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Barry Callebaut AG, the low-profile maker of a quarter of the world’s chocolate, reported first-half earnings that beat estimates as it weeds out less profitable cocoa contracts.
Earnings before interest and taxes dropped 8.4 percent to 201 million Swiss francs ($210 million) in the six months through February, weighed down by the currency’s strength, the Zurich-based company said in a statement Wednesday. Analysts expected 191 million francs. The stock rose 8.6 percent as of 10:50 a.m. in Zurich, on track for the biggest gain in more than seven years.
“The measures in order to restore profitability in cocoa are bearing fruit,” Jean-Philippe Bertschy, an analyst at Bank Vontobel, wrote in a note.
The beat cheered investors as Barry Callebaut, which produces chocolate for major brands such as Cadbury and Hershey, has predicted a tough year. After El Nino, the weather pattern that threatens crops from Ecuador to Indonesia, there is a 50 percent chance that counter-cycle La Nina will move in this year, according to Bloomberg Intelligence analyst Duncan Fox.
That pattern caused prices of agricultural products like sugar to rise the last time it occurred in mid-2010, increasing the cost to make chocolate.
By Corinne Gretler and Jan Schwalbe (Bloomberg)
Zurich-based, Barry Callebaut AG was formed in 1996 from the merger of the Belgian chocolate producer Callebaut and the French company Cacao Barry. It’s last annual report puts its output at 1.8 million tonnes. From this it generated CHF 6.2 billion of sales and CHF 0.4 billion of operating profit. It employs over 9,000 people and owns 53 factories.