Barry Callebaut reports quarterly sales drop amid challenging trading conditions
Barry Callebaut's Peter Boone speaking recently at the launch of its Second Generation Chocolate. Pic: Barry Callebaut
Barry Callebaut has delivered its latest results which have shown a first quarter downturn of 5.1% in sales volumes for its chocolate and cocoa business, to 578,694, amid challenging trading conditions, writes Neill Barston.
As the company acknowledged, its performance has been impacted in the wake of production downtime lost last summer after an outbreak of salmonella at its Wieze production facilities in Belgium, which it moved swiftly to contain, yet resulted in manufacturing hold-ups in subsequent months.
Furthermore, the company noted that its results were also set against a decline within the wider market of of 2.8%, according to Nielsen, with companies grappling with the ongoing inflationary effects of ingredients owing to ongoing the war in Ukraine, and broader supply chain challenges.
The business noted that its figures were also down against a particularly strong period the same time last year as well, with the company’s CEO Peter Boone expressing confidence that its results would prove positive in the second half of 2023. Significantly, the business has re-adjusted its latest three-year guidance figures, projecting a sustained period of growth moving forward to 2025.
However, for its first quarter of 2023, Barry Callebaut reported its chocolate business was down by -5.8% in the first quarter owing directly to the situation at Wieze, which was resolved last August. However, it stated this had affected all its active regions, notably the EMEA, down by 8.5%. In addition, the group’s key Growth drivers in the emerging markets were also down 3.8%, as well as its gourmet and specialties, seeing a 11.2% drop after a slow start to the year.
Looking ahead, CEO Peter Boone, (pictured main image), said: We expect a more back-end loaded year with improvements in the coming quarters as the Wieze factory is fully back on stream and Gourmet products are more widely available. Our consistent long-term growth strategy and its successful execution give us the confidence to issue a new 3-year mid-term guidance for 2023/24 to 2025/26 focusing on accelerated value creation. The new guidance consists of on average +4-6% volume growth and +8-10% EBIT growth in local currencies, with further ROIC improvement.”
Despite the challenging results, the company highlighted several successes, including a major expansion confirmed for its Chatham factory in Ontario, Canada meeting demand for dairy-free product ranges, as well as a ground breaking for its latest facility in Neemrana, India, as notable early gains for the year. It has also just opened its new business excellence centre in Malaysia, offering enhanced strategic support for the region.
Furthermore, the business also recently released its sixth annual Forever Chocolate report that detailed notable progress on its sustainability goals, including two chocolate bar ranges that are now entirely sustainably sourced with regards to their processing.
Regional breakdown
By region for the period, sales volumes for the EMEA recorded a sales volume decline of -8.5% to 261,902 tonnes owing to issues at the Wieze plant, which the company said had otherwise been on track for a strong performance.
Within the US and wider region, sales volumes were also less than anticipated, down -2.4% to 160,908 tonnes, in line with the underlying regional chocolate confectionery market, which was also down by -2.2%. Meanwhile, in Asia Pacific, results remained about flat at 0.1% at 39,543 tonnes in the first three months of fiscal year 2022/23, below the underlying regional chocolate confectionery market (+3.2%)
Similarly, with regards to its cocoa operations, volumes stood at 116,341 tonnes, down by -2.6% in the quarter, compared to a strong prior year. Sales revenue amounted to CHF 476.2 million, up +8.5% in local currencies (+4.2% in CHF).
Outlook
Looking ahead, CEO Peter Boone concluded that there would be cause for optimism with its global operations. He added: “We expect a more back-end loaded year with improvements in the coming quarters as the Wieze factory is fully back on stream and Gourmet products are more widely available. Our consistent long-term growth strategy and its successful execution give us the confidence to issue a new 3-year mid-term guidance for 2023/24 to 2025/26 focusing on accelerated value creation. The new guidance consists of on average +4-6% volume growth and +8-10% EBIT growth in local currencies, with further ROIC improvement.”
