Barry Callebaut: Full Year Results Fiscal 2014/2015

Zurich / CH. (bc) Swiss Barry Callebaut Group, the world´s leading manufacturer of cocoa and chocolate products, announced its Full-Year Results for the year 2014/2015 (ended August 31). Highlights:

• Broad-based sales volume growth of 4.5 percent, accelerating significantly in Q4
• Operating profit (Ebit) increased by 7.4 percent in local currencies (minus 0.3 percent in Swiss Francs), net profit down 2.7 percent in local currencies (minus 5.9 percent in Swiss Francs)
• Antoine de Saint-Affrique new CEO since October 01, 2015
• New mid-term financial target1, with focus on consistent, above-market volume growth and enhanced profitability and on average:
• four to six percent volume growth
• Ebit above volume growth in local currencies
• All Board members stand for re-election; Patrick De Maeseneire, new CEO of Jacobs Holding, proposed as new Board member and Vice Chairman
• Proposed payout to shareholders of 14.50 CHF per share; stable payout ratio of 33 percent

Antoine de Saint-Affrique, CEO of the Barry Callebaut Group, said: «As we have done consistently for the last ten years, we managed to outpace the market and delivered solid, profitable growth. After a slow start to fiscal year 2014/2015, our volume growth accelerated, particularly during the last quarter, and reached 4.5 percent for the year, much in contrast to the global confectionery market. Sales volume growth was broadly based, driven by developed markets and supported by our key growth drivers Outsourcing, Emerging Markets and Gourmet. Despite the historically weak cocoa products market and excluding a significant negative currency translation effect, we improved our operating profit. This is the result of our continued focus on product mix, margins and costs. I congratulate the team on this robust performance».

In fiscal year 2014/2015 (ended August 31, 2015) the Barry Callebaut Group increased its sales volume by 4.5 percent to 1’794’782 tonnes, with a strong acceleration in the last quarter. The company’s growth for the year compares favourably to the 2.7 percent decline in the global confectionery market according to Nielsen. Growth was broadly based with strong contributions from the developed markets in Western Europe and North America, as well as from Outsourcing, Emerging Markets and Gourmet + Specialties. Sales revenue was up 12.1 percent in local currencies (6.4 percent in Swiss Francs) to 6’241.9 million CHF, as a result of volume growth and higher cocoa bean prices over the entire fiscal year.

Gross profit grew 4.8 percent in local currencies (minus 1.7 percent in Swiss Francs) to 846.8 million CHF. It was heavily impacted by the exceptionally low combined cocoa ratio, which was compensated for by the company’s greater focus on margins as well as product and customer mix, bolstered by the growth in the Gourmet + Specialties business.

Operating profit (Ebit) rose 7.4 percent in local currencies (minus 0.3 percent in Swiss Francs) to 414.8 million CHF, thereby outpacing volume growth. The low Ebit in Global Cocoa was compensated for by the positive Ebit contribution of all other regions and product groups. This is also the result of a good gross margin development and fixed cost discipline. Following a strong prior year, the Group’s Ebit per tonne grew by 2.9 percent in local currencies. Due to significant currency translation impacts, Ebit per tonne in Swiss Francs declined by 4.7 percent.

Net profit for the year in local currencies was 2.7 percent below prior year (minus 5.9 percent in Swiss Francs) and came in at 239.9 million CHF. This is a reflection of the higher average financing requirements mainly due to higher cocoa bean prices, a foreign exchange loss, as well as higher income tax expenses.

Outlook: Focus on smart balance

Looking ahead, CEO Antoine de Saint-Affrique said: «We see significant growth opportunities ahead and we are committed to achieving consistent, above-market volume growth based on our three key growth drivers Outsourcing + Partnerships, Emerging Markets and Gourmet + Specialties. We will strike a balance between volume growth and enhanced profitability as well as free cash flow generation – in brief: «smart» growth. However, we foresee a challenging fiscal year 2015/2016 due to the current cocoa products market, which will temporarily affect our profitability. We are driving a number of strategic initiatives, such as the Cocoa Leadership project, to fully leverage our global scale in cocoa, optimize our footprint and strengthen our profitability in the mid-term. We adapt our mid-term guidance to four to six percent volume growth, and Ebit above volume growth in local currencies on average for the three-year period 2015/2016 to 2017/2018, barring any major unforeseen events».

Strategic milestones achieved in fiscal year 2014/2015

• Expansion: Acquisition of the industrial chocolate manufacturing assets from «World’s Finest» Chocolate, in the attractive U.S. Midwest region, and signing of a long-term supply agreement for the supply all of their chocolate needs. Signing of the first outsourcing agreement in Southeast Asia with GarudaFood of Indonesia for the delivery of an important part of their compound chocolate requirements. Inauguration of a new chocolate factory in Paine/Chile. Expansion of existing chocolate factories in Extrema/Brazil and in Lódz/Poland. Opening of a low-cost compound chocolate factory in Pune/India. Relocation of Chocolate AcademyTM center in Russia to downtown Moscow and opening of three such training centers for professionals in Tokyo, Cologne and Dubai to further boost the Gourmet business, bringing the total number of Chocolate AcademyTM centers to 19. Acquisition of nut specialist American Almond in the U.S. to enhance the specialties product offering in the Americas.
• Innovation: Development of new chocolate and compound recipes with higher thermo tolerance to satisfy the demand for chocolate products in warmer climates. Opening of a new Chocolate Application Center in Wieze/Belgium and the first Cocoa Application Center in Asia Pacific, located in Pasir Gudang/Malaysia. Ten percent of the sales revenue in fiscal year 2014/2015 came from new or renovated products.
• Cost Leadership: Establishment of a Shared Service Center in Lodz/Poland, where transactional activities across Europe will be bundled.
• Sustainable Cocoa: Launch of independent, non-profit Cocoa Horizons Foundation to improve the livelihoods of cocoa farmers and their communities and as a platform for chocolate companies and other contributors to invest in sustainable cocoa. More than 20 million CHF paid in farmer and farmer group premiums. Barry Callebaut partnering with The Hershey Company and Mondelez International, respectively, to support them in their sustainability commitments and with the implementation of their cocoa sustainability programs on the ground (Image: Barry Callebaut).