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Barry Callebaut, the world's largest chocolate maker, announced a slight increase in sales volumes for the three months ending in November. This growth occurred despite the challenging market environment characterized by record-high cocoa prices.
According to Reuters, the company reported that sales volumes rose by 0.4%, reaching 580,876 tonnes. This figure exceeded the estimated median consensus of 578,300 tonnes, as per Yahoo.
Impact of Record-High Cocoa Prices
The surge in cocoa prices has affected chocolate makers worldwide as consumers are hesitant to pay more for their beloved sweet treats. In November, cocoa bean prices on the New York Exchange (ICE) reached their highest point in 46 years, primarily due to a supply deficit caused by adverse weather, tree illnesses, and capacity shortages.
Barry Callebaut anticipates continued uncertainty in the cocoa price development, particularly considering the recent weaker-than-expected cocoa bean harvest data from West Africa. As a result, the company expects an industry-wide impact on working capital requirements.
Barry Callebaut issued a 600 million Swiss franc ($690.37 million) bond to address the cocoa price situation. The funds raised will refinance the company's 450 million euro ($488.84 million) debt due in mid-May.
Supplying Prominent Brands
Barry Callebaut plays a crucial role in the production of chocolate for several renowned brands. They supply chocolate for Unilever's Magnum ice creams and Nestle's KitKat bars. Despite the record-high cocoa prices, the company continues to meet the demand and maintain its sales volumes.
The chocolate maker's outlook for the 2023/2024 period remains unchanged despite the challenges posed by higher cocoa prices. Barry Callebaut aims to achieve flat volumes and EBIT (earnings before interest and taxes) during this time frame.
Recognizing the need to adapt to the changing market dynamics, Barry Callebaut took proactive measures to address the impact of rising cocoa prices. By issuing a bond, the company secures funds to refinance its debt and ensure its financial stability.
Photo: Barry Callebaut Newsroom
