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Barry Callebaut – Half-year results, fiscal year 2011/12: Accelerated top line growth, significantly investing in the future

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April 02, 2012
Overview
  • Growth in all Regions and across all Product Groups
  • Sales volume up 6.7%; sales revenue up 10.4% in local currencies (+3.0% in CHF)
  • Investing in profitable growth while optimizing structures and processes
  • EBIT decreased by 5.5% in local currencies (-12.5% in CHF)
  • Growth targets confirmed1

Group key figures for the first half of fiscal year 2011/12 – from continuing operations

 

 

Change in %

 

Six months up to Feb 29, 2012

 

Six months up to Feb 28, 20112

in local currencies

in reporting currency

Sales volume

Tonnes

 

6.7

699,058

655,065

Sales revenue

CHF m

10.4

3.0

2,476.9

2,404.0

Operating profit (EBIT)

CHF m

(5.5)

(12.5)

175.1

200.2

EBIT per tonne

CHF

(11.4)

(18.0)

250.5

305.6

Net profit for the period (PAT)

CHF m

(11.3)

(18.0)

121.8

148.6

 

Zurich/Switzerland, April 2, 2012 – In the first half of fiscal year 2011/12 (ended February 29, 2012), Barry Callebaut AG, the world’s leading manufacturer of high-quality cocoa and chocolate products, increased its sales volume by 6.7% and thus again outperformed the worldwide chocolate confectionery market.3 All Regions and Product Groups contributed to the volume growth, which rebounded strongly in Q2 (+11.5%). First-half sales revenue grew faster than volumes, rising 10.4% in local currencies (+3.0% in CHF). Gross profit increased by 2.9% in local currencies (-3.9% in CHF). Operating profit (EBIT) decreased by 5.5% in local currencies, -12.5% after translation into Swiss francs. Significant investments in operating structures to support further growth, ramp-up costs related to recent long-term partnership and outsourcing agreements, investments in the growth of the Gourmet & Specialties Products business as well as multiple capacity expansions led to higher operating expenses, negatively impacting EBIT. Net profit from continuing operations declined by 11.3% in local currencies (-18.0% in CHF) due to lower EBIT, higher financing costs related to the bond placement in summer 2011 as well as a less favorable tax mix.

Juergen Steinemann, CEO of Barry Callebaut, said: “After an anticipated slow start in Q1, we regained momentum in Q2, in all Regions and across all Product Groups. Once again, we outpaced the global chocolate market. Several major new partnership deals were signed, confirming an important part of our business model. In the last six months, we initiated selective investments in our future growth. This temporarily affected our bottom-line results.”

Region Europe – Volume rebound under challenging market conditions

In the second quarter, Barry Callebaut’s largest Region Europe returned to positive growth rates and reported a strong volume increase of 3.0%, compared to -0.1% for the respective chocolate market4. Strategic customers as well as specialties products drove growth. In total, sales volume amounted to 361,987 tonnes. Despite challenging market conditions in the southern European countries, Western Europe significantly outperformed the underlying chocolate market thanks to a strong volume acceleration in Q2. Eastern Europe again showed double-digit growth, equally supported by the Food Manufacturers as well as Gourmet & Specialties Products business. Overall, sales revenue in Region Europe rose by 4.7% in local currencies (-3.2% in CHF) to CHF 1,174.6 million. Higher factory and supply chain costs as well as investments in sales and promotion, primarily in the Gourmet business, impacted operating profit (EBIT).Therefore EBIT decreased by 12.2% in local currencies (-18.2% in CHF) to CHF 114.5 million.

Barry Callebaut closed the sale of its European Consumer Products business Stollwerck in September 2011. This led to a non-recurring loss of CHF 31.7 million for the reported period.

In order to readjust the structures and processes after the sale of the Consumer Products business, Barry Callebaut will spend approx. EUR 30 million (CHF 36 million) for a comprehensive reengineering project, called ‘Spring’, over the next two years. The main focus of Project Spring is on Western Europe. It will address all customer-oriented processes. After the implementation of this project, the company expects yearly recurring efficiency gains of at least EUR 10 million (CHF 12 million).

Region Americas – Strong performance, top and bottom line

The chocolate confectionery market in the U.S. decreased by 2.0%. Brazil’s market growth slowed to +5.5%.5 Overall, Barry Callebaut maintained its strong double-digit growth momentum in Region Americas. Sales volumes grew strongly at 18.6% to 176,898 tonnes. In North America both Corporate as well as National Accounts and the Gourmet business showed double-digit growth rates. The business in South America more than tripled its volume. Sales revenue increased by 18.0% in local currencies (+10.2% in CHF) to CHF 548.4 million in the Region. The positive volume and revenue development also translated into an improved operating result: Operating profit (EBIT) rose by 19.9% in local currencies (+12.4% in CHF) to CHF 44.3 million. The Region continues to invest in its footprint and structures to accommodate current and future growth.

Region Asia-Pacific – Accelerating growth with further potential

Chocolate markets in Asia continued to outperform all other regions, growing by +6.9%.5 In the Region Asia-Pacific, Barry Callebaut again accelerated its growth pace. Sales volume rose by 7.9% to 28,514 tonnes. However, capacity constraints in the Food Manufacturers Products business still limited the opportunities for full growth potential. Recent and future capacity extensions will offer additional growth potential in the Region Asia-Pacific. Overall, the industrial business accelerated in Q2 driven by Corporate Accounts. The Gourmet & Specialties Products business grew substantially at double-digit rates driven by the two global brands Callebaut® and Cacao Barry®. Sales revenue increased by 5.5% in local currencies (+1.5% in CHF) to CHF 119.8 million. Operating profit (EBIT) was positively influenced by the good volume growth and improving margins. EBIT rose by 21.1% in local currencies (+16.3% in CHF) to CHF 15.7 million.

Global Sourcing & Cocoa6 – Growth picking up

A good start to the cocoa crop 2011/12 as well as a well-stocked industry caused cocoa terminal market prices to move continuously downwards during the reporting period. Prices recently stabilized within the range of GBP 1,400 to 1,600 per tonne yet with considerable intra-day volatility. Barry Callebaut expects the cocoa price to move within the aforementioned bandwidth during the next few months. Better-than-expected sugar crops in Russia and Brazil combined with exports from India led to a surplus on the world sugar market. This put prices under downward pressure in the first half of the period under review. With the end of the Brazilian harvest and funds taking positions in the market, prices increased slightly afterwards. The regulated EU sugar market remained in a structural deficit with increased, historically high price levels. Sugar market prices are expected to remain relatively firm and volatile until the new Brazilian crop enters the market in May. Good production levels worldwide and lower demand moved milk powder prices downwards to the long-term average levels. Market prices for milk powder are expected to stabilize on a slight downward trend for the rest of this fiscal year.

Sales volume of the segment Global Sourcing & Cocoa rose by 2.9% to 131,659 tonnes. Ongoing capacity expansions at existing factories and higher internal cocoa powder demand initially led to lower sales to third-party customers. Growth picked up again in Q2. Sales revenue rose by 17.0% in local currencies (+10.4% in CHF) to CHF 634.1 million driven by high cocoa powder prices at the time the business was contracted. Volume growth and a good combined ratio almost offset the negative impacts from higher factory and supply chain costs. Overall, operating profit (EBIT) declined by 0.8% in local currencies (-8.6% in CHF) to CHF 33.9 million.

Other developments / Highlights

In the period under review, Barry Callebaut became Unilever’s strategic long-term supplier and innovation partner of choice. The company also signed an outsourcing agreement with Grupo Bimbo, one of the largest food companies in Latin America. Barry Callebaut entered into a joint venture with Indonesian P.T. Comextra Majora, including the future construction of a new cocoa processing facility in Makassar (Sulawesi). In addition, Barry Callebaut acquired two companies: La Morella Nuts, a specialist in producing nut-based ingredients based in Spain, and Mona Lisa Food Products, a leader in chocolate decorations products in the U.S. Both companies will support the further growth of Barry Callebaut’s global Gourmet business.

In line with the company’s new strategic pillar Sustainable Cocoa, Barry Callebaut recently launched a cocoa sustainability initiative called ‘Cocoa Horizons’. The aim is to boost productivity on cocoa farms, increase quality and improve family livelihood in key cocoa producing countries. For this, the company will invest CHF 40 million over 10 years in farmer training, infrastructure and community education as well as health programs.

In November, Barry Callebaut’s Terra Cacao™ premium chocolate won two prestigious innovation awards at the Food Ingredients Europe Fair (FiE) in Paris. The awards are also the reward for several years of research in developing Barry Callebaut’s patented Controlled Fermentation method.

Outlook – Continue to invest for future growth

Juergen Steinemann on the outlook: “The economic environment in Western Europe and North America remains fragile. Nonetheless, we are dedicated to investing along the route of our four strategic pillars, Expansion, Cost Leadership, Innovation and Sustainable Cocoa, paving the way for our future growth. With this, we are confident of reaching our mid-term financial targets7.”


1 Four-year growth targets for 2009/10-2012/13: On average 6-8% volume growth and average EBIT growth in local currencies at least in line with volume growth – barring any unforeseen events.
2 Due to the discontinuation of the European Consumer Products business certain comparatives have been restated to conform with the current period’s presentation.
3 Source: Nielsen September 2011 until January 2012. The global chocolate market was flat.
4 Source: Nielsen September 2011 until January 2012. The chocolate market in Western Europe declined by 2.9%, whereas in Eastern Europe it grew 5.6%.
5 Source: Nielsen September 2011 until January 2012.
6 The figures reported under “Global Sourcing & Cocoa” include all sales of cocoa products to third-party customers in all Regions while the figures shown under the respective Region show all chocolate sales.
7 Four-year growth targets for 2009/10-2012/13: On average 6-8% volume growth and average EBIT growth in local currencies at least in line with volume growth – barring any unforeseen events.

***

For more detailed financial information see Barry Callebaut’s Letter to Investors ‘Half-year results 2011/12’: http://www.barry-callebaut.com/documentation#c1212.

***

Financial calendar for fiscal year 2011/12 (September 1, 2011 to August 31, 2012):

9-month key sales figures 2011/12 (news release)

July 5, 2012

Full-year results 2011/12 (news release & conference)

November 7, 2012, Zurich

Annual General Meeting 2011/12

December 5, 2012, Zurich

***

Barry Callebaut:

With annual sales of about CHF 4.6 billion (EUR 3.6 billion/USD 5.0 billion) for fiscal year 2010/11, Zurich-based Barry Callebaut is the world’s leading manufacturer of high-quality cocoa and chocolate – from the cocoa bean to the finished chocolate product. Barry Callebaut is present in 27 countries, operates around 40 production facilities and employs a diverse and dedicated workforce of about 6,000 people. Barry Callebaut serves the entire food industry focusing on industrial food manufacturers, artisans and professional users of chocolate (such as chocolatiers, pastry chefs or bakers), the latter with its two global brands Callebaut® and Cacao Barry®. Barry Callebaut is the global leader in cocoa and chocolate innovations and provides a comprehensive range of services in the fields of product development, processing, training and marketing. Cost leadership is another important reason why global as well as local food manufacturers work together with Barry Callebaut. Through its broad range of sustainability initiatives and research activities, the company works with farmers, farmer organizations and other partners to help ensure future supplies of cocoa and improve farmer livelihoods.

***

Media and Analysts’/Institutional Investors’ conferences of Barry Callebaut AG

Date:

Monday, April 2, 2012

Location:

Barry Callebaut Head Office, Chocolate Academy, Groundfloor,
Pfingstweidstrasse 60, Westpark, 8005 Zurich/Switzerland

Time:

Media:

Analyst/Institutional Investors:

09:30 am to 10:30 am CET

11:30 am to approx. 01:00 pm CET

 

The conferences can be followed by telephone or audio Webcast. All dial-in and access details can be found on the Barry Callebaut website:
Media
Analysts

***

Contacts

for investors and financial analysts:

for the media:

Evelyn Nassar

Raphael Wermuth

Head of Investor Relations

External Communications Manager

Barry Callebaut AG

Barry Callebaut AG

Phone: +41 43 204 04 23

Phone: +41 43 204 04 58

evelyn_nassar@barry-callebaut.com

raphael_wermuth@barry-callebaut.com

 

Group key figures for the first half of fiscal year 2011/12 – from continuing operations

 

 

Change in %

Six months
up to

Feb 29, 2012

Six months
up to

Feb 28, 20111

 

 

in local currencies

in reporting currency

 

 

Group

 

 

 

 

 

Sales volume

Tonnes

 

6.7

699,058

655,065

Sales revenue

CHF m

10.4

3.0

2,476.9

2,404.0

EBITDA

CHF m

(2.4)

(9.5)

215.1

237.7

Operating profit (EBIT)

CHF m

(5.5)

(12.5)

175.1

200.2

Net profit for the period (PAT)

CHF m

(11.3)

(18.0)

121.8

148.6

By Region

 

 

 

 

 

Europe

 

 

 

 

 

Sales volume

Tonnes

 

3.0

361,987

351,468

Sales revenue

CHF m

4.7

(3.2)

1,174.6

1,214.0

EBITDA

CHF m

(9.9)

(16.1)

130.4

155.5

Operating profit (EBIT)

CHF m

(12.2)

(18.2)

114.5

140.0

Americas

 

 

 

 

 

Sales volume

Tonnes

 

18.6

176,898

149,191

Sales revenue

CHF m

18.0

10.2

548.4

497.5

EBITDA

CHF m

20.9

13.4

51.9

45.8

Operating profit (EBIT)

CHF m

19.9

12.4

44.3

39.4

Asia-Pacific

 

 

 

 

 

Sales volume

Tonnes

 

7.9

28,514

26,425

Sales revenue

CHF m

5.5

1.5

119.8

118.0

EBITDA

CHF m

19.3

14.5

18.4

16.1

Operating profit (EBIT)

CHF m

21.1

16.3

15.7

13.5

Global Sourcing & Cocoa

 

 

 

 

 

Sales volume

Tonnes

 

2.9

131,659

127,981

Sales revenue

CHF m

17.0

10.4

634.1

574.5

EBITDA

CHF m

2.3

(5.4)

46.3

49.0

Operating profit (EBIT)

CHF m

(0.8)

(8.6)

33.9

37.1

By Product Group

 

 

 

 

 

Sales volume

Tonnes

 

6.7

699,058

655,065

Cocoa Products

Tonnes

 

2.9

131,659

127,981

Food Manufacturers Products

Tonnes

 

8.2

 489,778

452,648

Gourmet & Specialties Products

Tonnes

 

4.3

77,621

74,436

Sales revenue

CHF m

10.4

3.0

2,476.9

2,404.0

Cocoa Products

CHF m

17.0

10.4

634.1

574.5

Food Manufacturers Products

CHF m

8.5

0.7

1,451.6

1,441.5

Gourmet & Specialties Products

CHF m

7.9

0.8

391.2

388.0

 

1 Due to the discontinuation of the European Consumer Products business certain comparatives have been restated to conform with the current period’s presentation.