Barry Callebaut Turns Bullish on Chocolate Outlook -- Update

By John Revill 

ZURICH--Barry Callebaut AG is confident of taking a bigger chunk of the chocolate market, strengthening its position as the world's largest supplier now that global demand is showing signs of recovery.

The Zurich-based company, the maker of the chocolate that goes into Oreo cookies. is seeing demand stabilize in many markets, said Chief Executive Antoine de Saint-Affrique said on Wednesday.

"The long term forecast for the confectionary market is 1.8% growth, and we see a stabilization of markets altogether," Mr. Saint-Affrique said.

Growth in Barry Callebaut's growth in sales volumes to restaurants as well as to food, ice-cream and drinks manufacturers like Mondelez International Inc. and Unilever NV contrast with shrinking global demand for confectionary particularly in some emerging markets.

"The interesting thing is the decline in some ways is slowing down, or getting better," said Mr. de Saint-Affrique.

The comments followed Barry Callebaut's announcement of a 19% drop in net profit for the six months to Feb. 29 to 107.9 million francs ($112.7 million) from a year earlier on a 5.6% fall in revenue to CHF3.42 billion.

Fiscal first-half sales volumes rose by 4.5%, a contrast with the 2.6% decline in the global confectionary market measured by market research company Nielsen.

"In the global confectionary market, volumes are still negative, but the value is going up," said Mr. de Saint-Affrique. "Six months ago we were at -5%, so the trend is improving bit by bit."

Mr. Saint-Affrique's bullish outlook cheered up investors, with Barry Callebaut stock rising more than 6% in early trading in Zurich.

Barry Callebaut's first-half results would have been better had it not been for the strong Swiss franc. Revenue rose 12% in local currencies.

The franc has soared in value over the past year versus the euro since the Swiss central bank scrapped a long-standing limit on the currency's value early last year. Barry Callebaut said it suffered a "severe" impact in converting its foreign profit back into Swiss francs.

Sales growth was also tempered by the company reducing some sales in the cocoa business, with less profitable contracts phased out. Mr. de Saint-Affrique said Barry Callebaut would be more "picky" in future.

Management would also continue to look at bolt-on acquisitions, particularly looking at companies who make high-end chocolate used by chefs for desserts, he said.

Write to John Revill at [e-mail]

(END) Dow Jones Newswires

April 06, 2016 04:17 ET (08:17 GMT)

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