Barry Callebaut volumes rise for first time in two years, outlook improves
Sales Volume Recovery and Market Outlook
By Paolo Laudani and Kira Britten
Third-Quarter Performance
July 9 (Reuters) - Swiss chocolate maker Barry Callebaut said on Thursday its third-quarter sales volumes rose for the first time in two years and forecast a smaller full-year decline than expected, helped by stabilising operations in North America.
Sales Volume and Forecasts
Sales volumes rose 5.7% from a year earlier, while the group said it now expected volumes to fall 1% in the year ending in August, compared with a 2.5% decline forecast in a company-provided consensus.
Global Chocolate Demand Indicators
The company's sales volumes are closely watched as an indicator of global chocolate demand following a period of record cocoa prices.
Market Reaction and Cocoa Price Trends
Shares in Barry Callebaut were up around 3% at 0609 GMT after falling 10% over the past three months. Cocoa futures have risen about 90% over the same period as an active El Niño event and concerns about West African crop development supported prices.
Analyst Commentary
"Good to see a volume recovery after two years of decline with a beat driven by its lower-margin cocoa business, which is probably why the company has maintained its EBIT outlook for the year despite nudging up guidance for volume," Kepler Cheuvreux's head of Swiss equities Jon Cox told Reuters.
Risks and Challenges
Cox warned that rising cocoa prices pose a risk to the company's balance sheet and to the chocolate market volume recovery.
Company Position and Future Guidance
The company, one of the world's largest cocoa processors that supplies chocolate for Magnum ice creams and Nestle's KitKat bars, kept its forecast for recurring core earnings to fall by a mid-teens percentage in local currencies this year.
North American Operations
Barry Callebaut said the volume gain reflected "early signs of stabilising fundamentals and service levels in North America".
(Reporting by Paolo Laudani and Kira Britten in Gdansk; Editing by Matt Scuffham, Christian Schmollinger and Subhranshu Sahu)
