Price strategy pays off for Barry Callebaut
confectionery industry delivered a solid set of first quarter
figures yesterday with net profit rising by 17 per cent, boosted by
the integration of recently acquired US confectionery firm Brach's
and Belgian-Dutch chocolate group Luijckx.
Net profit for the first three months ended 30 November 2003 rose to CHF56.7 million from CHF48.5 million in the year-ago period, beating consensus estimates of around CHF47.7 million.
A fully integrated chocolate company - from bean to retailer - Barry Callebaut is divided into two principal business segments - industrial (cocoa and food manufacturers) and food service/food retail.
On the industrial side, sales revenue, boosted by price increases, grew by 3.5 per cent to CHF623m, up from CHF601m for the same period in the previous year, despite a fall in volumes.
While cocoa saw a 14 per cent rise in sales, contributing CHF158m to the figure, actual volumes dipped by 5.9 per cent to 31 492mt. A deliberate step taken by the company to decrease cocoa volumes, Patrick De Maeseneire, CEO of Barry Callebaut told a press conference yesterday. Sales volumes also fell, by 1.3 per cent, to 148,345mt for the food manufacturers unit.
'Cocoa prices drifted sideways in the reporting period and closed below the level of GBP 900 per tonne,' said the company in a statement this week.
'The presence of the group in Ghana continues to pay off,' said the CEO yesterday. An active strategy to pursue the 'diversification of its bean sourcing' has been put in place by the chocolate group, which, in addition to the Ivory Coast and Ghana, is currently sourcing now from Indonesia, the world's third biggest supplier of cocoa.
At 1.3m tonnes, the Ivory Coast is still the number one global supplier of cocoa, followed by Ghana with 497,000 tonnes and Indonesia with 425,000 tonnes, according to figures from the International Cocoa Organisation.
Sales for the Barry Callebaut group as a whole grew to CHF1.22 billion from CHF1.10 billion and operating profit to CHF91.5 million from CHF79.3 million. The sales growth was due partly due to the acquisitions of chocolate companies Brach's and Luijckx. The company said it expects to increase net profit and operating profit by a double-digit percentage for the full year.
With a total revenue of €2.5bn in 2003, products from the company include bulk chocolate, chocolate coverings, coatings, powders. Major competitors of Barry Callebaut are the US company Hershey Foods, Mars and Swiss giant Nestlé.