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Barry Callebaut’s stock tumbled almost 20 per cent to a 12-year low on Thursday after the Swiss chocolatier revised down its sales forecast for the year, citing “unprecedented volatility” in the cocoa market.
The world’s largest cocoa processor now expects a mid-single-digit percentage fall in its cocoa sales volumes for the financial year ending in August, compared with its earlier forecast of a low single-digit percentage decline.
The company, which supplies cocoa to global food companies including Nestlé, has been hit hard by what it described as “unprecedented volatility” in cocoa prices, which have fluctuated wildly in recent months.
Cocoa futures peaked this year at £9,290 a tonne, driven by factors including adverse weather conditions, crop diseases and under-investment in cocoa farming in the main growing region in West Africa. They have since fallen to about £6,099 on worries about consumer demand and the economic fallout from tariffs.
Andreas von Arx, an analyst from Baader Trading, said Barry Callebaut had “previously made the case that they could pass on the higher financial costs due to the [higher cocoa bean prices] immediately to customers. And that is now not the case.”
“The risk to the sector is that the consumer has now faced two years of sustained price increases,” he said. “So far, volumes are still relatively resilient, but at some point in time consumers may just say: ‘I could eat something else’.”
In first-half results on Thursday, Barry Callebaut reported a 4.7 per cent fall in sales volumes to 1.08mn tonnes, below analysts’ expectations. While it is still forecasting a double-digit increase in core earnings for the year, it acknowledged that volatile market conditions will delay planned cost-saving measures.
The company’s transformation plan, which aims to generate annual savings of SFr250mn ($296mn), will now take longer to implement, the company said.
One industry veteran said the company was having to simultaneously cope with volatile cocoa prices, higher costs and tariff threats from the US. He added: “Barry Callebaut has always been described as a growth company so negative growth . . . is a very bad situation.”
