* Nine-month sales volumes rise 8.2 pct vs expected 7.7 pct
* Volume growth 8.9 pct in Q3, up from 7.8 pct in first half
* Says market environment in Europe still challenging
* Shares rise 1.9 percent, outperforming food sector
By Silke Koltrowitz
ZURICH, July 4 Barry Callebaut, the
world's No. 1 chocolate and cocoa-product maker, said on
Thursday that more outsourcing deals from food groups and strong
demand from bakeries and restaurants lifted volumes by a
better-than-expected 8.2 percent in the nine months to May.
Outsourcing, such as its 2012 deal with Unilever
to supply chocolate for products including Magnum, has
helped it outpace sluggish growth in the global chocolate
market. Selling chocolate products to food groups generates
about two thirds of the Swiss firm's sales, it said.
Sales volume growth accelerated to 8.9 percent in the third
quarter, said Barry Callebaut - which also supplies Nestle
, Mondelez and Hershey's - while the
global chocolate market grew only 1.9 percent.
"Third-quarter volumes were very good, mainly driven by
North and South America. We estimate that at least half of that
growth is driven by outsourcing deals," ZKB analyst Daniel
Nine-month volumes in austerity-hit Europe, which accounts
for about half of group sales, rose 5.7 percent. The company
said, "Western Europe performed very well against the background
of a still challenging market environment."
Its second biggest market, the Americas, accelerated to 17.1
percent growth, it said.
Sales revenue at the group fell 1.3 percent to 3.541 billion
Swiss francs ($3.73 billion), in line with an estimate in a
Reuters poll, as the group passed on lower raw material prices
to its customers.
GOURMET, PETRA FOODS
Increasing demand for chocolate products from bakeries and
restaurants, offered by the group's still-small Gourmet
business, helped drive volumes in all regions, the company said.
Analysts at Notenstein welcomed the fact the Gourmet
business was finally becoming a growth driver, but said it
remained to be seen whether stronger volumes would help the
stock, languishing since December 2011, in the longer term.
"First, Barry Callebaut will have to translate the high
volume growth into a sustainable increase in profitability,"
Shares rose 1.1 percent by 0840 GMT, outperforming a 0.7
percent stronger European food sector index.
One big challenge for the company is to make its $860
million buy of Singapore's Petra Foods' cocoa
processing business profitable, analysts said.
It closed the Petra deal this week and said it paid less
than the $950 million cited when the deal was first announced.
Its mid-term financial guidance is for 6-8 percent volume
growth through 2015/16, and by then it also wants to restore
profitability to the pre-acquisition level.
"Much depends on how Barry Callebaut will integrate the
Petra Foods unit," ZKB's Buerki said. "They paid a lot and
profitability of this business is lower."
Petra Foods' cocoa unit generated a loss of $28.9 million in
the first quarter of 2013 on sales of $224.7 million.
Cocoa processors have been hit by weak prices for cocoa
products, such as cocoa powder, which have fallen even more than
prices for cocoa beans, squeezing processors' margins. Prices
for cocoa beans have recovered from an 11-month low hit
in March, but are far from the record-high levels of 2011.