Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Barry Callebaut has lowered its outlook for the third time this year due to “unprecedented” disruption caused by wild swings in cocoa prices, sending shares in the Swiss chocolatier down 13.4 per cent on Thursday.
The world’s largest cocoa processor, which supplies confectioners including Nestlé, is now expecting its sales volumes to fall 7 per cent in the year to the end of August, having previously forecast a more modest mid-single-digit percentage decline.
Barry Callebaut has been grappling with what it called an “unprecedented market environment” triggered by volatile cocoa prices, which have fluctuated wildly in recent months, and sinking global demand.
The company said cocoa prices had soared during the nine months to the end of May, rising 43 per cent year on year, adding that the global chocolate market had experienced its worst decline in a decade in the third quarter, according to Nielsen data.
Cocoa futures in London peaked in April last year at about £10,000 per metric tonne, due to factors including adverse weather conditions and crop disease. They have since fallen back to an eight-month low of roughly £5,455 per tonne, but manufacturers are still contending with costly inventories built up during the price surge.
“In the short term, you’re in the middle of the black tunnel, the volumes look very bleak, and this is probably not going to stop in the next two, three quarters,” said Andreas von Arx, an analyst at Baader Bank’s trading division.
Barry Callebaut reported a 9.5 per cent fall in sales volume in the third quarter, with a particularly sharp drop in North America, bringing total volumes for the nine months to May to 1.6mn tonnes, down 6.3 per cent year on year.
The group said that, in addition to higher prices, tariff-related uncertainty in the US had disrupted customer ordering patterns and weighed on demand.
Despite the drop in volume, group revenue rose nearly 50 per cent, as the company managed to pass on higher prices to customers. Chief executive Peter Feld said the group was working with customers to develop more “cost-effective solutions”.
