* Q1 sales rev down 0.6 pct to 1.25 bln CHF vs f'cast 1.38
* Co cites lower sale prices for ingredients such as cocoa
* Sales volume beats expectations, up 8.4 pct at 388,170
* High internal demand limits cocoa powder sales
* Shares down 1.7 pct, underperform sector
By Emma Thomasson
ZURICH, Jan 16 Barry Callebaut, the
world's biggest maker of chocolate and cocoa products, reported
lower-than-expected quarterly revenue on Wednesday as its
ingredients business was squeezed by weak prices resulting from
The Swiss-based group, whose main business is making
chocolate for the likes of Nestle and Hershey,
said sales revenue fell 0.6 percent to 1.25 billion francs ($1.4
billion), short of a forecast for 1.38 billion in a Reuters
Lower sale prices for cocoa ingredients such as cocoa
butter, liquor and powder hit revenue at its global sourcing and
cocoa business, which fell 13.1 percent to 262.9 million francs
in the company's first quarter from September to November.
"While the weak sales figure might be cause for concern, it
is worth noting ... the cocoa ingredient contracts were agreed
six months ago when ingredients (prices) were weaker," said
Kepler Capital Markets analyst Jon Cox.
Barry Callebaut shares were down 1.7 percent at 894.5 francs
by 0907 GMT, underperforming a slightly firmer European food and
beverages index. The stock had spiked higher on Tuesday
on the back of strong sales from Lindt & Spruengli
Global cocoa product prices were depressed last year by the
introduction of additional capacity in anticipation of growing
However, Barry Callebaut's sales volume beat expectations
with an 8.3 percent rise to 388,160 tonnes. The group said
volume growth was driven by rising emerging market demand, as
well as higher sales in its main business of supplying major
Chocolate makers have seen an improvement in demand for
their products as cash-strapped Europeans seek solace in sweet
treats. And there are signs that Callebaut is outperforming this
strong market trend.
Compared with an estimate from consumer trends consultant
Nielsen that the global chocolate market grew 1.1 percent from
September to November, Barry Callebaut saw revenue rise 1.6
percent in Europe, 6.3 percent in the Americas and 8 percent in
the Asia-Pacific region.
However, the performance of the sourcing and cocoa unit was
dented by the need to halt operations at some of its factories
as part of expansion plans to add additional capacity. And
internal demand for cocoa powder to feed the business making
chocolate for other firms limited sales to third parties.
Chief Executive Juergen Steinemann told Reuters the deal
Barry Callebaut announced last month to buy the cocoa business
of Singapore group Petra Foods, which will make it the
world's biggest processor of cocoa, should ensure this does not
happen in future.
"There was huge demand for semi-finished goods internally,
which meant we had limited volumes available for selling to
third parties," Steinemann said in a telephone interview.
"With the acquisition of Petra Foods' cocoa ingredient
division, this will not happen again, because we have abundant
volume for semi-finished cocoa products in the future."
Chief Financial Officer Victor Balli said the company was
sticking to a plan to finance the deal with $300 million of
equity and the rest with debt, which the company would raise
around the closing of the transaction, expected in summer.
Sarasin analyst Patrick Hasenboehler noted the integration
risks of the Petra deal despite Barry's growth prospects.
"The planned capital increase is likely to be a drag on the
share price during the coming months," Hasenboehler said.
Balli said Barry Callebaut expects the cocoa price to stay
flat for the time being and possibly move higher in future.
"We are not seeing a significant change from a sideways trend."
The firm confirmed its medium-term growth targets, which aim
for average volume growth of between 6 and 8 percent and growth
earnings before interest and tax (EBIT) in local currencies at
least in line with that through to its 2014/2015 financial year.