Barry Callebaut, the world’s leading manufacturer of high-quality cocoa and chocolate products, announced today its half-year results for the period ended February 28, 2006. Operating profit (EBIT) strongly increased by 10.8% to CHF 177.0 million and net profit (PAT) grew by 11.3% to CHF 112.7 million. EBIT per tonne, the key indicator for operational performance, went up by 12.4% to CHF 320 per tonne, up from CHF 285 per tonne in the same prior-year period. All business units contributed positively to the increase of this ratio. 
 

Sales revenue grew by 8.4%, mainly due to increased physical bean sales [1], positive exchange rate effects and moderately higher cocoa bean prices. Excluding these effects, Barry Callebaut’s sales revenue slightly decreased. Sales volumes went down by 1.4% mainly due to the discontinuation of unprofitable contracts in the consumer business. Without this, sales volumes and revenue on a comparable basis would have increased. 

Barry Callebaut achieved this result despite expected shifts of volumes from the second to the third quarter due to Easter being three weeks later than in 2005 and also despite lower sales of semi-finished products as a consequence of the company’s growing in-house need for cocoa liquor and butter in order to manufacture the increasing quantities of chocolate sold to customers.

Patrick De Maeseneire, CEO of Barry Callebaut, said: “During the first six months of fiscal year 2005/06 we have been able to further grow our profitability, and we have made considerable progress in our European consumer business. We are pleased with our half-year results, especially in view of a late Easter in 2006.”

Development of business segments in the first six months of fiscal year 2005/06

Industrial business segment
 

The Industrial business segment focuses on selling cocoa and chocolate products to industrial processors and consumer goods manufacturers worldwide.

 

Sales volumes amounted to 365,679 tonnes, an organic volume growth of 3.0% compared to the 355,032 tonnes in the same prior-year period.

 

Sales revenue recorded in the Industrial business segment grew by 16.4% to CHF 1,316.0 million compared to CHF 1,130.1 million in the same prior-year period.

 

Operating profit (EBIT) for the Industrial business segment increased by 11.4% to CHF 109.5 million in the six-month period ended February 28, 2006, up from CHF 98.3 million in the prior-year period. The business units Cocoa and Food Manufacturers both contributed to the strong increase in operating profit. The above-mentioned physical bean sales did not have a significant impact on the profitability of the business segment.

After a severe winter in Russia, work on Barry Callebaut’s new factory near Moscow resumed. The factory is scheduled to start operations at the beginning of 2007. In China, Barry Callebaut has continued to evaluate several alternatives for establishing a regional presence with own production capacities in order to obtain better access to this important market. 

Food Service/Retail business segment
The Food Service/Retail business segment serves a broad range of customers, from local craftsmen to global retailers. As of the current fiscal year, the Consumer Africa division is no longer reported under the Gourmet & Specialties business unit, but is now included in the Consumer Products business unit. The prior-year figures have been restated accordingly.

 

Sales revenue decreased slightly by 0.4% to CHF 1,032.3 million, down from CHF 1,036.0 million.

 

Operating profit (EBIT) for the Food Service/Retail business segment increased strongly by 11.5% to CHF 93.9 million in the six-month period ended February 28, 2006, up from CHF 84.2 million in the prior-year period. Both business units contributed positively to the operating profit.
 

In the European consumer business, major efficiency gains resulted from the ongoing migration of operations to the existing SAP platform and an optimization of the distribution infrastructure in Germany. The business portfolio has been strengthened through additional co-manufacturing agreements with industrial food processors, new contracts with retailers outside Germany as well as the launch of new branded products at the confectionery trade show ISM in the beginning of the year.
 

Outlook
Looking forward, CEO Patrick De Maeseneire said: “Our business is seasonal. With the late Easter holiday this year, some volumes are expected to shift from the second to the third quarter. Efficiency improvements in our European consumer business are coming along as planned, and we are confident we’ll make further progress and achieve profitability for this business unit in fiscal year 2005/06. We expect a further decline in the combined (cocoa) ratio, having an effect on the profitability of our Cocoa business unit in the second half of this fiscal year as well as in 2006/07. Nevertheless, and despite changes in the accounting standards (IFRS) with regard to employee stock ownership programs, we confirm the communicated financial targets for the 3-year period 2004/05 through 2006/07. This as always, of course, barring any major unforeseen events.”

 

[1] Reported sales volumes only include processed goods. Therefore physical bean sales are not included in the reported sales volumes. However, the related sales revenue is included in the accounts. Bean sales have no significant impact on the Group’s operating profit (EBIT).