Barry Callebaut Earnings: Flat Volumes Amid Cocoa Price Pressure; Restructuring Plan Drives Outlook

Wide-moat Barry Callebaut, or BC, reported flat volume growth for fiscal-year 2024, with a strong first half offset by a 1.2% volume decline in the fourth quarter, largely due to the temporary closure of a Mexican factory and phased customer purchases in the gourmet segment. Elevated cocoa bean prices remain a significant source of volatility; however, BC’s cost-plus pricing model enables it to pass most inflation pressures and additional financing costs to customers. This resulted in 22.6% revenue growth for the year and a 6.8% increase in recurring EBIT (adjusted for restructuring costs), though recurring operating margin decreased by 1% to 6.8%. For fiscal 2024-25, BC expects cocoa bean prices to moderate, though they are unlikely to return to historical averages, translating into softness in the first half of the next fiscal year; overall, BC forecasts flat volume growth and double-digit recurring EBIT growth. We maintain our fair value estimate of CHF 1,810 per share, with shares offering around 10% upside potential.