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.
The Switzerland-based group, which supplies chocolate for Unilever (LON:ULVR)’s soon-to-be-spun-off Magnum ice creams and Nestle (NSE:NEST)’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 said it expected the 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.
Its shares were indicated up 3.2% at 0702 GMT premarket, as investors bought on the confirmed profit guidance and the on-track status of the company’s “BC Next (LON:NXT) Level” transformation plan, Vontobel analyst Jean-Philippe Bertschy said.
Cocoa trades in London at around 8,700 pounds ($10,738) 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 increases in a teens percentage.
“Continued challenging situation for Barry Callebaut,” Bertschy said.
The company also said it was issuing a bond worth 300 million Swiss francs ($331 million) to address the high costs and its ensured liquidity.
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.
($1 = 0.8102 pounds)
($1 = 0.9063 Swiss francs)
