Barry Callebaut's volumes fall as soaring cocoa prices begin to bite

By Paolo Laudani

(Reuters) - Chocolate maker and cocoa processor Barry Callebaut reported a lower sales volume than expected for its first quarter on Wednesday, hit by delayed orders as its clients renegotiate product prices with retailers amid record high cocoa costs.

Its shares fell 4.3% by 0824 GMT to the bottom of Europe's benchmark STOXX 600 index. Vontobel analyst Jean-Philippe Bertschy said the company was facing a "continued challenging situation", with the soaring raw material costs set to last.

The Switzerland-based group, which supplies chocolate for Unilever's soon-to-be-spun-off Magnum ice creams and Nestle's KitKat bars, said its sales volume fell 2.7% to 565,000 tonnes in the quarter that ended on Nov. 30, below analysts' forecast of 568,000 tonnes in a company-provided consensus.

The company also expects its annual sales volume to fall by a low single-digit percentage, after previously forecasting flat cocoa sales volume for the year. It, however, reaffirmed its target for double-digit growth in recurring operating profit on a constant currency basis.

Cocoa trades in London at around 9,240 pounds ($11,379) per metric ton and analysts have said the chocolate industry is in for a rough 2025, faced with unprecedented cost of the raw material that will likely prompt further price hikes in a teens percentage.

Analysts at Baader Helvea said the effects of the cocoa price increases were starting to show in the results. 

"Maybe the category is not as volume resilient as management wanted investors to believe," they wrote in a note to clients, adding that soaring prices could make investors question long-term metrics of the business model post-transformation.

Barry Callebaut said it was issuing a bond worth 300 million Swiss francs ($331 million) to address the high costs and its ensured liquidity.

($1 = 0.8120 pounds)

($1 = 0.9063 Swiss francs)

(Reporting by Paolo Laudani in Gdansk; Editing by Milla Nissi)