callebaut Sweden. Eurogran will be consolidated in the accounts of Barry Callebaut as of June 1, 2009. Adjusted for disposals and negative currency translation effects, sales revenue at Consumer Products Europe went up 5% for the first nine months of fiscal year 2008/09, partly as a result of continuous improvements across all activities, partly due to a good Easter business. As reported on June 2, 2009, Barry Callebaut’s negotiations with Natra regarding the combination of their European consumer chocolate businesses are on track.
Against the background of a declining chocolate market, Region Americas managed to increase sales volumes by 7.8% to 228,323 tonnes. Due to the higher volumes, partly as a result of the new chocolate factory in Mexico, and higher cocoa bean prices, sales revenue in the region grew by 20.1% to CHF 802.3 million. Both sales volumes and sales revenue growth further accelerated in the third quarter.
The substantial growth in the Food Manufacturers business unit came partly from the volumes delivered to Hershey under the existing long-term supply agreement but also from new customers, especially smaller and mid-sized companies. The Gourmet & Specialties business unit also recorded growth, in particular in the third quarter. During the first six months of the fiscal year the focus was on selling more of the locally manufactured ‘Van Leer’ Gourmet products as the strong EUR relative to the USD made the Gourmet products imported from Europe less attractive in a recessionary market; however, the sales of imported European products recovered in the third quarter. The earlier announced exclusive agreement with the leading agribusiness company Bunge in Brazil to distribute artisanal products to be made by Barry Callebaut in Brazil to the food service segment will take effect as of July 1, 2009. The plans to construct a chocolate factory in the South East of Brazil are on track. The new factory will be operational in early 2010.
Sales volumes in Region Asia & Rest of the World went up by 26.3% to 72,086 tonnes, supported by the acquisitions in Malaysia and Japan in the past fiscal year as well as organic growth. Sales revenue grew by 25.5% to CHF 290.4 million, impacted somewhat by negative currency effects as well as the sale of the Van Houten Singapore consumer business to Hershey as of February 28, 2009. In line with market trends, sales volume growth was somewhat slower in the third quarter. Sales revenue, however, gained further momentum. Food Manufacturers recorded excellent growth primarily in Malaysia, China, Indonesia and Taiwan. Gourmet & Specialties continued to experience high demand, especially for its locally produced ‘Van Houten Professional’ brand; in the third quarter sales of the more expensive Gourmet products imported from Europe also picked up again.
Barry Callebaut’s Industrial business segment focuses on selling cocoa and chocolate products to industrial food processors and consumer goods manufacturers worldwide. It consists of the Global Sourcing & Cocoa and the Food Manufacturers business units. In the first six months of the current fiscal year, the Industrial business segment pushed sales of cocoa products to take advantage of the higher cocoa products margins. In the third quarter, sales of cocoa products were deliberately reduced because of the above-mentioned decline in cocoa butter prices. Against the background of a globally declining chocolate market, the Food Manufacturers business unit recorded a very strong third quarter – in terms of market share gains, outsourcing volumes and strongly developing new markets.
