If in September a tonne of cocoa was still trading at 4,355 pounds sterling (around 4,870 francs), at the end of November, it was at 7,708 pounds. An increase of 72% over one year. This development is partly explained by poor harvests, particularly in Côte d’Ivoire. The country is in fact the leading supplier of this essential raw material for the manufacture of chocolate.
According to analyst forecasts collected by Bloomberg in December, production in this West African country is expected to reach 1.9 million tonnes during the 2024-2025 season running until August. This would represent a 10% drop compared to Ivorian government projections communicated in October, and would further fuel rising prices on global markets.
In addition to climate change, structural problems such as low remuneration for farmers – despite soaring prices – and diseases attacking cocoa trees explain a decrease in global volumes.
Restructuring in progress
This change in prices is pushing Barry Callebaut’s customers, partly food groups, to place fewer orders for chocolate products: in Western Europe (-7.5%) as well as in the center and east of Old Continent (-4.5%), fewer purchases were made. After years of inflation, consumers are closely monitoring their spending.
Notwithstanding the decline in quantities sold, revenues increased by 53.9% to 3.45 billion francs. This figure reflects the increase in the price of cocoa, which the multinational passes on to its customers, but is less relevant when it comes to understanding the state of health of the group.
-On the occasion of the publication of its quarterly figures, Barry Callebaut revised downwards its expectations for the entire fiscal year 2024-2025, ending in August. Volumes are expected to experience a slight single-digit decline whereas previously management expected a stable development year-on-year. “Given the unprecedented environment for cocoa bean prices, we never believed in the volume growth forecasts announced at the start of the financial year,” commented Jean-Philippe Bertschy, an analyst at Vontobel bank. .
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The operating margin (Ebit), on the other hand, should increase thanks to a restructuring program launched in 2024. Barry Callebaut is targeting annual savings of 250 million francs. And to achieve this, 18% of the workforce, around 2,500 positions, must be eliminated globally. Social agreements have notably been negotiated in Belgium, France, Poland and the United Kingdom.
Investors seemed dissatisfied with the published results. On Wednesday around 3:45 p.m., the stock fell by almost 9% to 1,048 francs while the benchmark index, the SPI, gained 0.83%.
