Outsourcing boosts Barry Callebaut sales

By Karen Willmer

- Last updated on GMT

Related tags Barry callebaut Revenue North america

Zurich-based chocolate manufacturer Barry Callebaut said today
that like-for-like sales increased 6.1 per cent in
the nine months to 31 May, despite the unstable cocoa

In actual terms, sales rose by 4.1 per cent to CHF3.285bn (€2bn). The like-for-like growth takes out the effects of currency translation into the Swiss franc and the results from the company's Brach consumer business in North America, which together had a negative effect of two percentage points on sales. Management is attempting to offload the money-losing Brach business, which has put a hole in its US operations. Meanwhile the company sold more product, with volumes rising by 6 per cent during the nine months, compared to the same period last year. The growth was about double the rate experienced in the global chocolate market, particularly due to its performance in Europe. "Volumes were driven as an increasing number of previously fully integrated food manufacturers began to outsource their chocolate needs to specialised partners,"​ the company said. Barry Callebaut's arrangements within the past year with confectionery giants such as Hershey, Nestle and, most recently, Cadbury, seem to have helped the company strengthen its position within the market. The company said it expects to sign the final agreements with Nestle and Hershey soon, to start supplying both companies within the next few months. "Thanks to our global presence from the bean to the shelf and our innovative strength, we have been able to establish ourselves as the outsourcing partner of choice in the chocolate industry,"​ said Patrick de Maeseneire, the company's chief executive. "The planned launch of a bond will give us the necessary flexibility to continue on our successful growth path."​ The company has achieved sales revenue growth of 5.9 per cent in Europe, plus more than this within Eastern Europe. Its recent Polish deal with Cadbury and factory plans in Russia for this September, highlight its interest in the Eastern European market. Overall sales revenue in Europe rose by 5.9 per cent, the company said. "An increasing number of previously fully integrated food manufacturers are beginning to outsource their chocolate needs. Barry Callebaut is well positioned to further benefit from this market development." ​ In its industrial business segment, where it sells cocoa and chocolate products to manufacturers, the company recorded a sales growth of 10.8 per cent. "The business unit benefited from higher outsourcing volumes as an increasing number of integrated consumer goods companies shift their focus towards sales and marketing, and are seeking to source liquid chocolate from third parties,"​ the company said. However, the North American market was not quite so successful for Barry Callebaut, which blamed the poor performance on the Brach unit. Sales revenue was down 4.5 per cent for these nine months to CHF760.3m (€460m), compared to CHF796.5m (€481m) the previous year. The company said the fall was due to unsatisfactory sales performance at the consumer products North America business, which is currently under management review. "Barry Callebaut is now actively pursuing several options including a joint venture, a partial or a full sale of the Brach's business, which accounts for more than three quarters of sales revenue at consumer products North America,"​ the company said. In Asia and the rest of the world, sales revenue rose 19.6 per cent to CHF239.7m (€145m). The company attributed the strong performance to gains in its food manufacturers business unit, higher sales of gourmet and specialities products, and rising demand for premium products in Hong Kong and China. Barry Callebaut had sales of about CHF4bn (€2.4bn) in the fiscal year ended 31 August 2006, and operates in 23 countries worldwide.

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