Barry Callebaut: Strong volume growth, product margins improved, continued investment in future growth

Mon Apr 8, 2013 1:01am EDT

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Barry Callebaut - Half-year results, fiscal year 2012/13



*Strong, broad-based volume growth, significantly outperforming the global chocolate market[1]:
sales volume +7.8%, fueledby strategic growth drivers outsourcing, Gourmet and emerging markets
*Product margins improved; gross profit up +4.9% in local currencies (+5.5% in CHF) despite an
unfavorable combined cocoa ratio[2]. EBIT decreased by 2.4% in local currencies (-2.1% in CHF)
*Closing and integration plan for Cocoa Ingredients Division acquisition from Petra Foods well on
track
*Growth targets confirmed[3]
*Fernando Aguirre and Timothy Minges nominated for election as new Board members

Juergen Steinemann, CEO of Barry Callebaut said: "We continued to deliver strong volume growth,
significantly outperforming the global chocolate market. We grew in all Regions and Product Groups
thanks to our strategic growth drivers outsourcing, Gourmet and emerging markets. We were able to
improve our product margins. Our EBIT was impacted by the unfavorable combined cocoa ratio as well
as additional factory and supply chain costs due to our strong growth in some regions causing
capacity constraints. We continued to invest in the expansion of our global footprint, structures
and processes."

Group key figures for the first half of fiscal year 2012/13 - 
from continuing operations

                                                                                                                                     
                                          Change in %                                                                                
                                   in local currencies  in CHF  6 months up to    Feb 28, 2013 6 months up to Feb 29, 2012[4] #ftn4  
 Sales volume              Tonnes                          7.8                         745,256                               691,061 
 Sales revenue              CHF m                (2.6)   (2.4)                         2,391.6                               2,449.6 
 Gross profit               CHF m                  4.9     5.5                           357.3                                 338.8 
 Operating profit (EBIT)    CHF m                (2.4)   (2.1)                           173.8                                 177.6 
 EBIT per tonne               CHF                (9.5)   (9.3)                           233.2                                 257.0 
 Net profit                 CHF m                (7.7)   (7.4)                           116.4                                 125.7 


Zurich/Switzerland - April 8, 2013 - In the first six months of fiscal year 2012/13 (ended
February 28, 2013), Barry Callebaut - the world's leading manufacturer of high-quality cocoa and
chocolate products - strongly increased its sales volume by 7.8% to 745,256 tonnes, significantly
outpacing the global chocolate confectionery market[1] #ftn1 . Top-line growth was broadly based,
driven by long-term outsourcing agreements and strategic partnerships, Gourmet and emerging
markets. All Product Groups and Regions contributed to this growth.
Sales revenue: Based on its cost-plus model, Barry Callebaut passes on raw material prices to
customers for 80% of its business. The lower average prices for cocoa ingredients (cocoa beans,
cocoa butter, and cocoa powder) compared to the previous year translated into lower sales revenue.
As a result, sales revenue went down by 2.6% in local currencies (-2.4% in CHF) to 
CHF 2,391.6 million despite the volume growth.
Gross profit increased by 4.9% in local currencies (+5.5% in CHF) to CHF 357.3 million, driven by
higher volume and improved product margins, partly offset by the effect of a lower combined cocoa
ratio[2] #ftn2 . In addition, the strong growth in some regions caused capacity constraints, which
led to additional factory and supply chain costs.
Operating profit (EBIT) was impacted by ongoing investments in structures, processes and people to
accommodate future growth. Additionally, the Group increased its marketing activities for the
global Gourmet brands, and incurred first costs related to the acquisition of Petra Foods' Cocoa
Ingredients Division. Consequently, EBIT declined by 2.4% in local currencies (-2.1% in CHF) to
CHF 173.8 million.
Net profit for the period from continuing operations decreased by 7.7% in local currencies (-7.4%
in CHF) to CHF 116.4 million, mainly as a result of the lower EBIT in combination with an increase
in net financial expenses and taxes.

Outlook - Continuation of robust growth, delivering on targets[3] #ftn3 
CEO Juergen Steinemann on the outlook: "Based on our four strategic pillars, Expansion,
Innovation, Cost Leadership and Sustainable Cocoa, we will continue to deliver robust volume
growth. The focus on product margins will remain important. We expect cocoa processing results to
increase in the second half of our fiscal year. Our cost base will grow at a slower pace than
volume, except for non-recurring costs related to the closing and integration of the acquisition
of the Cocoa Ingredients Division from Petra Foods. Considering all this, we are confident of
delivering on our mid-term guidance."

Strategic developments - Closing for Cocoa Ingredients Division acquisition from Petra Foods well
on track
In December Barry Callebaut announced its intention to acquire the Cocoa Ingredients Division of
Petra Foods in order to support the further growth of its chocolate business. This transaction
will boost Barry Callebaut's presence in fast growing emerging markets to almost one-third of the
Group's sales volume and enable the company to capitalize on the attractive growth rates in these
markets for cocoa powder-based applications in beverages, compound chocolates, fillings, bakery
products and ice cream. In addition, the acquisition will strengthen Barry Callebaut's current and
future partnership agreements as there is a trend towards combined contracts (cocoa and chocolate
products). It will also add Asia as a strong sourcing base next to West Africa. Deal close
activities are well on track. A joint integration taskforce has started developing an integration
masterplan 
to be implemented upon the closing of the transaction, which is expected to take place in summer
2013.
As expected, the acquisition of Petra Foods' Cocoa Ingredients Division led to a recent rating
action by Standard & Poor's which assigned a BB+ rating to Barry Callebaut AG, down from BBB-.
Barry Callebaut is currently preparing the financing of the acquisition to cancel the bridge loan
facility and replace it by issuing a combination of new equity for an equivalent amount of USD 300
million and a USD 600 million Rule 144A/Reg S USD bond offering.

In January Barry Callebaut strengthened its leadership position in Scandinavia through the
acquisition of ASM Foods AB in Sweden from Danish Carletti A/S. With ASM Foods, Barry Callebaut is
enhancing its portfolio of higher-margin products such as specialty compound chocolates, fillings
and inclusions for both its industrial and Gourmet business. In the same transaction, Carletti A/S
became Barry Callebaut's first outsourcing partner in Scandinavia. In addition, the Group signed
its first outsourcing agreement in South America with Arcor Group in Chile.

In terms of geographic expansion, four factories are currently under construction: A chocolate
factory in Eskisehir, Turkey, a cocoa factory in Makassar, Indonesia, both going on stream in fall
2013, as well as two chocolate factories in Santiago de Chile and in Takasaki, Japan, scheduled to
be operational in the first half of 2014.

The completion of the sale of the Dijon factory in November 2012 marked the final step in the
disposal of all consumer activities.

Regional / Segment performance

Region Europe[5] #ftn5  - Solid growth, both top and bottom line

European chocolate confectionery markets grew by 2.0%. Growth in Western Europe was +1.4%, markets
in Eastern Europe went up 3.4%[1] #ftn1 .
Notwithstanding the still challenging market environment - especially in Southern Europe - Barry
Callebaut achieved solid growth in Region Europe: Overall sales volume moved up strongly by 5.8%
to 377,458 tonnes. Growth in Western Europe was driven by higher sales of both standard (chocolate
and compound) and specialties products (fillings, decorations, nut products) in the Food
Manufacturers Products business. Despite the difficult market environment, the Gourmet business
achieved good, single-digit growth, supported by the company's Belgian Gourmet brand Callebaut(R).
Volumes in the Beverages division picked up.
The industrial business in Eastern Europe, Middle East and Africa (EEMEA) grew double-digit in
Russia, the Middle East and Turkey. Here, the Gourmet & Specialties Products business continued to
record double-digit volume growth thanks to a particular strong performance of Callebaut(R) in
Russia.
Overall sales revenue in Region Europe increased by 3.1% in local currencies (+3.0% in CHF) to CHF
1,186.2 million. Operating profit (EBIT) development even exceeded the good volume and sales
revenue development: EBIT rose 8.1% in local currencies (+8.6% in CHF) to CHF 127.5 million) as a
result of improved margins.

Region Americas - Continued double-digit top-line growth, strong bottom-line performance
The chocolate confectionery market in the U.S. decreased by 1.3%; Brazil was at -0.7%[1] #ftn1 .
Barry Callebaut maintained the double-digit growth pace in Region Americas. Sales volume increased
by 13.6% to 200,434 tonnes. In North America, growth was mainly driven by the company's global
accounts in the Food Manufacturers Products business. The Gourmet business continued to grow
double-digit in North America and sales volume in South America was again substantially higher.
Mexico was a strong performer, doubling volumes compared to last year. Sales revenue in the Region
went up 1.6% in local currencies (+3.6% in CHF) to CHF 567.2 million as result of lower raw
material prices. Volume growth positively influenced the regional operating result: Operating
profit (EBIT) rose by 8.7% in local currencies (+10.4% in CHF) to CHF 49.8 million.

Region Asia-Pacific - Double-digit volume growth

Chocolate markets in Asia grew by 11.6%, again outperforming the growth in other world regions,
although still from a lower base[6] #ftn6 .

In Region Asia-Pacific, Barry Callebaut continued to grow double-digit. Overall sales volume
increased by 11.9% to 30,915 tonnes. Growth was driven by strategic partnerships in the Food
Manufacturers Products business. In the Gourmet & Specialty Products business, Callebaut(R)
achieved broadly based, double-digit volume growth; overall growth was also strongly supported by
well performing local brands. Both in the industrial and the Gourmet business, China was the best
performing country.
Due to lower average raw material prices compared to last year, sales revenue in the Region
increased by 0.3% in local currencies (+1.0% in CHF) to CHF 118.1 million. Operating profit (EBIT)
was negatively impacted by a higher cost base as a result of ongoing expansion: EBIT decreased by
2.5% in local currencies (-1.3% in CHF) to CHF 15.0 million.

Global Sourcing & Cocoa[7] #ftn7  - Combined cocoa ratio[2] #ftn2  affected profitability

Cocoa terminal market prices traded above the GBP 1,700 threshold early September due to
uncertainties with regard to the development of the main crop and the implementation of the Cocoa
Reform in Côte d'Ivoire. In the following months, prices continuously retreated and closed at GBP
1,429 at the end of February. The downward move was mostly caused by the liquidation of funds'
long positions and, more recently, by good prospects for the size of the upcoming mid-crop,
starting in May.
The sugar crop 2012/13 was very good; the world market closed the 3rd year in a row in a surplus.
After peaking last October, world sugar prices steadily declined. Funds going short put additional
downward pressure on prices. By the end of February, world market prices for sugar were at a
two-year low. In the EU, special measures were taken to supply the sugar market by increasing the
import quota. EU sugar prices stayed at the same, still rather high levels.
Milk powder prices in Europe remained flat, but on high levels, due to balanced supply and demand.
In contrast, world market prices increased and reached EU levels at the end of February due to
lower overall supply in the market and in anticipation of a drier season in New Zealand, which
would lead to less supply in the near future.

The segment Global Sourcing & Cocoa expanded its total third party sales volume by 4.9% to 136,449
tonnes, despite a downturn in powder demand in the U.S. and Europe. Compared to last year, sales
prices for cocoa ingredients (cocoa butter, cocoa liquor, and cocoa powder) were significantly
lower. Therefore, sales revenue declined by 17.2% in local currencies (-18.0% in CHF) to CHF 520.1
million. As expected, the combined cocoa ratio[2] #ftn2  had a negative effect on cocoa processing
profitability and as a result operating profit (EBIT) dropped by 37.5% in local currencies (-40.4%
in CHF) to CHF 19.8 million.

Proposals to the Extraordinary General Meeting of Shareholders (EGM)

Authorized capital increase
As announced on March 27, 2013, the Board of Directors of Barry Callebaut has called for an
Extraordinary General Meeting of Shareholders (EGM) on April 22, 2013 proposing to create
authorized share capital for the purpose of partly financing the acquisition of the Cocoa
Ingredients Division from Petra Foods.

Election of two new members to the Board of Directors
Furthermore, the Board of Directors also proposes to the EGM the election of Fernando Aguirre and
Timothy E. Minges as new members of the Board of Directors of Barry Callebaut for the current term
of office until the next ordinary General Meeting on December 11, 2013.

Fernando Aguirre served as the Chairman and CEO of Chiquita Brands International Inc. from 2004
until 2012. Presently Mr. Aguirre is a consultant to Chiquita and a Director of Levi Strauss & Co.
as well as a Director at Aetna Inc.

Timothy E. Minges is currently Chairman of PepsiCo Greater China Region and a member of PepsiCo's
Executive Committee. Mr. Minges also serves on the Board of Tingyi-Asahi Beverage.

(see separate CVs http://www.barry-callebaut.com/EGM  for further details)

***

For more detailed financial information see Barry Callebaut's Letter to Investors 'Half-year
results 2012/13': www.barry-callebaut.com/documentation#c1212
http://www.barry-callebaut.com/documentation#c1212 .

***

 Financial calendar for fiscal year 2012/13 (September 1, 2012 to August 31, 2013): 
 Extraordinary General Meeting of Shareholders                      April 22, 2013 
 9-month key sales figures 2012/13 (news release)                     July 4, 2013 
 Full-year results 2012/13 (news release & conference)    November 7, 2013, Zurich 
 Annual General Meeting 2012/2013                        December 11, 2013, Zurich 


***

Barry Callebaut (www.barry-callebaut.com/ http://www.barry-callebaut.com/ ):
With annual sales of about CHF 4.8 billion (EUR 4.0 billion / USD 5.2 billion) for fiscal year
2011/12, Zurich-based Barry Callebaut is the world's leading manufacturer of high-quality cocoa
and chocolate - from the cocoa bean to the finest chocolate product. Barry Callebaut operates out
of 30 countries, runs more than 45 production facilities and employs a diverse and dedicated
workforce of about 6,000 people. Barry Callebaut serves the entire food industry focusing on
industrial food manufacturers, artisans and professional users of chocolate (such as chocolatiers,
pastry chefs or bakers), the latter with its two global brands Callebaut(R) and Cacao Barry(R).
Barry Callebaut is the global leader in cocoa and chocolate innovations and provides a
comprehensive range of services in the fields of product development, processing, training and
marketing. Cost leadership is another important reason why global as well as local food
manufacturers work together with Barry Callebaut. Through its Cocoa Horizons initiative and
research activities, the company engages with farmers, farmer organizations and other partners to
help ensure future supplies of cocoa and improve farmer livelihoods.

***

 Media and Analysts'/Institutional Investors' conferences of Barry Callebaut AG                                                                                                                 
 Date:                                                                   Monday, April 8, 2013                                                                                                  
 Location:                                                               Barry Callebaut Head Office, Chocolate Academy, Groundfloor, Pfingstweidstrasse 60, Westpark, 8005 Zurich/Switzerland  
 Time:                                                                   Media: 09.30 am to 10.30 am CET                                                                                        
                                                                         Analysts/Institutional Investors: 11.30 to approx. 1 pm CET                                                            
                                                                                                                                                                                                
 The conferences can be followed by telephone or audio webcast. All dial-in and access details can be found on the Barry Callebaut website:                                                     
 Media http://www.barry-callebaut.com/59?view=category,year=,event=9947                                                                                                                         
 Analysts/Institutional Investors http://www.barry-callebaut.com/50?view=category,year=,event=9165                                                                                              


***

 Contact                                                                     
 for investors and financial analysts:  for the media:                       
 Evelyn Nassar                          Raphael Wermuth                      
 Head of Investor Relations             Head of Media Relations              
 Barry Callebaut AG                     Barry Callebaut AG                   
 Phone: +41 43 204 04 23                Phone: +41 43 204 04 58              
 evelyn_nassar@barry-callebaut.com      raphael_wermuth@barry-callebaut.com  
                                                                             


Group key figures for the first half of fiscal year 2012/13 - 
from continuing operations

                                                                                                                                                     
                                                             Change in %                                                                             
                                                      in local currencies  in CHF  6 months up to Feb 28, 2013  6 months up to Feb 29, 2012[4] #ftn4 
                                                                                                                                                     
 Group                                                                                                                                               
 Sales volume                                 Tonnes                          7.8                      745,256                               691,061 
 Sales revenue                                 CHF m                (2.6)   (2.4)                      2,391.6                               2,449.6 
 EBITDA                                        CHF m                  1.8     2.1                        220.1                                 215.6 
 Operating profit (EBIT)                       CHF m                (2.4)   (2.1)                        173.8                                 177.6 
 Net profit                                    CHF m                (7.7)   (7.4)                        116.4                                 125.7 
 Net profit (incl. discontinued operations)    CHF m                 22.0    22.4                        110.3                                  90.1 
                                                                                                                                                     
 By Region                                                                                                                                           
 Europe                                                                                                                                              
 Sales volume                                 Tonnes                          5.8                      377,458                               356,888 
 Sales revenue                                 CHF m                  3.1     3.0                      1,186.2                               1,151.4 
 EBITDA                                        CHF m                  8.5     9.0                        143.1                                 131.3 
 Operating Profit (EBIT)                       CHF m                  8.1     8.6                        127.5                                 117.4 
                                                                                                                                                     
 Americas                                                                                                                                            
 Sales volume                                 Tonnes                         13.6                      200,434                               176,446 
 Sales revenue                                 CHF m                  1.6     3.6                        567.2                                 547.4 
 EBITDA                                        CHF m                 13.7    15.1                         60.7                                  52.7 
 Operating profit (EBIT)                       CHF m                  8.7    10.4                         49.8                                  45.1 
                                                                                                                                                     
 Asia-Pacific                                                                                                                                        
 Sales volume                                 Tonnes                         11.9                       30,915                                27,639 
 Sales revenue                                 CHF m                  0.3     1.0                        118.1                                 116.9 
 EBITDA                                        CHF m                  0.7     1.6                         18.2                                  17.9 
 Operating Profit (EBIT)                       CHF m                (2.5)   (1.3)                         15.0                                  15.2 
                                                                                                                                                     
 Global Sourcing & Cocoa                                                                                                                             
 Sales volume                                 Tonnes                          4.9                      136,449                               130,088 
 Sales revenue                                 CHF m               (17.2)  (18.0)                        520.1                                 633.9 
 EBITDA                                        CHF m               (21.3)  (23.6)                         34.9                                  45.6 
 Operating Profit (EBIT)                       CHF m               (37.5)  (40.4)                         19.8                                  33.2 
                                                                                                                                                     
                                                                                                                                                     
 By Product Group                                                                                                                                    
 Sales Volume                                 Tonnes                          7.8                      745,256                               691,061 
 Cocoa Products                               Tonnes                          4.9                      136,449                               130,088 
 Food Manufacturers Products                  Tonnes                          8.8                      524,738                               482,336 
 Gourmet & Specialties Products               Tonnes                          6.9                       84,069                                78,637 
                                                                                                                                                     
 Sales Revenue                                 CHF m                (2.6)   (2.4)                      2,391.6                               2,449.6 
 Cocoa Products                                CHF m               (17.2)  (18.0)                        520.1                                 633.9 
 Food Manufacturers Products                   CHF m                  1.9     2.6                      1,455.1                               1,418.3 
 Gourmet & Specialties Products                CHF m                  4.5     4.8                        416.4                                 397.4 


[1] #body_ftn1  The global chocolate confectionery market grew by 1.5% in volume in the period
September 2012 until January 2013. Source: Nielsen.
[2] #body_ftn2  Combined sales prices for cocoa butter and cocoa powder relative to the cocoa bean
price. For cocoa processors, profitability depends on the ratio between input costs (price of
cocoa beans) and output prices (price of cocoa butter and powder).
[3] #body_ftn3  Mid-term growth targets for 2011/12-2014/15: On average 6-8% volume growth and
average EBIT growth in local currencies at least in line with volume growth - barring any
unforeseen events.
[4] #body_ftn4  Restated figures due to the divestiture of the consumer business.
[5] #body_ftn5  Including Western Europe, Eastern Europe, Middle East and Africa.
[6] #body_ftn6  China (+4.1%) and India (+16.3%); Source: Nielsen, September 2012 until January
2013.
[7] #body_ftn7  The figures reported under "Global Sourcing & Cocoa" include all sales of cocoa
products to third-party customers in all Regions while the figures shown under the respective
Region show all chocolate sales.

The complete news release and CVs can be downloaded from the following links:

News Release (PDF) http://hugin.info/100441/R/1690938/555159.pdf 
CV - Candidate 2: Mr. Timothy E. Minges (PDF) http://hugin.info/100441/R/1690938/555164.pdf 
CV - Candidate 1: Mr. Fernando Aguirre (PDF) http://hugin.info/100441/R/1690938/555163.pdf 


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Source: Barry Callebaut via Thomson Reuters ONE


HUG#1690938



 --- End of Message --- 

Barry Callebaut
P.O. Box Zurich Switzerland

WKN: 914661;ISIN: CH0009002962;

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