Barry Callebaut stays bullish amid ‘difficult’ European market

Chocolate giant Barry Callebaut Group said it bucked a difficult trading in Europe to grow sales of its products to food manufacturers.

Overall volume sales grew 6.6% year on year to 814,236 tonnes in its Europe, Middle East and Africa business, the Switzerland-based group has reported in its full-year results.

Sales revenue in the region rose 9.7% in local currencies – and 6.8% in Swiss Francs (CHF) – to CHF2.7bn (£2.3bn) in the financial year ending 31 August. The increase in revenue had been driven by higher raw material prices and the sale of higher-value products, said the supplier.

Operating profit (EBIT) for the region increased 4.4% in local currencies – down -0.1% in Swiss Francs – to CHF289.5m (£242m), which the group stated was fuelled by a strong product mix and more sales from higher-margin speciality and decorations products.

New product launches

Barry Callebaut Group reported that sales in its Gourmet & Specialties business had also achieved “solid volume growth”, thanks to new product launches, new packaging and entering new categories such as chocolate drinks.

The business said sales in the overall European chocolate confectionery market declined -1.2%, but had shown some signs of recovery as consumption picked up.

Recent activity by the business in Europe has included the announcement of plans to acquire and integrate the Mondelēz International chocolate production facility in Halle, Belgium. This deal – expected to close in December – includes a long-term agreement to supply Mondelēz International with an additional 30,000 tonnes of liquid chocolate a year.

Group volumes up 2.2%

Across the Barry Callebaut Group, sales volumes rose 2.2% in the financial year, which it said reflected “above-market” performance of its chocolate business (+7.6%) and the intentional phase-out of less profitable contracts in cocoa products (-12%).

Sales revenue rose 8.8% in local currencies, and 7% in Swiss Francs, to CHF6.7bn (£5.6bn). The challenging cocoa products market impacted operating profit, which rose 0.1% in local currencies and fell -3.2% in Swiss Francs.

Barry Callebaut Group CEO Antoine de Saint-Affrique said the business’s focus on “smart growth” – which he described as a balance between volume growth, enhanced profitability and free cash flow generation – was starting to gain traction.

“We delivered strong growth in our chocolate business across all regions, supported by our three key growth drivers and despite a sluggish global chocolate confectionery market,” he added. “In our Global Cocoa business, we deliberately phased out less profitable contracts. Good profitability in our chocolate business was offset by a challenging cocoa products market, as anticipated.”

The business also announced that Dr W Andreas Jacobs is to step down as chairman of the board of directors, and that Patrick De Maeseneire, currently vice chairman of the board, is proposed for election as the new chairman.

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