Food products Barry Callebaut sells less chocolate in the first quarter
Barry Callebaut (BC) sold less chocolate in the first quarter of fiscal year 2024/25. The high cocoa price had a significant impact on demand. Accordingly, BC has also slightly lowered its volume outlook for the full year.
22.01.2025, 07:21
22.01.2025, 08:17
SDA
Sales volumes fell by 2.7 percent in the period from September to November 2024, as the world's largest chocolate company announced on Wednesday. In absolute figures, the volume of chocolate sold amounted to 565,238 tons.
The decline is mainly due to price negotiations between customers and retailers, delayed orders and a rationalization of warehousing units. According to the figures, the overall chocolate market developed at a comparable rate of -2.6 percent.
Meanwhile, sales rose sharply by 54 percent to 3.45 billion Swiss francs, which would have been 63 percent more in local currency. The main reason for this massive increase is the 70 percent higher cocoa price, which BC is able to pass on to most customers according to its business model (cost-plus).
With these figures, BC missed the AWP consensus, which was -1.7 percent for the important volume figure. In contrast, BC significantly exceeded the less relevant sales figure.
Gourmet also in decline
In the important Global Chocolate segment (market share of around 80%), BC shrank by 3.4% in the quarter under review, slightly more than the market as a whole (-2.6%). Business with industrial customers in particular - BC produces products for well-known food manufacturers such as Mars, Unilever and Nestlé - fell significantly (-3.8%).
The 'Gourmet' segment also declined by 1.5%, after growth of 9.8% in the previous financial year as a whole. In view of the recent rise in the price of cocoa beans, customers delayed their orders, according to the report. In addition, there was also limited product availability in North America following quality measures in Mexico - a factory there was temporarily closed.
In the Global Cocoa division (market share 20%), however, BC grew slightly (+0.3%). Demand for cocoa powder remained robust and new customers were acquired, writes BC. Meanwhile, sales of cocoa liquor continued to be affected by supply bottlenecks.
Progress with investment program
In view of the difficult market situation, BC has been undergoing a massive restructuring process for some time and has launched an investment program with net investments of 500 million Swiss francs. The programme, called "BC Next Level", is intended to bring the company "closer to its customers and sales markets" and focuses on simplification and digitalization, according to the information provided. It is also expected to generate cost savings of 250 million francs, thanks in part to the reduction of around 2,500 jobs.
"Significant progress" was made in this regard in the first quarter, according to today's press release. Social plans have been finalized in many countries. Progress has also been made in negotiations on the closure of the Intra site in Italy. The opening of a competence center for artificial intelligence (AI) in Singapore and far-reaching measures for better planning and improved operational implementation are also progressing well.
Due to the rise in the price of cocoa beans, the need for funds has also increased recently. Among other things, BC issued a bond totaling 300 million Swiss francs on the Swiss capital market just over a week ago.
Outlook lowered
The fact that the environment would become even more difficult was apparently also a surprise for the management. BC has adjusted its volume estimates for the full year 2024/25 (September 2024 to August 2025) downwards. A decline in the low single-digit percentage range is now being targeted, after a constant sales volume had previously been expected.
However, BC considers itself to be "well positioned as market leader". The target for operating profit remains unchanged: double-digit growth in recurring EBIT at constant currencies is expected.
