Barry Callebaut (BARN) Trading Update summary

Market environment and sales performance

• Sales volume declined 2.7% in Q1, closely tracking the market's -2.6% drop, due to delayed orders, retail price negotiations, and SKU rationalization.

• Sales revenue surged 63.1% in constant currency, driven by a >70% rise in cocoa bean prices, with cost-plus pricing passing costs to customers.

• Premium brands gained share while mainstream players faced the most volume pressure.

• Latin America (+13.2%) and AMEA (+6.4%) showed strong volume growth, while Western and Central/Eastern Europe saw declines.

• Global Cocoa segment grew 0.3% in Q1, with cocoa powder demand robust but cocoa liquor supply constrained.

Market and commodity trends

• Cocoa bean prices increased over 70% year-on-year, peaking at GBP 9,926 in December 2024, mainly due to hedge fund activity and speculation.

• Cocoa bean prices rose 388% from January 2023 to November 2024.

• Milk powder and world sugar prices rose 92% and 102% respectively; EU sugar up 51%, but global sugar prices dropped 22% and European sugar prices fell 44% year-on-year.

• Dairy prices increased 3% year-on-year, driven by slow milk supply recovery and robust demand.

• Short-term demand softness is expected due to higher prices, but a slight surplus in the bean market is anticipated for 2024-2025.

Financial guidance and liquidity

• Double-digit EBIT growth guidance for 2024-2025 is reiterated, but volume guidance is lowered to a low single-digit decrease.

• Additional liquidity secured through a CHF 300 million Swiss bond, €1 billion bridge loan, and €620 million revolving credit facility.

• Higher working capital needs are being addressed with proactive financial policies and ongoing monitoring of bean prices.

• Free cash flow outlook is more negative due to inventory value increases from bean price spikes, with further updates expected at H1 reporting.

• Net interest costs are expected to exceed the previously communicated CHF 50 million increase, depending on bean price evolution.