-- Barry Callebaut (BARN.SW) shares dwindled 9% in early Thursday trading as fading demand, supply disruptions in North America, and a competitive overcapacity market dragged down interim sales volume and operating profit, forcing the Swiss chocolatier to downgrade its fiscal 2026 earnings guidance.
Group volume in the six months ended Feb. 28 fell 6.9% year over year to 1,010,247 tonnes due to negative market dynamics, with global chocolate volumes dropping 5.1% and those for global cocoa declining 14.3%. Ultimately, the revenue of the chocolate and cocoa products company plunged to 6.75 billion francs from 7.29 billion francs a year ago.
Operating profit or EBIT slipped 2.2% to 289.4 million francs and recurring EBIT by 5.7% to 310.9 million francs. Still, net profit attributable to Barry's shareholders surged annually to 89.4 million francs from 32.1 million francs amid lower income tax expenses. Additionally, a "significant and fast" decrease in cocoa bean prices, coupled with operational actions to reduce working capital, allowed the company to reduce net debt to 3.60 billion francs from 6.11 billion francs, which led to lower finance costs.
As Barry intends to prioritize restoring volume and leading the market back to growth, it increased its fiscal 2026 volume outlook to expect a 1% to 3% volume decline, instead of the mid-single-digit decrease projected on Jan. 21. At the same time, Barry warned about a mid-teens contraction in recurring EBIT in local currencies during the 12-month term, with the profitability outlook subject to potential impacts from disruption in the Middle East.
Previously, Barry anticipated a low- to mid-single-digit growth in recurring EBIT and a double-digit increase in recurring pretax profit in local currencies. Against this backdrop, the company noted that action was required to drive sustained profitable growth. While details will be announced in June, Barry intends to focus on key markets and segments, reintroduce a clear gourmet brand, and transition to a "smaller, more commercially focused" leadership team.
"As I reflect on my first few months at Barry Callebaut, it is clear that we have an unparalleled market position, deep expertise and fundamental growth opportunities. At the same time, we have significant work to do to reinvigorate the company after a turbulent period of industry disruption and transformation. We need to restore fundamentals, step-up service levels and empower our regional businesses," Chief Executive Officer Hein Schumacher said.