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* Net profit up 9 pct to 120 mln Sfr
* Stand-alone sales volume up 3.1 pct
* Confirms mid-term financial targets
* CFO sees cocoa prices ease short term
By Silke Koltrowitz
ZURICH, April 3 Barry Callebaut, the
world's biggest chocolate maker, reported a rise in half-year
profits on Thursday, boosted by the turnaround of the Petra
Foods' cocoa business it bought over a year ago, and reaffirmed
its medium-term sales growth target.
Chocolate makers are facing sluggish growth, especially in
mature markets in western Europe, but Barry Callebaut benefits
from a trend at big food groups, such as Nestle and
Unilever , to outsource chocolate production.
On top of this industrial production, Barry Callebaut also
supplies restaurants, bakeries and catering services with
'gourmet' chocolate products, a business area that is growing
strongly, but has seen a setback in Asia recently.
"We'll continue to grow in the second half thanks to our
three growth drivers, emerging markets, outsourcing and
gourmet," Chief Executive Juergen Steinemann told Reuters in a
The Zurich-based firm said sales volumes in the first half
increased 3.1 percent on a stand-alone basis, or 17.6 percent
including the business acquired from Petra Foods at
the end of 2012 and consolidated since July 2013.
Chief Financial Officer Victor Balli said at a results news
conference a dispute with Petra Foods over the closing price of
the deal was continuing. "There's only upside for us there, if
we finally agree on a lower price, we'll get some money back."
Last autumn, Barry Callebaut sought a reduction of $98.3
million in the closing price of $860 million that Petra Foods is
contesting. The price had already been lowered once from the
initially announced $950 million.
The loss-making cocoa business Barry Callebaut bought swung
to a profit in the first half and should contribute 30 million
Swiss francs to full-year operating profits, Balli said.
Net profit in the first half rose 8.9 percent to 119.6
million francs ($135 million), just below analysts' forecasts.
Analyst Pascal Furger at Vontobel said the fact that Barry
had increased profitability despite low volume growth was "a
strong achievement" and he expected volumes to pick up in the
second half after strong growth for key customers in recent
Stand-alone volume growth in the first half was below the
group's medium-term target of 6-8 percent per year, but that
forecast was repeated on Thursday.
The company also said it was still on track to restore
profitability to pre-acquisition levels by 2015/2016 and to
achieve synergies of 30-35 million francs from the Petra buy.
Sales volumes only grew very slightly in Europe and North
America, but strongly in South America and Asia-Pacific.
"We have seen dramatically strong growth in Europe over the
last two years that brought us to the limit of our capacities so
we had to step on the brakes," Steinemann said, adding he was
not worried volumes had only risen 0.3 percent.
He said Russia, currently in focus due to the political
tensions with the West, was a market with huge potential and
Barry Callebaut's business would continue to increase there.
However, the group's gourmet business in Asia-Pacific saw a
decline in volumes for the first time, Balli said.
"Currencies fell dramatically making our products much more
expensive, that weighed on growth and profitability. The
positive point is that most of our competitors in the gourmet
business are also from Europe and face the same difficulties."
He said prices for cocoa beans had increased a lot recently
as people feared a severe deficit. "We don't quite see that, we
think we're likely to see only a small deficit this year."
He added prices were likely to come down a bit in the short
term, but should rise in the long run due to increasing demand.
Lindt & Spruengli, whose gold foil-wrapped bunnies
are back on supermarket shelves ahead of Easter, said last month
high raw material costs and pressure from retailers to keep
prices low continued to pose challenges in 2014.
Shares in Barry were up 1 percent at 1189 francs by 0845
GMT, ahead of a 0.1 percent rise in the Stoxx Europe 600 food
and drinks sector index.
($1=0.8860 Swiss francs)
(Editing by Greg Mahlich)