First-half results

Barry Callebaut defies chocolate declines, but net profits slump

By Oliver Nieburg

- Last updated on GMT

Barry Callebaut's H1 volumes climb 4.5% as global chocolate market drops 2.6%
Barry Callebaut's H1 volumes climb 4.5% as global chocolate market drops 2.6%

Related tags Cocoa processing Chocolate Cocoa solids Barry callebaut

Barry Callebaut has posted volume growth above the chocolate confectionery market in its half-year results, but net profit fell mainly due to currency fluctuations and a challenged cocoa ingredients business.

The firm’s sales volumes were up 4.5%, for the six months up to February 29. Over the same period global chocolate confectionery volumes fell 2.6%, according to Nielsen.

“We have proven we can defy the market trend and deliver solid and quality growth,”​ said CEO Antoine de Saint-Affrique in today’s media conference.

World’s Finest Chocolate, Arcor and Romega

Barry Callebaut’s fastest volume growth came in the Americas, where it reported a 13.4% rise, compared to a 3.7% drop in the overall market.

“Outsourcing and strategic partnerships were fueled in particular by additional volume from World’s Finest Chocolate [US], Arcor [Argentina] and another global player in an emerging market.”

Key figures

  • Sales volumes – 933,327 MT (+4.5%)
  • Revenue – CHF 3.42bn / $3.56bn (+5.6%)
  • Net profit – CHF 107.9m / $112.4m (-18.5%)

Barry Callebaut recently entered a long-term outsourcing agreement with Romanian confectioner Romega and signed a deal with another firm that has been kept confidential.

It sees further potential in outsourcing since the top five chocolate players currently outsource only 10%-20% of chocolate needs, and 70% of volumes in emerging markets are still produced in-house.

The firm is also exploring 3D-printing.

Phasing out some ingredients contracts

Barry Callebaut said it had intentionally reduced sales to third parties in its Global Cocoa division which supplies cocoa ingredients such as butter, powder and liquor. It has begun phasing out less profitable contracts.

This led to a 7.8% sales volume decline in Barry Callebaut’s Global Cocoa business.

callebaut versus markets
Source: Barry Callebaut Media Conference

Cocoa ratio and currency impact hits net profit

Company net profit dropped 18.5% due to higher income taxes, higher financial expenses and a foreign exchange loss.

Company CFO Victor Balli said net profit was strongly impacted by currency fluctuations.

“An historically low combined ratio had a really negative impact on the cocoa processing activities,”​ he added. “Cocoa processing had a negative impact of minus CHF 21m ($21.9m) versus prior year.”

The combined cocoa ratio - the price of cocoa butter and cocoa powder at European factories relative to the futures price for cocoa beans - impacts profitability for cocoa processors.

Balli said cocoa processing had been a profitable business around four years ago, which lead to increased capacity from new players in Asia.

“At the same time the whole confectionery market started to slow down, in particular in Asia,” ​he said. “So you had overcapacity and sluggish demand that classically drove down the prices.”

Not all gloom: Overall chocolate value sales up

But Saint-Affrique said he did not wish to paint a totally bleak picture of the chocolate confectionery market.

“We see that whilst the global market is declining by 2.6% over the last six months, trends are improving quarter on quarter and market value is up 4.6%.”

He said a push for added value had helped Barry Callebaut’s decorations maintain double-digit growth in H1. “And there we are only scratching the surface, being a modest player in the field,”​ said the CEO.

Barry Callebaut’s cocoa flavanol health claim chocolate Acticoa is also “well and alive”​, according to the company. Belgian business Vandenbulcke became the first firm to launch a brand, ChoVita, with Acticoa​ in the EU earlier this year and Barry Callebaut says the ‘good blood flow’ chocolate is gaining traction in the US.


Saint-Affrique said the full-year will “remain challenging from a profitability point of view due to the current cocoa products market”.

Barry Callebaut has forecast 4%-6% volume growth on average for the three-year period 2015/16 to 2017/18.

Related topics Business Confectionery

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