📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Barry Callebaut slides as high cocoa prices trigger more debt

Published 07/11/2024, 01:15 AM
Updated 07/11/2024, 07:56 AM
© Reuters. FILE PHOTO: Empoyees of chocolate and cocoa product maker Barry Callebaut prepare chocolates after the company's annual news conference in Zurich, Switzerland November 7, 2018. REUTERS/Arnd Wiegmann/File Photo

By Andrey Sychev and Mateusz Dobrzyniewski

(Reuters) -Barry Callebaut shares fell on Thursday after the Swiss chocolate maker said quarterly sales volumes declined and cocoa prices had boosted its costs, raising investor concerns.

The stock was down 10% in afternoon trading and on track for its worst day since 2015, and was the worst performer on the Europe-wide STOXX 600 index.

"The market realizes that the high cocoa bean price is having a significant impact on the free cash flow and the financing costs," Vontobel analyst Jean-Philippe Bertschy said.

Barry Callebaut is borrowing heavily to fund the inflated value of its raw material inventories, issuing six bonds worth 2 billion Swiss francs ($2.23 billion) over the last six months, he added.

In the third quarter alone, the firm issued 730 million and 700 million Swiss francs in bonds.

The company, in an earnings presentation, flagged a negative impact of 1.1 billion Swiss francs from higher bean prices on its free cash flow in the first half of its fiscal year which ends in August, and hinted at further burdens in the second half.

Barry's chocolate sales volumes fell 0.3% in its third quarter ending in May, while in Eastern Europe they dropped by 7%.

The bigger slowdown in the region might be an early indication of risks stemming from further price increases globally, as they look higher than the average levels of the past, said Baader Helvea analyst Andreas von Arx.

Cocoa bean prices were 131% higher in the nine months to May 2024 than in the previous comparable period, according to London terminal market prices.

© Reuters. FILE PHOTO: Empoyees of chocolate and cocoa product maker Barry Callebaut prepare chocolates after the company's annual news conference in Zurich, Switzerland November 7, 2018. REUTERS/Arnd Wiegmann/File Photo

The impact of Barry Callebaut's stock performance also weighed on peer, Swiss chocolate maker Lindt & Spruengli, whose shares fell 2%.

($1 = 0.8991 Swiss francs)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.