Barry Callebaut Shares Plunge as It Cuts Guidance Again

(Bloomberg) — Swiss cocoa grinder Barry Callebaut AG’s shares plunged, as it cut its sales volume guidance for a second time in three months due to persistent cocoa price volatility.

As inflationary pressures squeeze consumer budgets and demand, the company has seen sales to chocolate-manufacturing clients decline. Unlike consumer brands like Lindt & Spruengli AG, the firm has had difficulties passing on higher cocoa prices to customers, due to its lack of premium brand pricing power.

Barry Callebaut on Thursday said it now sees a 7% decline in full-year sales volume, compared with a mid single-digit decrease forecast in April. It reported revenue of CHF10.95 billion ($13.7 billion), and a 6.3% decrease in sales volume for the first nine months of its fiscal year, saying the global chocolate market “saw its largest decline in a decade in the third quarter.”

It’s yet another sign of how processors and consumers are still feeling the impact of cocoa’s rally in the previous two years to a record high. The stock dropped as much as 18% in Zurich on Thursday, the most in three months, before closing down 13%.

The company also expects a mid to high single-digit increase in recurring earnings before interest and taxes in local currencies for the 2024-25 year, compared with a double-digit increase previously forecast.

While cocoa futures are down about 30% this year with higher production expected in the season that starts in October, chocolate makers are still clearing expensive inventories. Uncertainty around potential US tariffs is also pressuring demand, and Barry Callebaut’s global chocolate business saw a 12% decline in third-quarter sales volume in North America.

“Overall, the weak volumes in Q3 lowers the visibility on when a return to volumes growth is likely,” JPMorgan Chase & Co. analyst Edward Hockin wrote in a note, adding that he sees “risks to next year consensus volumes expectations.”

Despite Barry Callebaut announcing initiatives to lower its debt-to-income ratio, high leverage is another major concern for investors, Vontobel analysts said in a note. The cocoa processor saw a significant increase in inventory value due to high cocoa prices.

Barry Callebaut’s shares have slid about 31% this year, with cocoa prices remaining historically high in the wake of poor harvests in West Africa. The firm is undergoing restructuring under Chief Executive Officer Peter Feld, who’s trying to edge the company closer to its business-to-business clients. 

–With assistance from Allegra Catelli.

(Updates with share price decline and analyst comment)

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