By Andrei Sychev
(Reuters) – Swiss chocolate maker Barry Callebaut posted annual profit growth as it managed to pass on rising cocoa prices to customers, but said it expects a second straight year of flat sales volumes as prices of its key ingredient remain high.
Shares in the company rose 3% by 0828 GMT.
The company said in a statement that there is “significant uncertainty about how cocoa-related price increases will impact demand in the near term,” adding that it would defend its market share in a challenging environment.
Cocoa bean prices reached a record high of around $12,540 per tonne in April and have almost doubled in the past 12 months through November.
That has hurt Barry’s cash flow, which stood at minus 2.3 billion Swiss francs ($2.7 billion) for the year to the end of August, and led to the company borrowing 2 billion francs, tripling its net debt.
“The skyrocketing net debt is worrying and unlikely to be resolved anytime soon,” said Vontobel analyst Jean-Philippe Bertschy.
But the chocolate maker managed to pass on higher costs to its customers, with annual turnover rising 22.6% to 10.4 billion francs and recurring operating profit, adjusted for one-off items, rising 6.8% to 704.4 million Frank.
However, including one-off costs and restructuring costs, profit fell by a third to 446.1 million francs.
Barry Callebaut sees the first positive effects of his two-year savings plan, launched last year, which aims to save 250 million francs annually. Under the plan, the company has closed factories in Germany and Malaysia, and plans to close one in Italy.
“BC remains a huge construction project and the pressure from the high cocoa bean price is not easing,” Bertschy said, adding that he has been surprised by the company’s resilience in the tough market.
Chocolate sales volumes were unchanged at 2.279 million tonnes at the end of the company’s fiscal year in August, just below the company’s consensus of 2.283 million tonnes.
Volumes fell 1.2% in the fourth quarter, hit by weaker sales for the company’s luxury gourmet division and a temporary production freeze at its Mexican factory in August.
($1 = 0.8725 Swiss francs)
