Morningstar | Barry Callebaut Serves Bitter 1Q Volume but Higher Sales; Guidance Extended for Three More Years
Barry Callebaut reported first-quarter sales with sales volume growth at 1.7% (versus 4.5% assumed in our model) and revenue up 3.7% in local currencies (versus 2.5% in our model). Management reaffirmed 2018-19 guidance and extended midterm guidance of 4%-6% average volume growth and EBIT growth on average above volume growth for three more years. We do not anticipate changing our CHF 1,500 fair value estimate after incorporating the first-quarter sales update into our model. We maintain our no-moat rating.Regionwise, disappointing volume growth in Europe, the Middle East, and Africa (down 0.1% versus up 5.5% in our model) and Asia-Pacific (3.5% versus 7% in our model) was partially offset by better-than-expected growth in the Americas (8% versus 4.5% in our model). The company maintained that it expects stronger growth in EMEA and Asia-Pacific going forward.
Barry Callebaut said it is confident that sales will accelerate in the second half of the year as additional volume kicks in from new outsourcing contracts across all regions (supply of over 12,000 tons of chocolate from the Burton's Biscuit agreement and 7,000 of compound chocolate in the second half of the year from the GarudaFood agreement).
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.
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