By John Revill
ZURICH--Barry Callebaut AG (BARN.EB) the world's biggest
chocolate maker by volume, expects the global chocolate market to
remain subdued and grow below its long term average in the second
half of the year.
"We expect the global market to grow 1% to 2%, which is a bit
below the long term average," Chief Executive Officer Juergen
Steinemann told Dow Jones Newswires Monday.
The long term average growth rate for chocolate volumes is
around 2%-3%, but has slowed recently amid tougher economic
conditions in Europe.
"Europe is going to be a bit slower, especially southern is not
in a great state," Mr. Steinemann said.
Despite the tough market conditions, Zurich-based Barry
Callebaut expects to grow faster than the global market due its
outsourcing deals with companies such as Nestle SA (NESN.VX) and
Unilever NV (UN) and its push into emerging markets.
Chief Financial Officer Victor Balli said he expected cocoa
price to trade sideways or perhaps slightly lower after a good
mid-crop.
"The next big trigger is the main crop in the fall and it's too
early to say. But I expect cocoa could trade at around GBP1,300 to
GBP1,400 per tonne," he said.
The integration of the cocoa ingredients business of
Singapore-listed Petra foods, announced last December, was still on
track to be completed by the summer, the company said.
Mr. Balli confirmed that the $950 million acquisition, Barry's
largest ever, would add 30 million Swiss francs ($32.1 million) to
CHF35 million in extra earnings.
The deal is being partly funded through raising equity of $300
million and a $600 million bond.
Both are subject to shareholder approval, but Mr. Balli said he
expected both to take place between mid-May and June.
Majority shareholder Jacob Holding AG, which holds 50.5% of
Barry Callebaut, would participate fully in the fundraising, and
keep its share at 50.5%, said Mr. Steinemann.
He was speaking as Barry Callebaut fell slightly short of
expectations with its earnings for the six months to the end of
February, as the company increased its investments on its factories
by around CHF20 million.
Net profit for the six months to February 28 was CHF116.4
million, down from CHF125.7 million a year earlier, while revenue
declined to CHF2.39 billion down from CHF2.45 billion, partly on
lower cocoa prices.
Volumes increased 7.8% compared with a global chocolate market
which grew by 1.5%.
"I am extremely pleased our volumes have outperformed the market
by five times. The lower earnings doesn't make me nervous, we are
investing for the future," said Mr. Steinemann.
Write to john.revill@dowjones.com
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