( AFP / KENZO TRIBOUILLARD )
High cocoa prices weighed on Barry Callebaut’s sales volumes, which fell more than expected during its staggered first quarter, pushing it to lower its annual sales target.
The Swiss group – which supplies cocoa and chocolate preparations to food industry giants such as Mondelez, Nestlé and Unilever as well as to pastry chefs and confectioners – is now counting on a “low single-digit” decline in its sales volumes during the 2024/2025 financial year (which runs until the end of August), against previously expected stagnation.
At 09:04 GMT, the stock fell 4.97% to 1,089 Swiss francs, countering the trend of the SPI, the broad index of the Swiss Stock Exchange, up 0.77%.
“Our fiscal year started with cocoa bean prices reaching new highs, creating additional pressure on the market,” admitted its managing director, Peter Feld, quoted in the press release detailing its quarterly sales.
In 2024, cocoa prices will rise by 161%, peaking at $10,100 on December 18 on the New York Stock Exchange. However, prices had already increased by 70% in 2023, under the effect of heavy rains and a pod disease which had damaged the crops.
In January, they initially fell a little before starting to rise again.
– Orders postponed –
During its staggered first quarter (which extends between September and November), its turnover exploded to the extent that a large part of the contracts provide for passing on variations in the prices of raw materials to its customers. Its turnover therefore increased by 53.9% compared to the same period a year earlier, to 3.4 billion Swiss francs (3.6 billion euros).
But sales volumes suffered from this surge in cocoa prices, falling more than expected to 565 thousand tonnes, a drop of 2.7% over one year. Analysts surveyed by the Swiss agency AWP expected on average a decline of 1.7% to 571 thousand tonnes. However, its turnover clearly exceeds expectations which stood at 2.8 billion francs.
The group attributed this decline in volumes to weak demand from its customers who are in the process of renegotiating their prices with mass retailers and to the short-term reaction of consumers to inflation on chocolate products. Some customers have also delayed their orders in the face of this “acceleration” in cocoa bean prices, he added.
“The rise in cocoa prices is starting to show its effects on the results,” reacted Andreas von Arx, analyst at Baader Helvea who was already expressing doubts about the annual sales target before the publication of these figures in view of this strong rise in cocoa prices.
In a stock market comment, he recalled that the group’s profitability depends “mainly on volumes, and not on turnover”.
The group nevertheless confirmed the annual objective for its operating profit, for which it is still targeting double-digit growth (excluding currency effects) while a major reorganization of its activities is underway.
