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Barry Callebaut AG increases operating profit by 13% and net profit for the year by 8%

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November 20, 2001
Overview

• Sales revenue increases by 6% to CHF 2,548.6 million

• Sales volume increases by 5% to 787,302 tons

• Operating profit (EBIT) increases by 13% to CHF 168.0 million

• EBIT per ton increases by 8% to CHF 213.40

• Net profit increases by 8% to CHF 97.1 million

• Company processes 14% of the worldwide cocoa harvest

• Retirement of Klaus J. Jacobs and Dr Gaudenz Staehelin from the Board of Directors

• Election of Dr Christian Jacobs and Rolando Benedick proposed

• Dividend increase proposed from CHF 6.50 to CHF 6.70 for each registered share

Zurich/Switzerland, November 20, 2001 – Barry Callebaut AG, the worldwide leading manufacturer of cocoa and chocolate products, increased sales revenue in fiscal year 2000/01 to August 31 by 6% to CHF 2,548.6 million. This means that the company grew twice as fast as the overall market (plus roughly 2%). A solid operating profit (EBIT) of CHF 168.0 million, or 13% more than the previous year, translates to an EBIT of CHF 213.40 a ton, or 8% higher than the previous year. Net profit rose to CHF 97.1 million (+8%). It did not increase at the same rate as EBIT, largely due to higher financing costs entailed by the full consolidation of strategic cocoa positions. Total assets were reduced by almost CHF 180 million. The debt-to-equity ratio fell to a satisfying 113%, compared to 159% in the previous year. The equity ratio increased to 34%, from 29% in the previous year.

Business Unit Development

The Chocolate for Industrial Clients (Food Manufacturers) business unit increased its sales by 2% to CHF 1,416.6 million, or 56% of total sales, based on solid sales growth of almost all products, particularly in Europe. With a worldwide increase in chocolate consumption of roughly 2%, Barry Callebaut is targeting a higher rate of growth than that and a simultaneous reduction of costs. The concentration of the client base on ever fewer large clients continues. Barry Callebaut has successfully exploited this development for some time as an opportunity by positioning itself as a know-how partner and service provider for the globally active food industry. The focus of the business development effort will be on premium and health-promoting products, such as chocolate without added sugar.

Gourmet & Specialities (Food Service), which supplies special products to artisanal users, such as chocolate makers, confectioners, hotels and restaurants, increased sales by 10% to CHF 636.5 million. The main reason for the increase was above-average growth in premium specialties. This business unit, which was deliberately pushed hardest during the year, is already contributing 25% to Group sales. In the next few years, Barry Callebaut is targeting above-average growth in the sector, compared to overall market growth. Additional potential has been identified in North and Latin America, in particular. Opportunities are also to be found in the trends towards healthy and health-promoting nutrition and towards convenience food that requires no further processing by their artisanal or private users.

The figures for the Consumer Products are incorporated in the Gourmet & Specialties area. The Consumer Products business area was converted into an independent unit in July 2001. It encompasses niche products that are sold in some European and African countries through selected distribution channels, and represents an extension to our strategic customer segments.

In the Cocoa & Sourcing (Risk Management, Sourcing & Semi-Finished Products) business unit, the most important products are cocoa liquor, cocoa butter and branded cocoa powder. Around half of production is supplied to third parties and half processed further by the company itself. Sales to third parties increased by 12% to CHF 495.5 million, or 19% of total sales, although volume declined by 3%. This is a consequence of higher prices of cocoa powder, of cocoa bean sales as well as of the deliberate reduction of sales to third parties. Costs in the Sourcing area were further reduced by the worldwide central procurement system implemented in recent years. As part of its geographical risk diversification, Barry Callebaut established a new production facility in Ghana. In order to exploit the potential for profitable premium products, the procurement of organic cocoa beans direct from producers and small cooperatives was increased in order to ensure a consistently high quality.

Market Development

The world economy has been slowing down, especially in the final quarter of the year under review.

Western Europe is Barry Callebaut’s most important market with sales of 481,024 tons, or 61% of the total. Sales increased by 4% over the previous year. A distribution center was opened in Aalst, Belgium, where all the products manufactured in Europe can be stored under optimum conditions before being shipped all over the world. The facility in Drongen, Belgium, will be closed by the end of 2001, allowing Barry Callebaut to use other existing production capacity more effectively. Sales in Eastern Europe (4% of the total) declined by 2%. The exchange of recipes between the various production facilities will be extended, opening up new sales opportunities at competitive prices.

Sales in the Americas (North and South America) increased by 10%. The share of total volume of the Americas was 27% or 215,743 tons. Barry Callebaut succeeded in both gaining market share and benefiting from increasing health consciousness in North America through the growing use of products with additional benefits, such as organic products, without added sugar, fat-free or high-protein products and products that have not been subject to genetic engineering.

Sales in Asia/Pacific increased by 3%. The share of total sales was 25,164 tons or 3%. Barry Callebaut continues to see great market opportunities in these countries. Africa produced a sales growth of 23%, primarily because of the consolidation of Van Houten for the full year. Barry Callebaut is now present in Senegal, Cameroon and the Ivory Coast with its own production facilities. In the Middle East, Barry Callebaut was faced with some very strong quality and price competition. Nevertheless, sales volume remained stable. The region contributed 5% or 35,893 tons to total sales.

Strategic concentration to ensure long-term growth

In the future, Barry Callebaut will continue to focus on driving forward its growth in high-quality products and services in the chocolate and gourmet areas. In the

Chocolate for Industrial Clients (Food Manufacturers) area, the focus will be on the reinforcement of cost leadership in combination with the provision of further services. The Gourmet & Specialties (Food Service) will place an increased emphasis on innovative, high-value, high-margin products and services. In the Cocoa & Sourcing (Risk Management, Sourcing & Semi-Finished Product) area, there will be a reduction in the share of the business of cocoa products for third parties, while retaining the existing know-how throughout the entire value chain by producing for the company’s own needs. This will further reduce the exposure to fluctuations in the price of semi-finished products. Barry Callebaut wants to use these measures to secure sustainable quality growth for the whole Group.

Tax claim in the Ivory Coast

During the year under report, the Ivory Coast raised a retrospective tax claim in the amount of CHF 247 million for the years 1998-2000 against Barry Callebaut’s local subsidiary, as was reported when presenting half-year results. Barry Callebaut does not consider this claim justified and has decided to take appropriate measures to counter this claim. Discussions are still going on.

Proposals to the Annual General Meeting

At the Annual General Meeting on December 13, 2001, Mr Klaus J. Jacobs and Dr Gaudenz Staehelin will retire from the Board of Barry Callebaut AG. It is proposed that Dr Christian J. Jacobs, designated Chairman of the Board of KJ Jacobs AG, in Hamburg, Germany, and Mr Rolando Benedick, in Basle, Switzerland, CEO of Manor AG, be elected to the Board of Directors. The Board further proposes to the Annual General Meeting a dividend increase from CHF 6.50 to CHF 6.70 for each registered share.

Outlook

For the year 2001/02, Barry Callebaut expects a further strengthening of operating performance. The short-term effects of the present economic slow-down cannot be estimated with precision. In light of the continuing structural changes in the cocoa and chocolate industries, Barry Callebaut is confident that the measures that have been taken will continue to enhance its leadership position.

Contacts
for investors and financial analysts:
Dr. Ralph Schmitz-Dräger, CFO Gaby Tschofen
Barry Callebaut AG
Tel. +41 1 388 61 42
Fax +41 1 388 61 53

for the media:
Gaby Tschofen
Barry Callebaut AG
Tel. +41 1 388 61 60
Fax +41 1 388 61 53

Barry Callebaut:

With annual sales of CHF 2.5 billion Barry Callebaut is the world’s leading manufacturer of high-quality cocoa and chocolate products. The company processes 14% of the global cocoa harvest, operates 24 production facilities in 16 countries and employs approximately 5,000 people. The company is divided into four strategic areas: Cocoa & Sourcing (Risk Management, Sourcing & Semi-Finished Products), Chocolate for Industrial Clients (Food Manufacturers), Gourmet & Specialties (Food Service) and, since July 2001, Consumer Products.

Its clients range from industrial processors, such as the world famous branded consumer goods manufacturers who produce chocolate, confectionery, biscuits, dairy products, ice cream and breakfast cereals incorporating Barry Callebaut’s products, to artisanal users, including hotels, gastronomy, chocolate makers, pastry chefs and bakers. Barry Callebaut also provides a comprehensive range of services in the fields of product development, processing, training and marketing.

The holding company, Barry Callebaut AG has been listed on the SWX Swiss Exchange since June 1998 (ticker symbol BARN). The fully paid-up share capital amounts to CHF 517 million, divided into registered shares with a nominal value of CHF 100 each. Market capitalization on August 31, 2001, the end of the financial year 2000/01, was CHF 1.085 billion.