Barry Callebaut revealed that its chocolate manufacturing
division had sidestepped setbacks from a weak world confectionery market, but
not its cocoa operations, which are to continue facing "challenging conditions".
The Swiss-based group, which makes chocolate largely on
behalf of groups such as Hershey and Nestle, said that its overall sales for
the September-to-May period rose 2.5% by volume, to 1.32m tonnes, "significantly"
outperforming a 2.1% decline in the global confectionery market.
"Our growth was broadly based," reflecting strength in emerging
markets, specialty products and outsourced manufacturing, said Juergen
Steinemann, the Barry Callebaut chief executive.
All three of the group's regional divisions managed volume growth,
despite declining markets, with the Americas unit being led to 3.7% expansion
by South American operations, which achieved "strong double-digit growth across
all product groups, and in all countries".
However, Barry Callebaut's chocolate division was more strongly
affected by confectionery market weakness, which Mr Steinemann to "price
increases for consumer products and rather soft economies across the globe".
Indeed, the group said it "did not actively increase its sales"
of cocoa products, against a backdrop of poor bean-processing margins, which are
also been squeezed by a boost to bean prices from expectations of a sharp drop
in output in Ghana, the second-ranked producing country.
The so-called "combined ratio" - the price of the main
products, butter and powder, compared with that of raw beans – fell to 2.67 as
of the end of June, the lowest on records going back to 2007.
"Barry Callebaut did not proactively pursue growth with
third-party customers, and gave priority to internal needs," the group said.
While divisional revenues rose by 9.4% to SFr1.40bn, that
was down to increased cocoa product prices, with volumes up just 0.8% to
361,241 tonnes for the nine months, representing a slight slowdown from the pace
of increase at the half-year stage.
Mr Steinemann foresaw further headwinds ahead for the cocoa
division, saying that "we will keep on navigating carefully through the
challenging cocoa market".
However, for Barry Callebaut as a whole "we expect sales
volume to gain more momentum" in the June-to-August quarter.
"Overall, we continue to see ample opportunities for further
growth and all our growth drivers will support our sustained significant
outperformance of the global chocolate market."
The group stood by its long-term guidance of growth of 6-8%
in sales volumes per year, and operating profits of SFr256 per tonne by
2015-16, despite the below-target performance so far in 2014-15.
Barry Callebaut shares stood 1.1% lower at SFr1040 in morning
deals, earlier touching a three-month low of SFr1038.