Morningstar | BARN Reports Strong 3Q Sales With Asia-Pacific Continuing to Surprise on the Upside
No-moat Barry Callebaut reported nine-month results, with sales volume growth at 5.0%,versus 3.8% in our model, and revenue up 5.7% in CHF (8.2% in local currencies) versus 2.2% in our model. Management confirmed midterm guidance of 4%-6% volume growth and EBIT above volume growth in local currencies. We increase our fair value estimate for Barry Callebaut to CHF 1,590 from CHF 1,500 after updating our model to account for better-than-expected third-quarter results. Shares are trading in the two-star territory.Sales volume growth in Europe was up 5.3% versus 2.6% in our model, outperforming the regional chocolate confectionery market (which was up 0.2% according to the company). This was partially the result of Inforum contributing to volume for the first time and strong growth for food manufacturers in Western Europe (including the ramp-up for Burton's Biscuit).
In the Americas, volume growth was up 6.0% (versus up 5.5% in our model and 0.2% for the market) driven by both food manufacturers, and gourmet and specialties (double-digit growth in South America).
In Asia, Barry Callebaut continues to outperform an already dynamic market (up 8% market growth) with volumes up 10.1% versus up 6% in our model and revenues up 9.3% in local currencies (up 10% in CHF). In Global Cocoa, the sales volume increased by 2.2% versus negative 0.5% in our model.
Barry Callebaut said cocoa bean prices have increased by 4% on average during the first 9 months of fiscal 2019, with expectations for "balanced" global cocoa supply and demand.
Barry Callebaut is a cocoa and chocolate company, engaged in serving the food industry, from food manufacturers to professional users of chocolate such as chocolatiers, pastry chefs or bakers and products for vending machines. Co. offers a range of chocolate and other cocoabased products with numerous recipes. Co. also provides a comprehensive range of services in the fields of product development, processing, training and marketing. Co. is fully vertically integrated along the entire value chain: from sourcing of raw materials to finished products on the shelf. Co.'s operations are organized in three business units: Cocoa, Food Manufacturers, Gourmet & Specialties Products.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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