Switzerland-based Barry Callebaut, the world’s leading manufacturer of high-quality cocoa and chocolate products, reported strong results for its 2009/10 financial year, ended August 31st last. With a sales volume growth of 7.6%, Barry Callebaut significantly outperformed the global chocolate confectionery market which was basically flat at a growth rate of 0.3%.

All regions contributed to this growth. It was particularly strong in those regions where Barry Callebaut had made major investments in the past years – Americas (+15.6%), Asia-Pacific (+15.5%) and Eastern Europe (+11.1%). In terms of product groups, the group’s gourmet & specialties products business managed to accelerate its already fast growth pace, recording a sales volume increase of 17.3%.

However, the strong Swiss franc had an unfavorable impact on sales revenue, operational profit (EBIT) and net profit. In local currencies, sales revenue grew strongly by 11.3% (+6.8% in SFr) and reached SFr5.21b (Eur3.86b), driven by a higher sales volume and higher average raw material prices.

Juergen Steinemann, chief executive of Barry Callebaut.

Further operational efficiency gains, an improved capacity utilisation as well as tight cost management programmes could more than compensate for the anticipated unfavourable combined cocoa ratio, the adverse currency translation effect and fewer one-off gains than in the prior-year period. Operating profit (EBIT) growth in local currencies was 7.9%; in SFr, the increase was 5.6%, up to SFr370.4m. As a result of lower financing costs, net profit grew even faster than EBIT; rising to SFr251.7m – an increase of 13.5% in local currencies and 10% in SFr.

“We have managed to deliver top results. Market conditions were challenging with a still rather fragile world economy, a flat global chocolate market, high raw material prices and important currency fluctuations. Our growth strategy based on the three pillars of expansion, innovation and cost leadership, together with our robust business model, have allowed us to cope well with all these market challenges,” says Juergen Steinemann, chief executive of Barry Callebaut. “The main highlights of the past fiscal year were the successful negotiations of a major long-term global supply agreement with Kraft Foods signed in early September 2010, confirming the trend towards outsourcing and strategic partnerships; the opening of our chocolate factory in Brazil, the first one we have in South America; and the gratifying results of our increased focus on our gourmet & specialties business”

Barry Callebaut, the world’s largest manufacturer of cocoa and chocolate products, and Kraft Foods, the world’s second largest food company and a global leader in confectionery, have signed a long-term global product agreement. Under the terms of the agreement, Barry Callebaut will deliver the majority of Kraft Foods cocoa products and industrial chocolate requirements around the world. The agreement, which also includes some of the Cadbury liquid chocolate deliveries under the current outsourcing agreement, is expected to more than double Barry Callebaut’s existing business with Kraft Foods.

Juergen Steinemann, chief executive of Barry Callebaut.

As a result of this agreement, Barry Callebaut will increase its production capacities primarily in the US, Canada, Cote d’Ivoire, Malaysia as well as in Europe and invest approximately $65m (SFr66m, Eur51m) over the next two years. The additional volumes will be built up gradually over a period of three years, starting immediately.

“This long-term global supply agreement with Kraft Foods ranks amongst the largest strategic deals our company has ever signed. It means that we have succeeded in firmly establishing ourselves as a leading supplier for cocoa and chocolate products to the international food industry,” says Juergen Steinemann, chief executive of Barry Callebaut. “We are excited about this partnership between two leading companies in their field which is evidence of the ongoing outsourcing and partnership trend in the chocolate industry.”

With annual sales of about SFr4.9b (Eur3.2b) last year, Zurich-based Barry Callebaut is present in 26 countries, operates more than 40 production facilities and employs about 7,500 people.