Profit at Barry Callebaut nearly flat in first half

by Staff
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ZURICH, SWITZERLAND — Net profit at Swiss cocoa and chocolate manufacturer Barry Callebaut AG was down slightly in the first six months of the year while sales revenue improved 21%.

Net profit for the period ended Feb. 29 was 124.4 million Swiss francs ($123.2 million), which compared with 124.7 million Swiss Francs during the same period a year ago. Sales revenue for the six months was 2,585 million Swiss francs ($2,559 million) which compared with 2,134 million Swiss francs during the same period of the previous year.

"During the first six months of the current fiscal year we have made significant investments in our future," said Patrick De Maeseneire, chief executive officer "We have opened two new factories in emerging markets, integrated four new production sites in North American and Europe and phased in three large outsourcing contracts. We are now optimally positioned to accelerate our profitable growth going forward, and we will be able to fully benefit from scale effects."

Sales volumes increased 10.3% to 612,436 tonnes, which compared with 555,183 tonnes during the same period of the previous year.

Overall, the company said profitability was impacted by three factors. First, sales prices for branded consumer goods could not be increased until Jan. 1, 2008, resulting in a delay in price adjustments. Also, the start-up of new factories in Russia and China resulted in additional costs, and large outsourcing contracts are initially associated with high fixed costs and low capacity utilization.

In Region Americas, sales revenue during the period increased 19.2% to 455.9 million Swiss francs ($451.4 million), which compared with 382.5 million Swiss francs during the same period of the previous year.

"Despite the economic and exchange rate uncertainties and the much lower volume growth expected in the third quarter due to the very early Easter, we are confident that we will reach our mid-term financial targets. . . . This, of course, barring any major unforeseen events," said Mr. De Maeseneire.

The company also announced that it has entered an agreement with Kuala Lumpur Kepong Berhad through which the Malaysian company will sell 60% of its subsidiary to Barry Callebaut.

"The new presence in Malaysia will serve as a strong basis to us to further expand our footprint in Asia and to facilitate cocoa bean sourcing from neighboring country Indonesia, which is the world's third largest producer of cocoa with a share of 15%," said Mr. De Maeseneire. "This partnership will offer us access to an established business with a strong customer base led by an experienced management team."

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