New chocolate maker contracts boost volumes for Barry Callebaut

By Lindsey Partos

- Last updated on GMT

Related tags Barry callebaut Chocolate

New outsourcing contracts for industrial cocoa from new and
existing chocolate makers boost volume growth for cocoa supplier
Barry Callebaut, helping to offset harmful exchange rates, energy
prices and inflation.

The Swiss maker of bulk chocolate reported sales volumes of 872,993mt for the first nine months of 2008, a rise of 10 per cent for the same period in 2007 which they claim is "more than three times the growth rate of the chocolate market."

The firm's strong volume growth propelled nine months sales to May 31, 2008 by 19 per cent to 3.61 billion Swiss francs (€2.24billion), up from CHF3.04 billion in the year ago period.

Revenues gained positively from the 'historically' high raw material prices. reported recently that cocoa prices peaked on 13 March this year, with ICE Futures US cocoa 2nd position seeing prices closing at $2,922 a tonne, "a staggering 39.2 per cent higher on the start of the year", says a report from Fortis.

Repeating the cost message from food businesses the world over, Patrick De Maeseneire, CEO of Barry Callebaut, said: "The food industry faces increasing cost pressure from high raw materials and energy prices and inflation as well as economic uncertainties."

And in the face of such circumstances, the firm has upped the pace to cut costs across the group.

"To offset rising input costs deriving from increasing raw material and energy prices, Barry Callebaut has launched a cost reduction program, which is expected to have a positive impact of approximately CHF 20 million in the second semester.

The most important levers are cost optimisations in operations, logistics, external consultants and marketing," says a spokesperson from Barry Callebaut speaking to today.

Looking ahead, in a statement today Patrick De Maeseneire asserted: "We are confident that we will reach our four-year financial targets over the period 2007/08-2010/11, barring any major unforeseen events."

The targets are, on average, annual top-line growth of 9 to 11 per cent, EBIT growth of 11 to 14 per cent and net profit growth of 13-16 per cent.

Breaking the results down by region, sales revenue for Europe rose by 19.8 per cent to CHF 2.7bn (€1.68bn) compared to the prior year period, gaining from higher cocoa bean prices and the "result of exchange rate effects".

In the Americas, sales revenue saw a rise of 19.6 per cent to CHF 668m (€415m), lifted by new outsourcing contracts, notably from US chocolate giant Hershey and also 'new customers, both large and mid-sized,' says the Swiss firm.

Asia and the rest of world, in contrast, witnessed flat sales volumes, dropping 0.2 per cent from 57,191mt for the nine months up to May 31, 2007 to 57,078mt for the comparable period in 2008.

Sales revenues came in, for the first nine months up to May 31, 2008, to CHF231.4m (€143m), rising from CHF222.9 (€142m) for the prior year period.

Sales volume for this region were, according to the Swiss firm, impacted by the sale of the Ivorian consumer products subsidiary SN Chocodi in February 2008 and the Senegalese firm Chocosen in February 2007.

The flat figures for Asia notwithstanding, Barry Callebaut remains upbeat for the region; additional production capacity is now online at their new chocolate factory in China, with volumes for the food manufacturers business unit in the region "growing exponentially", reports the firm.

Last year, Barry Callebaut disclosed large outsourcing orders with US chocolate giant Hershey, Swiss food group Nestle, UK's Cadbury and Japanese food company Morinaga.

And in the financial statement today, they state that preparations "for the first chocolate deliveries to Morinaga in Japan, scheduled for early 2009, are underway."

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