Barry Callebaut AG, the world's largest chocolate maker, has issued a profit warning, significantly downgrading its operating profit forecast for the 2025-2026 fiscal year. The primary reasons cited for the reduction are the sharp decline in global cocoa prices, industry overcapacity, and potential supply disruptions linked to geopolitical tensions. Consequently, the company's shares fell by as much as 17% on Thursday. The warning came amid a broader market context where cocoa prices have slumped significantly, falling 41.6% since the start of the year and 57.6% over the last 12 months. Callebaut stated that while falling prices were initially positive, the combination of market pressures necessitated the profitability adjustment.
Ad slot
Barry Callebaut AG, the world's largest chocolate manufacturer, has issued a profit warning, citing sharp declines in cocoa prices and industry overcapacity. The announcement caused the company's shares to plummet by 17% on Thursday.
Profit Forecast Downgrade
The Swiss chocolate maker slashed its operating profit forecast for the 2025-2026 fiscal year. The company now expects its earnings before interest and tax (EBIT) to decrease by a 'mid-teens' percentage.
This outlook represents a significant downgrade from just three months prior, when the Zurich-headquartered firm had indicated preparations for a return to growth.
Ad slot
Key Factors Impacting Profitability
Hein Schumacher, the CEO, acknowledged that while the first half of the fiscal year saw encouraging free cash flow generation due to falling cocoa bean prices, several factors negatively impacted the EBIT performance. These factors include:
Market Overcapacity: The industry is facing competitive overcapacity.
Volume Declines: Reduced sales volume contributed to the pressure.
Supply Disruptions: Potential supply chain issues, linked to geopolitical factors such as the Iran conflict, were cited.
Schumacher stated that the company is prioritizing restoring volume and leading the market back to growth.
