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Barry Callebaut operating profit falls 40% on transformation costs
Global Banking & Finance Review®
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(Reuters) -Barry Callebaut, the world’s biggest chocolate maker, reported lower than expected half-year operating profit on Wednesday, hit by one-off expenses caused by its transformation plan.
(Reuters) -Barry Callebaut, the world’s biggest chocolate maker, reported lower than expected half-year operating profit on Wednesday, hit by one-off expenses caused by its transformation plan.
The Swiss-based company’s earnings before interest and tax fell 40% in local currencies to 178 million Swiss francs ($197 million) on a reported basis in the six months to the end of February.
Analysts were expecting an EBIT of 266 million francs, a company-provided consensus showed.
Barry Callebaut, which supplies chocolate for the soon-to-be-spun-off Magnum ice creams made by Unilever and for Nestle’s KitKat bars, said that increasing cocoa prices and the broader inflationary environment drove revenue up by 11% in Swiss francs. The consensus had expected an increase of 5.7%.
Climate change, years of insufficient planning and tree diseases have brewed a perfect storm for farmers in Western Africa, a region which accounts for roughly 70% of global cocoa supplies, driving prices to historical highs.
Cocoa now trades at a higher price than copper.
Barry Callebaut said half-year sales volumes were broadly unchanged from a year earlier, in line with its annual guidance for flat volumes.
($1 = 0.9036 Swiss francs)
(Reporting by Paolo Laudani and Mateusz Dobrzyniewski; editing by Milla Nissi)
Operating profit is the income generated from a company's regular business operations, excluding any income derived from non-operational activities. It reflects the efficiency of the company's core business activities.
Transformation costs refer to the expenses incurred when a company undergoes significant changes to improve its operations, such as restructuring, implementing new technologies, or changing business models.
EBIT stands for Earnings Before Interest and Taxes. It is a measure of a firm's profit that includes all incomes and expenses (excluding interest and income tax expenses).
Cocoa prices refer to the market value of cocoa beans, which are the primary ingredient in chocolate production. Prices can fluctuate based on supply and demand, climate conditions, and global economic factors.
Revenue is the total income generated by a company from its business activities, including sales of goods and services, before any expenses are deducted.
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