Barry Callebaut Reports Annual Profit Growth

By Andrey Sychev

Swiss chocolate maker Barry Callebaut has reported annual profit growth, successfully passing on rising cocoa prices to customers. However, the company anticipates a second consecutive year of flat sales volumes due to high ingredient costs.

Shares in the company rose 1.7% in Julius Baer pre-market trading.

In a statement, the firm noted "significant uncertainty" on how cocoa price hikes would affect short-term demand, emphasizing its commitment to defend market share in a challenging environment.

Cocoa bean prices soared to an all-time high of about $12,540 per metric tonne in April, nearly doubling over the last year.

This surge has adversely affected Barry's cash flow, which recorded a loss of 2.3 billion Swiss francs (approximately $2.7 billion) for the fiscal year ending in August. Consequently, the company borrowed 2 billion francs, tripling its net debt.

Despite these challenges, Barry Callebaut managed to pass on the increased costs to customers, leading to a 22.6% increase in annual revenue to 10.4 billion francs. Recurring operating profit, adjusted for one-off items, rose 6.8% to 704.4 million francs.

Sales volumes for chocolate remained stable at 2.279 million tonnes by the end of the fiscal year in August, slightly below the 2.283 million tonnes consensus. However, volumes dropped 1.2% in the fourth quarter, impacted by lower sales in the gourmet segment and a temporary production halt at its Mexican plant in August.

Analysts at J.P. Morgan predict that rising chocolate prices will negatively affect the company’s sales.

($1 = 0.8725 Swiss francs)