Although a 4.5% growth in broad-based sales meant Barry Callebaut outpaced a sluggish and declining global confectionery market, the chocolate giant still saw net profits fall by 2.7% to 240m CHF (€222m).
This was due to high cocoa prices as well as higher average financing requirements, including a one-time exchange loss in Brazil and higher income tax and interest payments, it said.
It has lowered its mid-term outlook from 6-8% to 4-6% as a result.
'A robust performance'
But Antoine de Saint-Affrique, the company’s new CEO who took up the position last month, nonetheless praised a robust performance.
“As we have done consistently for the last ten years, we managed to outpace the market and delivered solid, profitable growth,” he said.
“However, we foresee a challenging fiscal year 2015/16 due to the current cocoa products market, which will temporarily affect our profitability.”
Nielsen data for the global market volume growth shows consistent falls from -1.8% in Q1 to -3.9% in Q4.
But Barry Callebaut has seen growth consistently rise for the same period from +0.2% in Q1, and accelerated in the last quarter to +10.7% (45,668 tonnes).
Sales volume grew by 3.9% for Europe, by 4.7% the Americas region and 7.2% for Asia Pacific.
Growth fuelled by three sectors
De Saint-Affrique put this performance down to strong sales in developed markets as well as key drivers in outsourcing, emerging markets and gourmet.
Volumes in emerging markets were up 5.1% on the previous year, representing one third (33%) of total sales volume, while long-term outsourcing and strategic partnerships - such as Morinaga, Arcor and World’s Finest Chocolate - saw a 6.6% increase on the previous year, accounting for 32% of total sales. Gourmet and specialities rose 6% to make up 10% of total sales volume.
The CEO said the company would continue to focus on achieving consistent, above-market growth from these three sectors, and would aim to strike a balance between volume growth, enhanced profitability and free cash flow generation – “in brief, smart growth”, he added.
A historic low for cocoa
As in the first quarter of 2015, however, full year profits were “heavily impacted” by an exceptionally low combined cocoa ratio - the price of cocoa butter and cocoa powder relative to the futures price for cocoa beans.
This has been on the decline for several years but grinding overcapacity in Asia, sluggish global demand and high cocoa bean prices saw it sink to a 20-year historic low over the past year.
But this is set to improve. A spokesperson for Barry Callebaut told FoodNavigator: “We expect another impact for the first 6 months of the current fiscal year [but] this will improve in the second half, as the market has strongly turned positive in the past couple of weeks.”