CORRECTED - UPDATE 2-Callebaut sees stagnant chocolate demand in 2010
(Corrects fourth bullet point to show sales volume rose 7.2 percent, rather than a rounded down 7 percent. Text amended to conform.)
* Expects to outperform market in 2010
* Sees global chocolate market picking up from 2011
* Confident will meet three-year financial targets
* Q1 sales volumes up 7.2 percent, vs forecast 7.4 percent
* Shares down 1.0 percent
(Adds CEO interview, analyst, shares)
By Katie Reid and Silke Koltrowitz
ZURICH, Jan 13 (Reuters) - Barry Callebaut (BARN.S), the world's largest chocolate maker, is confident it will outperform a stagnant chocolate market this year thanks to outsourcing deals, and expects the industry to return to growth from 2011.
The maker of chocolate for companies such as Cadbury CBRY.L and Nestle NESN.NX, said September-November revenue rose 6.3 percent in local currencies, in line with Kraft KFT.N bid target Cadbury's underlying second-half sales growth.
But its forecast for only stable demand for the global chocolate market in 2010 underscored tough conditions still faced by the usually recession-resilient chocolate sector.
Chief executive Juergen Steinemann said on Wednesday the chocolate market was likely to pick up in 2011 and see growth rates of around 3 percent in 2012.
The outlook came the day after Cadbury, fending off a takeover bid from U.S. rival Kraft, painted a rosier outlook, saying it was aiming for revenue growth within its 5-7 percent goal. [ID:nLDE60A1Q2]
"We believe we will be able to gain market share in 2010," Steinemann said. "We have a pipeline of outsourcing deals. It is difficult to say ... when the next deals will be announced."
The provider of cocoa and chocolate products, coatings and cocoa powders to the food industry said its sales volumes rose 7.2 percent to 363,000 tonnes in the first quarter of its 2009-10 year, versus a forecast for 7.4 percent. [ID:nLDE6061Y5]
"Solid. Barry Callebaut is a volume business and the figure is in line with expectations," Kepler Capital Markets analyst Jon Cox said.
"We are long-term fans of the case and believe the outsourcing trend is unstoppable. Asia remains largely virgin territory for chocolate makers, while we expect it to benefit from a Kraft-Cadbury tie up," he said.
Barry Callebaut shares were down 1 percent at 1015 GMT, trailing a 1 percent rise in the DJ Stoxx European food and beverage index .SX3P.
PRICEY COCOA TO BOOST OUTSOURCING
Soaring raw material prices made outsourcing deals more likely as food groups seek to protect profitability by passing chocolate production to Barry Callebaut, Steinemann said.
Spiralling cocoa and sugar prices would also lead to price hikes at food groups, further zapping consumers' desire and ability to spend, Steinemann said.
Cocoa futures CCc1 rose to their highest level in 30 years last month but have since fallen back on improved main crop prospects in top producer Ivory Coast.
"We don't see any fundamental signs of relaxation of cocoa prices... Sugar prices are also trending upwards. There are enormous price pressures," Steinemann said.
Barry Callebaut, trading at 14 times expected 2010 earnings to be at a discount to Swiss peers Lindt & Spruengli and Nestle, confirmed its three-year financial targets.
It is aiming for annual average volume growth of 6-8 percent and operating profit growth at least in line with this until August 2012. (Additional reporting by Nigel Hunt; Editing by Dan Lalor) ($1 = 1.016 Swiss francs)
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