Barry Callebaut reports results for first six months of fiscal year 2005/06

Continued strong profit growth
  • Business with Industrial and Gourmet customers driving overall growth
  • Operating profit (EBIT) increased by 10.8% to CHF 177.0 million
  • Net profit (PAT) up 11.3% to CHF 112.7 million
  • Restructuring of European consumer business progressing as planned
  • Three-year financial targets confirmed
 
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.
 
  • Cocoa products sold to third-party customers decreased by 4.2% to 63,906 tonnes. The main reason for this decline was lower sales of butter and liquor because of Barry Callebaut’s growing in-house needs resulting from the increased sales of chocolate products.
  • Sales volumes in the Food Manufacturers business unit were 301,773 tonnes, up 4.7% from 288,331 tonnes, resulting from higher sales mainly in North America, Germany and the U.K.
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.
 
  • In the Cocoa business unit sales revenue increased by 44.9% to CHF 364.6 million, up from CHF 251.7 million. This increase resulted from the significantly higher sales of cocoa beans in the second quarter. As mentioned earlier, reported sales volumes include only processed goods but no raw material sales. Adjusted for these raw material sales, revenue of the Cocoa business unit decreased by 6.8% compared to prior year.
  • The Food Manufacturers business unit managed to increase sales revenue by 8.3% to CHF 951.4 million, up from CHF 878.4 million in the previous year. Excluding positive foreign exchange effects as well as the impact of a slight increase in the cocoa price, organic sales revenue growth was approximately 5.3%. This increase is mainly attributable to volume growth.
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.
 
  • Sales revenue in the Gourmet & Specialties business unit increased by 10.8% to CHF 305.1 million, up from CHF 275.4 million. Excluding the positive currency effects, sales revenue in this business unit increased by 8.4% organically.
  • Sales revenue in the Consumer Products business unit decreased by 4.4% to CHF 727.2 million, compared to CHF 760.6 million in the same prior-year period. This decrease mainly came from discontinued unprofitable volumes. Sales revenue in the African consumer business remained at the level of the same prior-year period.
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).
 
 
Barry Callebaut:
With annual sales of more than CHF 4 billion for fiscal year 2004/05, Zurich-based Barry Callebaut is the world’s leading manufacturer of high-quality cocoa, chocolate and confectionery products – from the cocoa bean to the finished product on the store shelf. Barry Callebaut operates more than 30 production facilities in 24 countries and employs more than 8,000 people. The company serves the entire food industry, from food manufacturers to professional users of chocolate (such as chocolatiers, pastry chefs or bakers), to global retailers. It also provides a comprehensive range of services in the fields of product development, processing, training and marketing.
 
Fiscal year 2005/06 will close on August 31, 2006.
 
Key Figures for Barry Callebaut (unaudited)
 
 
Change (%)
6 months up to Feb 28, 2006
6 months up to Feb 28, 2005
Income Statement
 
 
 
 
Sales revenue
 in local currencies
CHF m
8.4
5.5
2,348.3
2,285.6
2,166.1
Sales volume
mt
-1.4
553,196
561,033
Gross profit
   in local currencies
CHF m
7.3
4.8
358.4
349.9
334.0
Operating profit (EBIT)
   in local currencies
CHF m
10.8
9.0
177.0
174.1
159.7
 
EBIT per tonne
   in local currencies  
CHF
12.4
10.6
320.0
314.7
284.7
 
Net profit (PAT)
   in local currencies
CHF m
11.3
9.8
112.7
111.2
101.3
Cash flow (1)
CHF m
7.2
169.0
157.7
Shares
 
 
 
 
EBIT per share
 in local currencies
CHF
10.8
9.0
34.24
33.67
30.89
Earnings per share (undiluted)
CHF
11.2
21.8
19.6
Earnings per share (diluted)
CHF
11.2
21.8
19.6
Balance Sheet
 
 
Feb 28, 2006
Aug 31, 2005
Balance sheet total
CHF m
6.0
2,824.5
2,664.8
Net working capital
CHF m
13.3
941.6
830.8
Non-current assets
CHF m
2.4
1,196.0
1,168.2
Net debt
CHF m
-1.7
937.5
953.5
Shareholders’ equity
CHF m
17.9
986.4
836.7
Others
 
 
 
 
Employees
 
-2.6
8,318
8,542
 
  1. Net profit + depreciation of tangible assets + amortization of goodwill and other intangibles
Key figures by business segment (unaudited)
 
 
Change (%)
6 months up to Feb 28, 2006
6 months up to Feb 28, 2005
Industrial Business Segment
 
 
 
 
Sales revenue
CHF m
16.4
1,316.0
1,130.1
   - Cocoa
CHF m
44.9
364.6
251.7
   - Food Manufacturers
CHF m
8.3
951.4
878.4
Sales volumes
mt
3.0
365,679
355,032
   - Cocoa
mt
-4.2
63,906
66,701
   - Food Manufacturers
mt
4.7
301,773
288,331
EBIT (3)
CHFm
11.4
109.5
98.3
EBITDA (3)
CHF m
8.5
136.4
125.6
Food Service/Retail Business Segment (2)
 
 
 
 
Sales revenue
CHF m
-0.4
1,032.3
1,036.0
   - Gourmet & Specialties
CHF m
10.8
305.1
275.4
   - Consumer Products
CHF m
-4.4
727.2
760.6
EBIT (3)
CHFm
11.5
93.9
84.2
EBITDA (3)
CHF m
8.6
120.9
111.4
 

2. The Consumer Products business in Africa has been shifted from the business unit Gourmet & Specialties to the business unit Consumer Products. The prior-year figures have been restated accordingly.

3. 2004/05 figures have been restated to reflect the organizational changes in relation with the centralized coordination of our manufacturing facilities and supply chain as well as the centralized administration shared services, as from September 1, 2005.

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Your Barry Callebaut Group Contacts

Claudia Pedretti
Head of Investor Relations
+41 43 204 04 23
Frank Keidel
Head of Media Relations
+41 76 399 69 06​