The Barry Callebaut Group, the manufacturer of high-quality chocolate and cocoa products, reported strong sales volume growth of +8.7% to 1,164,749 tonnes in the first six months of fiscal year 2021/22 (ended on February 28, 2022). Although achieved on a low comparison base, the result is well ahead of the Group’s pre-COVID-19 volume in fiscal year 2018/194. Excluding the first-time consolidation of Europe Chocolate Company (ECC) as of September 2021, organic volume growth in the period under review was +7.9%. Chocolate volume grew by an outstanding +9.9%, clearly outpacing the underlying global chocolate confectionery market (+2.0%)5.
The strong growth was supported by all Regions and key growth drivers: Outsourcing (+7.3%), Emerging Markets (+8.7%) and Gourmet & Specialties (+29.5%). Sales volume in Global Cocoa grew by +4.0% to 227,951 tonnes.
Sales revenue amounted to CHF 4,030.3 million, up +16.5% in local currencies (+15.8% in CHF). The increase was impacted by the overall inflationary environment, which Barry Callebaut manages through its cost-plus pricing model for the majority of its business.
Gross profit amounted to CHF 606.4 million, up +7.2% in local currencies (+6.5% in CHF), growing overall in line with volume. The positive volume and mix effect was reduced through the negative impact of the cocoa business and the impairment of financial assets in Russia.
Operating profit (EBIT) recurring6 amounted to CHF 318.1 million, despite being affected by the aforementioned impairment of financial assets, leading to an increase of +8.0% in local currencies (+7.2% in CHF). The recurring EBIT per tonne was fairly stable at CHF 273, reflecting the strength of the cost-plus model. The recovery of indirect tax credits for prior fiscal periods related to a recent decision by the Brazilian Supreme Court applicable to all taxpayers had a positive impact of CHF +12.8 million. As a result, the reported EBIT amounted to CHF 330.9 million, up +12.3% in local currencies (+11.5% in CHF).
Net profit for the period recurring6 amounted to CHF 212.1 million, up +3.6% in local currencies (+3.1% in CHF) compared to prior-year Net profit. Net profit reported amounted to CHF 224.8 million, up by +9.7% in local currencies (+9.3% in CHF). The increase was supported by higher Operating profit (EBIT), which was partially offset by higher Net financing cost due to higher benchmark interest rates and impairments on cash in emerging markets, in particular in Russia. Income tax expenses amounted to CHF –47.1 million, which corresponds to an effective tax rate of 17.3% (17.4% in prior year).
Net working capital slightly increased to CHF 1,598.8 million from CHF 1,579.1 million in the prior-year period. The increase was well below the Group’s volume growth, thanks to overall good working capital management. Receivables increased on the back of strong business momentum. Inventories were higher to ensure product availability amidst the global supply chain constraints. Both increases were largely offset by higher payables.
Free cash flow continued to strengthen in the six months under review and amounted to CHF –132.6 million compared to CHF –183.4 million in the prior-year period. Adjusted for the effect of cocoa beans considered as readily marketable inventories (RMI), the adjusted Free cash flow amounted to a strong CHF 167.0 million (February 28, 2021: CHF 162.9 million).
Net debt further decreased to CHF 1,594.3 million from CHF 1,752.9 million in the prior-year period, driven by the Group’s strong Free cash flow generation. Taking into consideration the cocoa bean inventories as readily marketable inventories (RMI), the adjusted Net debt decreased to CHF 561.1 million compared to CHF 661.6 million in the prior-year period.
CEO Peter Boone said:
I am profoundly heartened by the way our colleagues across the globe have come together to support those in need. Our strong team, our global footprint and our cost-plus model make us confident that we can deliver on our mid-term guidance in a continued volatile market environment.
Read more of this article in our latest edition here: March 2022 Single Issue form – International Confectionery Magazine (in-confectionery.com)