Barry Callebaut issues new lower three-year guidance after slower than expected volume growth

The world’s largest cocoa and chocolate supplier reported sales volume of 578,694 tonnes in what it described as ‘an overall declining market’. Its chocolate business was down by -5.8%, due to the declines that occurred at its Wieze factory in Belgium, which was hit by a salmonella scare last year.

As the Swiss-headquartered Group started ramping up production again in Belgium, significant destocking and food manufacturers delaying orders also contributed to the decline in volume, it said in a statement.

"We had expected coming out of Covid an acceleration​," said Peter Boone, CEO of the Barry Callebaut Group. "The acceleration is back to a normal trajectory​."

The Group's new mid-term guidance focuses on accelerated value creation for a 3-year period 2023/24 - 2025/26 of on average: +4-6% volume growth and Barry Callebaut also said it would target 8%-10% EBIT growth in local currencies for the period 2023-2026, with further ROIC improvement, which pushed shares in the Group up 2.07% during early trading Wednesday (18).

Gourmet & Specialties

The 3-Month Key Sales Figures were released against a particularly strong comparator of +9.6% in the same quarter in prior year. This affected all  regions, the Group said, in particular EMEA (-8.5%). The Group's Key Growth Drivers Emerging Markets (-3.8%), Outsourcing (-0.1%) and Gourmet & Specialties (-11.2%) had a slow start. Excluding the delayed impact due to the Wieze ramp-up, Gourmet & Specialties volume would have been flat against a record high comparator (+33.8%).

“With Wieze fully operational since end of October and against a strong comparator, we had, as expected, a slow start to the year. In markets where Gourmet products were widely available, we continued to win. We are committed to achieve our current 3-year mid-term guidance in this final year, based on our broad product portfolio and broad geographic and customer base​,” Boone added.

Volumes fell to 579,000 tonnes from 610,000 tonnes a year earlier, - and sales revenue increased by 3.8% to 2.1 billion Swiss francs ($2.28 billion), as the company passed on raw material price increases the Group said. In local currencies, revenues increased by 7.2%.

"A number of reasons have led to a slow start to the year by Barry Callebaut standards, but a significant acceleration is expected in the course of the year​," Zurcher Kantonalbank analyst Daniel Burki told Reuters.

Boone added the chocolate maker was on track to achieve its existing targets. "We are committed to achieve our current 3-year mid-term guidance in this final year, based on our broad product portfolio and broad geographic and customer base​," he said in a statement.

Barry Callebaut also announced a new mid-term guidance of 4%-6% volume growth for the years 2023 - 2026, slightly down from the current 5%-7% targeted volume growth for the three years up to 2023.

Sustainability 

In December, Barry Callebaut published its 6th Forever Chocolate progress report, presenting the achievements on its journey to 'make sustainable chocolate the norm'. In the statement, the Group said it continued to scale up its activities by partnering with customers as well as societal and industry stakeholders to create tangible impact on the ground.

One of its key achievements in the past fiscal year was that with the support of its customers, Barry Callebaut increased the proportion of products sold containing 100% sustainable cocoa or chocolate to one in two products.