Barry Callebaut AG’s Ruby Natural Chocolate Discs are on display at the Sweets & Snacks Expo in Chicago, Illinois, USA, on Tuesday, May 21, 2019.
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Swiss chocolate maker Barry Callebaut on Thursday cut its operating profit forecast, citing lower cocoa prices, industry overcapacity and possible supply disruptions related to the Iran war.
The world’s largest chocolate maker said it now expects earnings before interest and tax (EBIT) to fall by “mid-teens” in the 2025-2026 financial year.
The outlook reflects a significant downward revision from just three months ago, when the Zurich-based company said it was preparing for a return to growth.
Hein Schumacher, who was appointed CEO of Barry Callebaut in late January, said Thursday that the company has an “unparalleled market position” and fundamental growth opportunities, while warning of a “tumultuous period” of industry disruption.
“The decline in cocoa bean prices in the first half of the financial year strengthened the future chocolate market momentum and supported strong free cash flow generation,” Schumacher said in a statement.
“However, the unique speed of market decline, volume declines and supply disruptions combined with a competitive overcapacity market impacted our EBIT performance, and we have adjusted our earnings outlook for this year as we prioritize recovering volumes and returning the market to growth,” he added.
Barry Callebaut’s stock price fell as much as 17% on Thursday. The stock last traded just after 2:30 p.m. London time (9:30 a.m. ET), down about 15.8%.
Cocoa prices on Wednesday fell by 0.72% to $3,537.28 per tonne. Despite rising over the past week, cocoa prices have fallen 41.6% since the beginning of the year and 57.6% over the past 12 months, according to Trading Economics data.
As with most commodities, the closure of the Strait of Hormuz has affected cocoa prices by limiting supply and increasing costs. But cocoa prices have been kept down by a much better harvest than in recent years, when prices have skyrocketed.
