Company Reports

Barry Callebaut is a leading chocolate manufacturer that benefits from lower costs, making it an attractive partner for other companies. While the recent unprecedented fluctuations in cocoa prices are causing short-term challenges for outsourcing, these issues could lead companies to consider outsourcing more in the future to simplify their operations. In the long run, this may benefit Barry Callebaut as businesses look to minimize their supply chain complexities.

Barry Callebaut is a leading chocolate manufacturer that benefits from lower costs, making it an attractive partner for other companies. While the recent unprecedented fluctuations in cocoa prices are causing short-term challenges for outsourcing, these issues could lead companies to consider outsourcing more in the future to simplify their operations. In the long run, this may benefit Barry Callebaut as businesses look to minimize their supply chain complexities.

Barry Callebaut is a leading chocolate manufacturer that benefits from lower costs, making it an attractive partner for other companies. While the recent unprecedented fluctuations in cocoa prices are causing short-term challenges for outsourcing, these issues could lead companies to consider outsourcing more in the future to simplify their operations. In the long run, this may benefit Barry Callebaut as businesses look to minimize their supply chain complexities.

Barry Callebaut released its fiscal third-quarter sales update, delivering positive volume growth in global cocoa and chocolate, ahead of company-compiled consensus. Full-year volume guidance was narrowed to the upper end of the previous guidance range of negative 1% to negative 3%.

Barry Callebaut reported second fiscal quarter results, delivering a sequential improvement in volumes, although the group remains in negative territory, with a 3.6% decline compared with a 9.9% decline in the prior quarter. The shares declined 16% at the market open on April 16.

Hein Schumacher is set to step into Barry Callebaut’s CEO role as early as Jan. 26, succeeding Peter Feld. Group sales results for the first quarter of fiscal 2025/26 came in slightly below company-compiled consensus. Shares rose 5% at the market open on Jan. 21.

Barry Callebaut is a leading chocolate manufacturer that benefits from lower costs, making it an attractive partner for other companies. While the recent unprecedented fluctuations in cocoa prices are causing short-term challenges for outsourcing, these issues could lead companies to consider outsourcing more in the future to simplify their operations. In the long run, this may benefit Barry Callebaut as businesses look to minimize their supply chain complexities.

Barry Callebaut reported a 6.8% decline in sales volumes for fiscal 2025 and a 49% increase in sales revenue, as it passed extraordinary cocoa price inflation on to customers. Free cash flow significantly exceeded company-compiled consensus driven by working capital improvements.

We are transferring coverage of Barry Callebaut, the leading global manufacturer of cocoa and chocolate ingredients. The pronounced volatility in cocoa prices over the past 18 months has drained free cash flow generation and pressured credit metrics and earnings.

Barry Callebaut is a leading chocolate manufacturer that benefits from lower costs, making it an attractive partner for other companies. While the recent unprecedented fluctuations in cocoa prices are causing some short-term challenges for outsourcing, these issues could lead companies to consider outsourcing more in the future to simplify their operations. In the long run, this may benefit Barry Callebaut as businesses look to minimize their supply chain complexities.

Barry Callebaut reported a 6.3% decline in volumes for the first nine months of fiscal 2025, worse than the 5.2% company-compiled consensus, and cut its full-year guidance for volume and EBIT growth. Shares were down by double digits in trading on July 10.

Barry Callebaut reported a 4.7% decline in first-half fiscal 2025 sales volumes, as average cocoa bean prices surged 95% year over year. A downward revision in full-year volume growth guidance and pressure on net profit from higher financing costs sent shares down roughly 20%.

We think Barry Callebaut's dominant position in the global chocolate industry affords the business significant cost advantages, making it one of the lowest-priced manufacturers and an important outsourcing partner for its customers. Outsourcing is a long-term trend, and it will likely continue to be a primary driver of above-average organic growth for the company in the years to come. We see a clear path to increased profitability through an improved customer and geographic mix over time.

Wide-moat Barry Callebaut reported its sales update for the first three months of fiscal 2024/25, beginning in September 2024 with a 2.7% decline in volume. The company revised its full-year volume guidance to a low-single-digit decline from previously expected flat growth. The volume pressure is primarily due to high cocoa bean prices, which surged in early 2024, temporarily stabilized, and spiked again in November 2024, increasing by approximately 70% in the first quarter of fiscal 2024/25.

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.

We think Barry Callebaut's dominant position in the global chocolate industry affords the business significant cost advantages, making it one of the lowest-priced manufacturers and an important outsourcing partner for its customers. Outsourcing is a long-term trend, and it will likely continue to be a primary driver of above-average organic growth for the company in the years to come. We see a clear path to increased profitability through an improved customer and geographic mix over time.

Barry Callebaut reported its nine-month trading update with volume up 0.4% in the first half (down 0.3% in the third quarter) for the group and up 0.8% for the global chocolate business ahead of a challenging and, overall, declining chocolate confectionery market (down 1.5%, according to Nielsen). Volume growth was positive across most regions, with Western Europe up 2.1%, compensating for lackluster performance in North America (down 1.4%) thanks to business coming from the consumer shift to private-label products and strong gourmet demand (volumes up 10.9%). Revenue was up 16.3%, or up 23.1% in local currencies, driven by a significant increase in cocoa bean prices. The latter's price during the period fluctuated between GBP 3,000 per ton and almost GBP 10,000 per ton, closing at about GBP 7,000 per ton at the end of May 2024, highlighting the volatile environment in which the company operates.

We think Barry Callebaut's dominant position in the global chocolate industry affords the business significant cost advantages, making it one of the lowest-priced manufacturers and an important outsourcing partner for its customers. Outsourcing is a long-term trend, and it will likely continue to be a primary driver of above-average organic growth for the company in the years to come. We see a clear path to increased profitability through an improved customer and geographic mix over time.

Barry Callebaut reported half-year fiscal 2024 results. Volumes were up 0.7% in the first half (up 1% in the second quarter) for the group and up 1% for the global chocolate business ahead of a challenging and, overall, declining chocolate confectionery market (down 2%, according to Nielsen). Volume growth was positive across most regions, with Western Europe (up 2.2%) compensating for lackluster performance in North America (down 1.9%) thanks to business coming from the consumer shift to private-label products and strong gourmet demand (volumes up single digits). Revenue was up 11.1% (up 19.6% in local currencies), driven by a significant increase in cocoa prices. Gross profit was flat, a testament to the group's resilience in inflationary environments due to its cost-plus pricing model. Operating profit was up 7.9% in local currencies (down 2.6% in CHF), well ahead of volume growth, but this was the result of a pass-through of higher financing costs that are offset below the EBIT line. Net profit for the period was up 0.8%, in line with volume growth, and reflects the group's ability to protect margins through its cost-plus model in times of inflationary pressures.

Barry Callebaut reported first-quarter fiscal 2024 results. Volumes were up 0.4% for the year, ahead of a challenging and overall, declining chocolate confectionery market (down 2.7%, according to Nielsen). Revenue in Swiss francs was up 6.2% at CHF 2.241 million. Performance in North America continues to be disappointing with weak trends in volumes continuing at down 4% versus down 6.6% for the underlying regional chocolate confectionery markets. On the contrary, performance in its Western Europe division and Central and Eastern Europe division was promising with volumes up 4.7% and 1.8% respectively, despite the declining regional chocolate confectionery market, but against the lower prior-year comparison base due to the Wieze, Belgium salmonella incident for the former. Sales volumes for both the Latin America and Asia, Middle East, and Africa divisions were down 1.3% and 1.5% respectively, broadly in line with underlying chocolate confectionery markets. All in all, although food manufacturers' sales volume was down 0.8% at the group level, gourmet and specialties' volume more than offset this weakness, growing by 9.1% against a soft comparison base in the prior year. Guidance for flat volume and EBIT for fiscal 2024 remains unchanged. The group expects long-term volume growth from fiscal 2026 onward of low single digits to midsingle digits and EBIT growth of midsingle digits to high single digits. Although our current estimates are close to the high end of new long-term guidance of 5% average volume growth and 7% EBIT growth, we expect a higher profitability base as a result of efficiency gains and cost-cutting to offset our adjustments to more modest growth expectations in the midterm. This leaves our CHF 1,910 fair value estimate for Barry Callebaut largely intact. We maintain our wide moat rating for the stock.