Barry Callebaut shares tank on profit warning

(Sharecast News) - Shares in Barry Callebaut slumped on Thursday after the Swiss chocolate maker warned on profits due to Iran-war related supply chain constraints and a volatile cocoa market.

While the company forecast a rebound in sales volumes in the second half of the financial year, earnings would remain under pressure for a longer period. Shares in the company tanked by 14% in morning trade.

Chief executive Hein Schumacher is implementing a turnaround plan to stabilise operations as the industry recovers from major swings in cocoa markets over the last year due to market shortages.

Chocolate product prices spiked, forcing to search for cocoa alternatives as customers reined in discretionary spending.

Barry Callebaut forecast its recurring operating profit for the year to August would fall by a figure in the mid-teens percentage range, compared with a prior forecast of an increase.

The company also said it expected a return to sales-volume growth in the second half, earlier than previously anticipated. It added that a significant and fast decline in cocoa prices supports a future chocolate-market recovery.

For the six months to February 28, the company reported a 4.2% fall in recurring operating profit to 310.9 million Swiss francs.

Revenue fell 3.7% excluding currency movements to SFR 6.75bn, with volumes down 6.9%.

"The unique speed of the market decrease combined with a competitive overcapacity market, volume declines and supply disruption impacted EBIT performance and adjusted our profitability outlook for the year," Schumacher said in a statement.

Reporting by Frank Prenesti for Sharecast.com