Cost of cocoa hits Barry Callebaut's sales
On Wednesday, Barry Callebaut reported lower sales volumes than expected for its first quarter, claiming it was “in line with the market in a difficult environment triggered by high cocoa prices.”
The sky-high cocoa prices are forcing chocolate buyers to postpone orders and attempt to renegotiate pricing, affecting suppliers like Barry Callebaut.
In a release to accompany its 3-Month Key Sales Figures, Fiscal Year 2024-25, the Group said its sales volume fell 2.7% to 565,000 tonnes in the quarter that ended on 30 November, below analysts' forecast of 568,000 tonnes in a company-provided consensus.
Barry Callebaut also expects its annual sales volume to fall by a low single-digit percentage after previously forecasting flat cocoa sales volume for the year.
Still, it reaffirmed its target for double-digit growth in recurring operating profit on a constant currency basis.
It also confirmed that it sold less chocolate in the three months to 30 November but increased sales revenues, which market analysts attributed to the company passing on higher costs to customers.
Peter Feld, CEO of Barry Callebaut Group, said: “Our fiscal year started with cocoa bean prices reaching new highs, creating further market pressure. While we focus on short-term operational priorities in the current environment, the significant opportunity to unlock sustainable, profitable growth and value creation is evident. This underscores the rationale for our BC Next Level strategic investment program, which future-proofs Barry Callebaut. “
Price developments of key raw materials
Terminal market prices for cocoa beans increased significantly during the first three months of fiscal year 2024-25, driven largely by hedge fund activity.
In London, prices surged from a minimum of GBP 4,355 ($5,370) at the start of the period and accelerated to a closing price of GBP 7,708 per tonne on 30 November, 2024.
In its statement, Barry Callebaut said: “On average, cocoa bean prices increased by +72% versus the prior-year period. The first months of the 2024-25 harvest saw good arrivals of beans in West Africa and non-West Africa origins in line with expectations.
Global sugar prices averaged -22% lower than last year, driven by improving fundamentals in key producing regions. Dairy prices increased on average by +3% compared to the prior year, driven by a slower-than-expected recovery in global milk supply, while global demand for dairy products remained robust.
Redundancies
The Group also said it has advanced with its BC Next Level business strategy in the first three months of the year and that signing ‘social plans’ (redundancies) has now also been completed in Belgium, including a final agreement with the European Works Council. This follows the successful completion of social plans in Germany (Norderstedt, Hamburg, and Cologne), France, Poland, the Netherlands, Malaysia (Port Klang), and the UK.
Progress was also made in negotiating the closure of the intra-site in Italy, the launch of a new Compound R&D center in Singapore, and planning excellence.
“As part of BC Next Level, we completed all social plans in Belgium, the largest part of our restructuring. Over the past few months, we secured additional liquidity through the recent bond issuances. As the market leader, we are pursuing strategic actions to adapt to the higher industry capital base and play a crucial role in sourcing sustainable beans for our customers. We continue to see significant growth potential in the attractive chocolate category,” said Feld.
Fairtrade Foundation appoints new CEO
The Fairtrade Foundation in London has announced the appointment of Eleanor Harrison OBE as its new Chief Executive Officer.
Harrison, who will begin her new role in March, was previously CEO of Impetus, a venture philanthropy nonprofit that improves social outcomes and scales impact for young people facing disadvantage.
Described as 'a visionary changemaker and strategist with 20 years of experience leading purpose-driven organizations,' she said: “I’m thrilled to be joining The Fairtrade Foundation at such an exciting point in time. Fairtrade’s mission speaks to my values. To connect producers and consumers and promote fairer trading conditions so producers can earn a fair income has never been more vital. Trade can and must work better for people and planet at this critical time of heightened political, economic, and environmental volatility and fragility.
“I will lead the Fairtrade Foundation with empathy, ambition, and warmth and look forward to working with our team, partners, and network to take Fairtrade to the next level.”
‘Media personality’ to run Cocobod
Local reports suggest that Dr Randy Abbey, a well-known media personality and football administrator, is poised to take on the role of Chief Executive Officer of the Ghana Cocoa Board (COCOBOD) after Joseph Boahen Aidoo’s resignation of the role effective 7January, 2025.
Anthony Aidoo, cocoaradar.com’s Ghana contributor, said not everyone celebrates this appointment. “Many industry experts express concern, as the cocoa sector has faced significant challenges recently. They believe this crucial time calls for leadership from someone with a deep understanding of the industry’s complexities to steer Ghana Cocobod toward recovery and growth.”
cocoaradar.com is:
- Official Media Partner - World Cocoa Foundation Partnership Meeting in São Paulo, Brazil, 19-20 March 2025.
- Official Media Partner - Amsterdam Sustainable Cocoa Conference, Chocoa, 4-9 February 2025.
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