High cocoa prices bite into Barry Callebaut's volume outlook, shares slump

By Paolo Laudani and Isabel Demetz

(Reuters) - Swiss chocolate maker Barry Callebaut lowered its annual sales volume guidance on Thursday due to what it called "unprecedented volatility" in cocoa bean prices, sending its shares falling almost 20%, on track for their biggest one-day drop ever.

The world's largest chocolatier, which supplies key food producers such as KitKat maker Nestle, forecast a mid-single-digit percentage decrease in its cocoa sales volume for the financial year ending on August 31.

It had previously said it expected the sales volume to fall by a low single-digit percentage amid the exceptionally high prices of the raw material.

"The short term pain from the unprecedented cocoa price spike and volatility is worse than we anticipated for the company," Kepler Cheuvreux's analyst Jon Cox told Reuters.

But declining cocoa prices should lead to an improvement in chocolate demand and ease pressure on Barry Callebaut's balance sheet and financials, Cox added.

Cocoa futures trade in London at around 6,096 pounds ($7,839.5) per metric ton, down from a yearly high of 9,290 pounds in January, as climate change and years of insufficient planning have brewed up the perfect storm for farmers in Western Africa which accounts for roughly 70% of global cocoa supplies.

Barry Callebaut, whose ingredients are used in one out of four chocolate and cocoa products consumed worldwide, posted a volume decline of 4.7% to 1.08 million tons in the first six months of the year, slightly below the 1.11 million tons expected by analysts in a company-provided consensus.

It reiterated that it expects a double-digit percentage rise in recurring core earnings (EBIT) in constant currency this year. In the first half, the figure fell 2.9% to 329.6 million Swiss francs ($386.0 million).

However, the "disruptive environment" will cause a 12-month delay for the company's "BC Next Level" savings to be reflected in the earnings, it said, while confirming it still aimed to save 250 million francs annually under the transformation plan.

($1 = 0.7776 pounds)

($1 = 0.8539 Swiss francs)

(Reporting by Paolo Laudani and Isabel Demetz in Gdansk, editing by Milla Nissi)