• Sales volumes rise 10.3% to 612,436 tonnes
• Sales revenue up 21.1% to CHF 2,585.0 million
• Operating profit (EBIT) up 1.3% to CHF 200.4 million. Compared to the reported half-year 06/07 EBIT figure of CHF 190.0 million operating profit rose 5.5%
• Net profit for the period was stable at CHF 124.4 million
• Four-year financial targets for the period 2007/08 through 2010/11 confirmed

Barry Callebaut AG, the world’s leading manufacturer of high-quality cocoa and chocolate products, today published its results for the first six months of fiscal year 2007/08 ended February 29, 2008. Sales volumes increased 10.3% to 612,436 tonnes, growing three times as fast as the global chocolate market. Sales revenue rose significantly by 21.1% to CHF 2,585.0 million, largely driven by higher cocoa bean and other raw material prices and favorable exchange rate developments. Excluding cocoa price and exchange rate effects, sales revenue rose 15.7%.

Profitability was impacted by the following three factors: Sales prices for branded consumer goods could not be increased until January 1, 2008, which resulted in a delay in price adjustments relative to higher raw material costs. The start-up of the new factories in the high-growth markets of Russia and China resulted in non-recurring additional costs. As previously communicated, large outsourcing contracts are initially associated with high fixed costs and low capacity utilization, leading to a proportionally lower EBIT per tonne. Despite these effects, which will not affect the next six months of the current fiscal year, an operating profit (EBIT)²  increase of 1.3% to CHF 200.4 million was achieved. Net profit for the period was stable at CHF 124.4 million, adversely affected by a loss on the sale of a minority interest and a higher average group tax rate.

Outlook

Patrick De Maeseneire, CEO of Barry Callebaut, said: “During the first six months of the current fiscal year we have made significant investments in our future: We have opened two new factories in emerging markets, integrated four new production sites in North America and Europe and phased in three large outsourcing contracts. We are now optimally positioned to accelerate our profitable growth going forward and we will be able to fully benefit from scale effects. The cost environment will remain challenging. Despite the economic and exchange rate uncertainties and the much lower volume growth expected in the third quarter due to the very early Easter, we are confident that we will reach our mid-term financial targets³, which we have defined as averages over a four-year period (2007/08-2010/11). This, of course, barring any major unforeseen events.”

Group key figures for the first six months of fiscal 2007/08

Market environment

The first six months of fiscal year 2007/08 were impacted by exceptionally high and volatile raw material prices. Cocoa prices surged by almost 50% between September 2007 and end-February 2008, followed by a sharp correction in mid-March. Cocoa prices are expected to remain volatile. To minimize the effect of raw material price fluctuations, Barry Callebaut applies consistent risk management processes. The combined (cocoa) ratio has recently been moving in a favorable direction and started to impact Barry Callebaut’s operation positively at the end of the period under review. Since reaching a historic high in August 2007, milk powder prices have decreased but are still above long-term averages. Energy and transportation costs have increased in correlation with rising oil prices.

Overview of business performance per region in first six months of fiscal year 2007/08

Region Europe: Remarkable volume increase

Region Europe recorded a sales volume growth of 10.8% to 434,339 tonnes. Sales revenue increased 23.3% to CHF 1,969.9 million. Operating profit went up 0.6% to CHF 171.9 million.

In Europe, the Food Manufacturers business unit gained market share in the highly competitive and partially saturated market in Western Europe. First deliveries to major outsourcing customers and good demand from smaller customers led to an above-market increase in sales volumes. The EBIT contribution from large outsourcing volumes is proportionally smaller during the phasing-in period but will gradually increase as the utilization of additional production capacity improves. A prolonged start-up period at Barry Callebaut’s new chocolate factory in Russia led to additional one-off costs. TheGourmet & Specialties business recorded a very good performance as a result of product innovations and increased marketing initiatives. The performance of theConsumer Products Europe business unit was flat. Sales prices for branded consumer products could not be increased until January 1, 2008, leading to a delay in price adjustments relative to higher raw material prices.

During the period under review, the biscuit factory Wurzener Dauerbackwaren in Germany was sold in order to focus on Barry Callebaut’s core activity, which is chocolate. Barry Callebaut also decided to sell its minority interest in the underperforming French chocolate maker Jacquot, which has been taken over by a competitor. The sale of the minority interest resulted in a loss on disposal and the loss of certain volumes.

Region Americas: Strengthened market position

Sales volumes in Region Americas rose 15.3% to 141,318 tonnes, clearly indicating that Barry Callebaut has consolidated its market position. Sales revenue went up 19.2% to CHF 455.9 million, as the impact of a weaker U.S. dollar versus the reporting currency Swiss franc was more than offset by higher raw material prices. EBIT increased by an outstanding 12.1% to CHF 40.7 million.

North America, in particular the U.S., is a key growth area for Barry Callebaut. The Food Manufacturers business unit registered good volume growth, with first deliveries related to major outsourcing contracts on schedule. These initial volumes are being processed at existing Barry Callebaut factories. The opening of the new chocolate factory in Monterrey, Mexico, is planned for the summer 2008 and will absorb additional volumes as the phase-in period progresses. Barry Callebaut’s Gourmet & Specialties business unit performed well and strengthened its market position, despite an unfavorable exchange rate, as the strong euro relative to the U.S. dollar, increased the costs of imported gourmet products from Europe.

Region Asia & Rest of the World: Investing to capture growth opportunities

Region Asia & Rest of the World registered a 9.3% decrease in sales volume to 36,779 tonnes, while sales revenueincreased 3.5 % to CHF 159.2 million. Volumes were affected by the sale of the Senegalese consumer products subsidiary Chocosen on February 28, 2007, as prior-year figures still included these volumes. Operating income (EBIT) in the region decreased 17.1% to CHF 17.3 million, reflecting an unsatisfactory performance by the African consumer business. On February 29, 2008 Barry Callebaut sold its Ivorian consumer products subsidiary SN Chocodi SA to CKG Holding, a local industrial investor.

The Food Manufacturers business faced production capacity constraints as the Singapore factory was running at full capacity for the second year in a row. Volume growth was therefore not possible in the region prior to the opening of the new factory in China in January 2008. The Gourmet & Specialties business unit did particularly well in its premium product range and added a locally produced brand to its portfolio to cater to the price sensitive local market.

As part of its geographic expansion into high-growth markets in Asia, Barry Callebaut has agreed to acquire from Kuala Lumpur Kepong Berhad, a Malaysia-based multinational company, a 60% stake in its subsidiary KLK Cocoa. Please see separate press release, published on March 31, 2008.

Key figures by region for the first six months of fiscal 2007/08

Development of business segments in first six months of fiscal 2007/08

The Industrial business segment focuses on selling cocoa and chocolate products to industrial food processors and consumer goods manufacturers worldwide. It consists of the Food Manufacturers and Global Cocoa & Sourcing business units.

Barry Callebaut has considerably expanded its cocoa processing capacities with the acquisition of the FPI factory in the U.S., the agreement to acquire KLK Cocoa in Malaysia and the expansion of its cocoa factories in San Pedro, Ivory Coast, and Louviers, France. The combined (cocoa) ratio has had a positive impact on Barry Callebaut’s operations since February 2008.

Food Service/Retail business segment: Strong Gourmet performance

The Food Service/Retail business segment serves a broad range of customers, from local craftsmen (such as chocolatiers, pastry chefs, bakers, hotels, restaurants, caterers) to global retailers. It consists of the Gourmet & Specialties and the Consumer Products business units.

A strong performance by the Gourmet & Specialties business unit was offset by a negative one-off impact related to the delay in passing on high raw material costs at the Consumer Products business unit. Sales prices for branded consumer products were could not be increased until January 1, 2008.

Key figures per business segment for first six months of fiscal 2007/08

Four-year financial targets confirmed

In November 2007, Barry Callebaut increased its mid-term financial targets. These targets are quantified as averages over a four-year period. To achieve these performance goals, Barry Callebaut is making significant investments and has expanded its global factory network. As previously communicated, these investments involve significant start-up costs and the installation of additional production capacities. These factors slowed Barry Callebaut’s EBIT growth during the first half of the current financial year but will accelerate EBIT growth going forward. 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. Taking all these factors into account, Barry Callebaut confirms its ambitious performance targets³ for the four-year period to 2010/11, barring any major unforeseen events.

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^{1 Prior year figures have been restated to conform with the current period’s presentation
2 Reported EBIT for  HY 2006/07, prior to restatements of  discontinued operation Brach’s, was CHF 190.0 million}

^{3 These are on average: annual top-line growth of 9-11%, EBIT growth of 11-14% and net profit growth of 13-16%}

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Barry Callebaut:

With annual sales of more than CHF 4 billion for fiscal year 2006/07, Zurich-based Barry Callebaut is the world’s leading manufacturer of high-quality cocoa and chocolate – from the cocoa bean to the finished product on the store shelf. Barry Callebaut is present in 25 countries, operates about 40 production facilities and employs approximately 7,500 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.

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