Barry Callebaut growth dented by European shortfall

By Nathan Gray

- Last updated on GMT

Barry Callebaut growth dented by European shortfall

Related tags: Local currencies, Switzerland

A downturn in sales throughout Western Europe has seen Barry Callebaut fail to meet its projected growth for the first quarter. However the Swiss chocolate supplier said it is still outperforming the market.

Manufacturing giant Barry Callebaut AG reported a "soft start" ​to its 2011-12 financial year – from September 2011 – with sales growing 2.6% by volume in the first quarter, compared to a forecast of around 4%. The company said that sales revenue grew by 3.2% in local currencies, but reported a 4.1% decrease in revenue in Swiss Franc (to 1.27 billion CHF) due to the strength of the Swiss currency.

The leading manufacturer of cocoa and chocolate products said that despite failing to meet its own projections for the quarter, the company had outperformed the global chocolate market by achieving the 2.6% growth – with Nielsen reporting a that the global chocolate market declined by 0.7% over the same period.

“After an expected soft start in the first two months of our fiscal year, we saw volume growth picking up in both our industrial as well as our Gourmet segment,” ​said Juergen Steinemann, CEO of Barry Callebaut.

“Despite a challenging environment, we outperformed the market. We made excellent progress in our projects leading us further in the right strategic direction,” ​he said.

European squeeze

The decline in volumes reflected a 0.8% slowdown in the European, where it said that "debt crisis in Europe negatively impacted consumer sentiment, especially in Southern Europe.”

The chocolate and cocoa giant added that a “difficult market environment in Western Europe”​ contributed to the company’s lower than anticipated growth – though it added that that “good growth”​ in Eastern Europe, driven by Poland, Russia and the Baltic States, had gone some way to compensating for the difficulties seen in Southern and Western Europe.

Sales revenue was reported to increase by 1.2% across Europe, however the company said that a strong CHF meant that this growth in local currencies was translated into a 8.2% fall in the reporting currency for the whole European region.

Asian decline

Barry Callebaut also disclosed a down-turn in growth across the Asia-Pacific region, where volumes grew by 2.7% in the September-to-November period – down from 10.4% over the previous 12 months.

However, the company said the Asian slowdown was at least in part due to factory downtime while they expanded capacity at a Singapore plant.

“The temporary production downtimes caused by the installation of new capacity also restrained growth during the period under review,” ​said Barry Callebaut.

Long term growth

Steinemann said that the company are ‘confident’ of reaching its long term financial targets of reaching an average of 6 to 8% growth in local currencies between the 2009/10 and 2012/13 financial years.

Barry Callebaut revealed it had achieved ‘broad-based growth’ in all regional markets in the Americas and across all segments – where sales growth rocketed to 17.6%. Sales revenue for the Americas region grew 18.0% in local currencies (6.9% in reporting currency).

The company recently announced a new outsourcing partnership with Mexian company Grupo Bimbo. As part of the contract Barry Callebaut will make up to 32,000 tonnes of chocolate a year for the Mexican foods giant.

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