Barry Callebaut (BARN) H1 24/25 earnings summary

Executive summary

• Navigated unprecedented cocoa bean price volatility, with prices nearly doubling year-over-year, significantly impacting short-term financial performance, demand, and customer behavior, resulting in a -4.7% sales volume decline.

• Protected EBIT through cost pass-through and operational initiatives, with recurring EBIT up 1.5% in local currencies, despite a sharp net profit drop due to delayed pricing and higher financing costs.

• Advanced Next Level transformation, targeting CHF 250 million in synergies, with ~40% cost savings achieved and significant SKU reduction.

• Secured additional liquidity via oversubscribed EUR 1,750 million and CHF 300 million bond issuances, maintaining a strong balance sheet and untapped revolving credit facility.

• Adjusted 2024-2025 outlook to reflect a mid-single-digit decrease in sales volume due to ongoing market volatility, while confirming long-term strategy.

Financial highlights

• Recurring EBIT increased by 1.5% in local currencies, with EBIT per ton up 6.5% year-over-year, and sales revenue up 63.1% to CHF 7,287.1 million.

• Net profit recurring fell 69.4% to CHF 63.5 million due to delayed cost pass-through and higher financing costs.

• Free cash flow declined by CHF 2,114 million, mainly due to a CHF 2 billion increase in inventory value from higher bean prices.

• Net debt increased to CHF 6,111.6 million, mainly from higher inventory values; reported Net Debt/EBITDA at 6.5x.

• Gross profit rose 1.7% in local currencies to CHF 653.8 million; recurring EBITDA was CHF 451.6 million.

Outlook and guidance

• Expects a mid-single-digit decrease in sales volume for FY 2024/25 amid market volatility.

• Guides for double-digit recurring EBIT growth in local currencies.

• Full Next Level cost savings impact delayed by 12 months due to market disruption.

• Dividend per share to be maintained at least at FY 2023/24 level during transition.