Barry Callebaut records revenue upturn, though warns of coronavirus financial headwinds
Half-year sales revenues for the Swiss-headquartered Barry Callebaut chocolate and cocoa processing group have risen by 5.8% to CHF 3.8 billion, for the period ending February 2020.
Net profits were up 6.7% for the period, at CHF 204 million, as well as sales volumes being up 5.4% to 1,103,728 tonnes, though the company acknowledged a challenging trading period ahead in the wake of the global coronavirus pandemic.
Consequently, the business has drawn upon a €1 billion revolving credit facility to ensure the financial liquidity of the business, as the global economy faces severe challenges in the months ahead. This was underlined by the International Monetary Fund warning that the entire global world output is likely to shrink by 3% for 2020, though is expected to recover next year.
Barry Callebaut started the year on a strong note with the launch of its dairy-free ‘M_lk Chocolate’ for its ‘Plant Craft’ Indulgence range at this year’s ISM in Cologne, which met with broad approval from the industry. But the event at the end of February came just as the peak for coronavirus began, with the majority of international travel restricted within weeks of the trade fair, as countries around the world attempted to stem the development of the disease. The peak Easter sales for the entire confectionery sector have consequently been impacted, as stores around the globe have either been shut or operated with significantly limited hours over the past month.
CEO Antoine de Saint-Affrique (pictured left of image, at ISM) confirmed that the company was taking appropriate steps to manage the outbreak, and offered his thanks to staff and suppliers for their efforts amid the crisis.
Speaking further on the pandemic, he said was a major unforeseen event and at present it was impossible to assess the impact on business growth and profitability, which depended on the length of the outbreak as to the severity of its effects.
He said: “In the context of the COVID-19 pandemic, we are taking all necessary measures to protect the health of our employees and their families. We keep contributing every day to the continuity of the global food supply chain. I would like to thank all our employees, as well as our suppliers and our customers, who are as committed, engaged and passionate as ever to produce and distribute food during this challenging time.”
Among the company’s other achievements so far this year, it has commenced the construction of its first chocolate factory in Southeastern Europe. The state-of-the-art facility will be located in Novi Sad, Serbia. The factory, with an initial annual production capacity of over 50,000 tonnes, will serve as a regional hub.
Within the UK, the business also inaugurated its UK chocolate centre at Banbury, Oxford in , as well as seeing another major development with its decoration business Mona Lisa begin large-scale 3D printing of chocolate.
In a statement on the present situation regarding coronavirus, the company added: “Barry Callebaut plays a critical role in contributing to the availability of food products during the COVID-19 pandemic. To do so, the Group has put in place precautionary measures to provide safe working environments for its people and maintain business continuity. Barry Callebaut has – early on – created dedicated teams at global and regional levels who are monitoring the situation as it develops and will adjust any measures based on the guidance of governments and other relevant authorities.
“We have to date not experienced any major disruption to its production operations. While Food Manufacturers and Global Cocoa are less affected, Gourmet sales volumes are impacted by government restrictions on the access to shops and restaurants. In China there are signals of strong demand recovery, but the overall progression of the COVID-19 pandemic remains volatile and difficult to predict.
“Due to the uncertainty in the financial markets, we took the precautionary decision to draw the full amount of its Revolving Credit Facility (RCF), in total EUR 1 billion with a tenor of six months, to create an alternative to the Group’s Commercial Paper Program (equivalent to around EUR 450 million) and to increase access to liquidity. Barry Callebaut has had the RCF in place for many years, as a fallback option in case the commercial paper market ceases to offer the required liquidity.”