Barry Callebaut lines up for growth in Asia

by Jeff Gelski
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ZURICH, SWITZERLAND – Barry Callebaut has positioned itself to boost sales and profits in Asia through a recent acquisition, an incoming board member and an increase in workers in that continent.

“It’s obvious that Asia is the key market for the future if you want to grow, I mean whether you sell ash trays, cars or chocolates,” said Juergen Steinemann, chief executive officer of the Zurich-based cocoa and chocolate company, in a Nov. 6 earnings call.

Last year Barry Callebaut acquired the cocoa ingredients division of Singapore-based Petra Foods Ltd. The acquired business, after suffering a loss in the previous year, recorded operating profit of 28 million Swiss francs ($29 million) for the fiscal year ended Aug. 31, 2014.

“I’m very pleased with the successful integration of the acquired cocoa business,” Mr. Steinemann said. “Despite a challenging cocoa market environment, we managed to turn the operation from a loss of last year into a profit.”

While Barry Callebaut was the leader in sourcing cocoa from west Africa, Petra was the leader in Asia, he said.

“We were both in Brazil,” he said. “By that, we are now also the leader in sourcing in Brazil.”

In a personnel move announced Nov. 6, Barry Callebaut’s board proposed to elect Wai Ling “Winnie” Liu to the board. Ms. Liu serves as c.e.o. of Enzo Jewelry, a jewelry retail brand founded in Hong Kong that now has 230 retail outlets in China. Ms. Liu would succeed Ajai Puri, who has decided to step down from the board.

Ms. Liu’s experience in the Asian market and consumer products interested Barry Callebaut, Mr. Steinemann said.

“I think to have somebody in the board who understands the consumers, who are the indirect users or the end user of what we do, is very important,” he said.

Six years ago Barry Callebaut had one factory in Asia, Mr. Steinemann said. Now the company has nine factories in Asia. Today, one-tenth of Barry Callebaut’s work force is in Malaysia, one-tenth is in Indonesia and 500 workers are in China, he said.

Barry Callebaut’s Asia-Pacific region saw sales volume rise 9.3% to 64,322 tonnes in the fiscal year ended Aug. 31. Sales revenue increased by 12.2% to 249.1 million Swiss francs. Operating profit increased by 0.4% to 27 million Swiss francs. Weaker currencies, a slowdown in the gourmet business, and further investments in structures and manufacturing footprint had an adverse impact on operating profit in Asia-Pacific.

Barry Callebaut companywide in the fiscal year ended Aug. 31 had sales volume of 1,716,766 tonnes, which was up 12% from 1,535,662 tonnes in the previous fiscal year; sales revenue of 5,865.9 million Swiss francs ($6,054.1 million), which was up 20% from 4,884.1 million Swiss francs; and net profit of 255 million Swiss francs ($263.2 million), which was up from 222.8 million Swiss francs.

 In the Americas region that covers North America and South America, sales volume rose 5.4% to 445,150 tonnes, sales revenue increased by 8.8% to 1,287.3 million Swiss francs ($1,333.3 million), and operating profit rose 18% to 126.5 million Swiss francs ($131 million).

Mr. Steinemann addressed the Ebola virus during the Nov. 6 call. He said no confirmed cases of Ebola have been reported in the cocoa growing countries of Cote d’Iviore and Ghana.

“Our operations and sourcing activities in these two countries are ongoing as usual, and cocoa is arriving at the ports in good quality and quantity,” Mr. Steinemann said. “The safety of our employees is our first priority. We have established therefore additional hygiene policies at our sites. Also we trained all of our employees and their families on the effect of Ebola and how to prevent it.

“We are monitoring the situation very closely and are ready to adapt our contingency plans to any possible changes. In the worst case, we are in a position to leverage our global sourcing footprint and to use reserve stock we have built to show continuancy for our customers.”
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