Barry Callebaut held a press call to update the market about their progress and strategy. New CEO Peter Boone explained that their business was more resilient than some others in the industry since they were able to pass on increases in raw material costs.
The market overall has been depressed during the Pandemic, but Boone believes it will come back strongly as we come out of it.
As we get out of the pandemic, we’ll see traditional distribution channels come back strongly, and that will further help us to grow and accelerate the performanceChief Executive Peter Boone
As of Aug. 31, the company’s net profit was 421.6 million Swiss francs,($453.5m) up 20.4% from the previous year. It’s a good performance, although we noted, once again, the company lost on currency exchange after translating money earned in foreign currency back to the Swiss Franc. It seems odd that the company, which is well-managed in so many respects, always seems to get the currency hedging wrong. It’s not an easy task for sure, but others I watch, such as Italian chocolate company Ferrero, often do a better job.
The currency ‘headwinds’ however didn’t stop Barry Callebaut from increasing its 2020/21 dividend by 27% to 28 Swiss francs per share.
The company also announced that the recently departed Chief Executive Antoine de Saint-Affrique, now CEO at Danone, would join its board of directors, presumably in a Non-Executive role.
I’m not certain I would completely agree with Mr Boone’s optimism, but possibly I’m looking at it in a different context. For Barry Callebaut, the future might be bright, but I’m not so sure about everyone else in the value chain underneath them. The ongoing weakness of the price of cocoa may not negatively impact Barry Callebaut, but it has an impact on farmers and producing countries.
Indeed, Cote d’Ivoire’s output is not slowing, and Ghana has just announced they want to increase production to 1.5 million tonnes, both of which, if achieved, will put downward pressure on prices.
Boone said he expects better demand to offset the fall in prices, in the current fiscal year, after a large cocoa bean surplus led to a drop in cocoa bean prices in 2020/21.