Factory shutdown to hit Barry Callebaut after 9-month sales rise

Empoyees of chocolate and cocoa product maker Barry Callebaut prepare chocolates in Zurich
Empoyees of chocolate and cocoa product maker Barry Callebaut prepare chocolates after the company's annual news conference in Zurich, Switzerland November 7, 2018. REUTERS/Arnd Wiegmann
  • 9-month sales volume up 7.9%
  • Sales revenue up 13.5% to 6.1 bln Swiss francs
  • Confirms mid-term targets
  • Expects salmonella incident to hit Q4

ZURICH, July 20 (Reuters) - Barry Callebaut (BARN.S) expects a "notable financial impact" in its fourth quarter from the shutdown of its Wieze factory as the world's biggest chocolate maker said on Wednesday that strong demand boosted sales in the nine months to May.

Sales volumes grew 7.9% to 1,751 thousand tonnes in the first nine months of Barry Callebaut's fiscal year 2021/22, while sales revenue increased 13.5% to 6.076 billion Swiss francs ($6.27 billion), the Zurich-based group said in a statement, also confirming its mid-term targets.

The global chocolate confectionery market grew only 1.4% during that period, Barry Callebaut said, and it outpaced it thanks to strong demand across regions and a continued recovery in its gourmet business that caters to bakeries and chefs.

The company halted production at its Wieze site in Belgium - the world's biggest chocolate factory - after detecting salmonella in June, but said cleaning was progressing well and it expected to restart production early next month and return to full capacity over the following weeks. read more

"Though the full financial impact of the incident is still being assessed, the Group expects it to be notable for the financial results in the fourth quarter 2021/22," it said.

"I assume a 2% group impact on a full-year basis from the factory’s temporary closure, its biggest and around a fifth of group volume," said Kepler Cheuvreux analyst Jon Cox, adding that the negative impact could reach 10% in the quarter.

Shares, down about 5% so far this year, opened 0.4% higher.

Barry Callebaut, which passes higher raw material costs on to customers like Nestle (NESN.S), confirmed it expects average volume growth of 5-7% per year and earnings before interest and tax above volume growth in local currencies for the period ending on Aug. 31 next year.

($1 = 0.9683 Swiss francs)

Reporting by Silke Koltrowitz, editing by Kirsti Knolle, Michael Shields and Louise Heavens

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