ZURICH Chocolate and cocoa product maker Barry Callebaut (BARN.S) confirmed mid-term sales growth guidance and reported first-half net profit rose more than expected as a phase-out of less profitable contracts in its cocoa business bore first fruit.
At a time chocolate makers face declining global demand, Barry Callebaut is outperforming the market because big groups outsource their chocolate production to the company and its gourmet business for chefs is also growing quickly.
"Markets are difficult everywhere, particularly in confectionery in the United States," Chief Executive Antoine de Saint-Affrique told reporters on a call on Wednesday, adding he expected to see an improvement in Europe this year and expected the good momentum for the company to continue.
Net profit rose to 142.1 million Swiss francs ($141 million) in the first half of fiscal year 2016/17, the supplier of chocolate to food groups such as Nestle (NESN.S) and Unilever (UNc.AS) (ULVR.L) said in a statement. This was ahead of a 127 million franc average estimate in a Reuters poll.
Sales volume growth at the Zurich-based company was up 1.4 percent in the half to February, just below a 1.7 percent poll estimate. It accelerated to 3.5 percent in the second quarter from slightly negative growth in the first quarter. First-half sales revenue rose to 3.54 billion Swiss francs.
While the phasing-out of less profitable contracts in its cocoa business had a negative impact on volume growth, new outsourcing contracts, notably with Mondelez (MDLZ.O), and the fast-growing Gourmet & Specialties business helped the company outpace a 2.1 percent decline in the global chocolate confectionery market in the six months to February.
Barry Callebaut, which says it makes one out of four chocolate and cocoa products consumed worldwide, confirmed its mid-term targets of 4-6 percent volume growth, with earnings before interest tax above volume growth in local currencies on average up to 2017/18.
Barry Callebaut's shares, which have risen more than 8 percent so far this year, were indicated to open 1.2 percent higher JBPRE03.
($1 = 1.0072 Swiss francs)
(Reporting by Silke Koltrowitz, editing by John Miller and Michael Shields)