By Paolo Laudani and Maria Rugamer
(Reuters) -Barry Callebaut cut its volume guidance for the third time this year on Thursday as high cocoa prices and uncertainty related to U.S. tariffs prompted customers to buy less of its product.
The world’s top chocolatier, which supplies chocolate for Unilever’s soon-to-be-spun-off Magnum ice creams and Nestle’s KitKat bars, expects its sales volume to fall by 7% in the year ending on August 31.
It had previously said it expected the volume to fall by a mid-single-digit percentage due to volatile cocoa bean prices.
Its shares were down 15% as of 0929 GMT, at the bottom of Europe’s benchmark STOXX 600 index, with analysts flagging concerns that the trading update could hurt the investment case.
Barry Callebaut’s BC Next Level investment programme and cost-savings strategy launched in 2023 are also slow to show results. It said the deleveraging actions would take around 12 to 18 months to have a full impact.
“Today’s result is unlikely to reassure investors on both the current environment and Barry’s ability to complete BC Next Level successfully,” Vontobel analyst Matteo Lindauer said.
London cocoa futures fell to an eight-month low on Monday on expectations of a rise in production in South America, but industry sources told Reuters that production in the key West African cocoa producing region could see another 10% drop.
Barry Callebaut also lowered its operating earnings target, saying they would rise by a mid to high single-digit percentage in constant currency this year. In April, it had guided for a double-digit rise.
CUSTOMERS NAVIGATE TARIFF STORM
Although the company’s presence in the U.S. allows it to weather most tariff uncertainties, it felt a significant impact from growing customer concerns in the quarter, CEO Peter Feld said in a call with analysts.
“When you think about our customer base, we’re not just having the big fast-moving consumer goods companies, but we have more than 1,200 mid-sized family-owned businesses that obviously are vastly worried about the announcements,” Feld said.
One in four chocolate and cocoa products consumed worldwide is made with Barry Callebaut ingredients.
Sales volume fell 9.5% year-on-year in the third quarter, even as revenue continued to rise as it passed on raw material costs to customers.
(Reporting by Paolo Laudani and Maria Rugamer in Gdansk, editing by Milla Nissi-Prussak)
