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REFILE-UPDATE 2-Barry Callebaut's profits up, sticks to sales growth target
April 3, 2014 / 7:30 AM / 4 years ago

REFILE-UPDATE 2-Barry Callebaut's profits up, sticks to sales growth target

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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 (Reuters) - 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 phone interview.

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 quarters.


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)

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