Chocolate maker and cocoa processor Barry Callebaut has reported a lower sales volume than expected for its first quarter, hit by delayed orders as its clients renegotiate product prices with retailers amid record high cocoa costs.
Its shares fell 4.3% by 08:24 GMT to the bottom of Europe's benchmark STOXX 600 index. Vontobel analyst Jean-Philippe Bertschy said the company was facing a "continued challenging situation", with the soaring raw material costs set to last.
The Switzerland-based group, which supplies chocolate for Unilever's soon-to-be-spun-off Magnum ice creams and Nestlé's KitKat bars, said its sales volume fell 2.7% to 565,000 tonnes in the quarter that ended on 30 November 2024, below analysts' forecast of 568,000 tonnes in a company-provided consensus.
The company also expects its annual sales volume to fall by a low single-digit percentage, after previously forecasting flat cocoa sales volume for the year.
It, however, reaffirmed its target for double-digit growth in recurring operating profit on a constant currency basis.
Cocoa Prices
Cocoa trades in London at around £9,240 ($11,379) per metric tonne LCCc1 and analysts have said the chocolate industry is in for a rough 2025, faced with unprecedented cost of the raw material that will likely prompt further price hikes in a teens percentage.
Analysts at Baader Helvea said the effects of the cocoa price increases were starting to show in the results.
'Maybe the category is not as volume resilient as management wanted investors to believe,' they wrote in a note to clients, adding that soaring prices could make investors question long-term metrics of the business model post-transformation.
It also said it was issuing a bond worth CHF 300 million (€319.3 million) to address the high costs and its ensured liquidity.
'Sustainable Profitable Growth'
Peter Feld, CEO of Barry Callebaut Group stated, "Our fiscal year started with cocoa bean prices reaching new highs, creating further market pressure. While we focus on short-term operational priorities in the current environment, the significant opportunity to unlock sustainable profitable growth and value creation is evident."
Feld added, "This underscores the rationale for our BC Next Level strategic investment programme which future-proofs Barry Callebaut. As part of BC Next Level, we completed all social plans in Belgium, the largest part of our restructuring. Over the past few months, we secured additional liquidity through the recent bond issuances.
"As the market leader, we are pursuing strategic actions to adapt to the higher industry capital base and play a crucial role in sourcing sustainable beans for our customers. We continue to see significant growth potential in the attractive chocolate category."
News by Reuters, additional reporting by ESM.
