(Recasts, adds CEO and analyst comment, shares)
By Silke Koltrowitz
ZURICH, April 11 (Reuters) - Swiss chocolate maker Barry Callebaut expects sales volume growth to slow in the second half of its financial year after strong demand in Europe and Asia helped profit to beat expectations in the six months to February.
Chocolate makers have been grappling with sluggish global demand, but Barry Callebaut has so far bucked the trend by relying on big food groups such as Nestle and Mondelez that are outsourcing chocolate production and a thriving ‘gourmet’ business with chefs and pastry makers.
Chief Executive Antoine de Saint-Affrique said the company had seen exceptionally strong volume growth of 8 percent in the first half of its 2017/18 financial year, with outsourcing contracts, the gourmet business and emerging markets all contributing to the growth.
“We won’t continue at this pace, if nothing else then because we have a much higher base in the second half,” de Saint-Affrique told reporters and analysts at a conference at the company’s headquarters in Zurich.
“I’m quite confident we can live up to our guidance (of 4-6 percent volume growth over the mid term), but I’m not sure we can do 8 percent all the time,” he said, adding he still saw a lot of growth potential for Barry Callebaut.
Barry Callebaut’s shares, which are trading at almost 35 times forward earnings, according to Thomson Reuters data, opened higher, but quickly turned negative and were down 3.6 percent at 0925 GMT.
Net profit jumped 33 percent to 173 million Swiss francs ($180.9 million) on a recurring basis, slightly ahead of estimates.
De Saint-Affrique said it was too early to assess the impact of a recent increase in cocoa bean prices, but Chief Financial Officer Remco Remco Steenbergen, who took over in March, said he expected a positive free cash flow if cocoa bean prices stayed at current levels.
Vontobel’s Jean-Philippe Bertschy said the first half had been “a peak cycle” for the company in terms of volume growth, profit and cash generation.
“At that demanding valuation, it is very difficult to see some upside for Barry,” Bertschy said. ($1 = 0.9561 Swiss francs) (Reporting by Silke Koltrowitz Editing by Amrutha Gayathri and Keith Weir)