At today's Capital Markets Day in London, Barry Callebaut Group revealed a strategy update and long-term growth plan, with further details on its BC Next Level strategic investment program. In addition, the company presented its full year results for the fiscal year 2022–23.
Highlights include:
- Updated strategy together with previously announced investment program BC Next Level will unlock Barry Callebaut's full growth potential and lead to step-change in profitability, drive cash generation, and deliver long-term value for all stakeholders
- Four strategic long-term growth priorities: deeper outsourcing partnerships, launch of Gourmet 2.0, scale up Specialties, move to "fair" market share in APAC, powered by a streamlined, digitally enabled organization and best-in-class sustainability
- After a transition period for the BC Next Level program, Barry Callebaut expects to be on a long term growth objective of Low Single-digit Plus to Mid Single-digit volume growth and Mid Single-digit Plus to High Single-digit EBIT growth starting from fiscal year 2025/26
- Initial benefits expected already in fiscal year 2023–24, with flat volume and flat EBIT in constant currency; modest underlying volume and stronger EBIT growth expected in 2024–25 (without BC Next Level one-time costs)
- Balancing reinvestment in growth, 75% of BC Next Level cost savings of CHF 250 million expected to flow-through to bottom line and will deliver a one-time step-function improvement in profit margin, building towards a 10% EBIT margin ambition
Barry Callebaut Full-Year results for the fiscal year 2022–23 include:
- Growth in Q4 of +3.9%, bringing full year sales volume to 2.3 million tonnes (-1.1%)
- Sales revenue of CHF 8.5 billion, up +9.7% in local currencies (+4.7% in CHF)
- Operating profit (EBIT) of CHF 659.4 million, up +12.2%1 in local currencies (+5.6%1 in CHF)
- Net profit of CHF 443.1 million, up +9.6%1 in local currencies (+3.4%1 in CHF)
- Adjusted free cash flow2 of CHF 251.8 million impacted by raw material prices
- Proposed dividend of CHF 29.00 per share, a payout ratio of 36%
"Our purpose is to create the world's best chocolate solutions for our customers - now and in the future. As the leader in the attractive, growing chocolate ingredients market and given our strength in sustainability and innovation, we are ideally positioned to outgrow the market. Our strategic growth priorities in combination with our BC Next Level investment program set the course for sustainable profitable growth and higher cash generation. We will deliver to our customers better value, service, quality and sustainability and make Barry Callebaut a much more resilient and profitable business, creating long-term value for all our stakeholders," says Peter Feld, CEO of Barry Callebaut Group.
Four strategic growth priorities to drive Barry Callebaut's ambitions
BC Next Level will fully unlock the Group's leading position in the chocolate ingredients market in pursuit of four strategic long-term growth priorities:
- Deepen outsourcing partnerships: Barry Callebaut is uniquely positioned as the global partner of choice to the most important customers in the Fast Moving Consumer Goods (FMCG) sector who want more sustainable and innovative chocolate solutions. Barry Callebaut will deepen these partnerships, leveraging its innovation capabilities to create better chocolate solutions for customers. In the coming years, Barry Callebaut aims to win two thirds of outsourcing partnership volumes expected to come to the market.
- Launch Gourmet 2.0: Barry Callebaut will move closer to markets and customers to better serve foodservice and artisanal customers and chains by broadening the focus across premium and mainstream market segments, simplifying its brand portfolio and modernizing its routes to market. Barry Callebaut’s ambition is to increase its value market share in the Gourmet market globally and deliver growth at double the underlying market growth rate.
- Scale up Specialties: Barry Callebaut’s ambition is to double the size of its core Specialties business by increasing the penetration of its highly differentiated specialty offerings in high growth areas such as gluten-free, vegan, single origin, and other specialty chocolates. To achieve this, Barry Callebaut will continue to evolve its product offering to focus on the most scalable market segments and launch a dedicated customer-focused innovation capability. The company will also enhance its route to market by leveraging its deepened outsourcing partnerships. The growth of Specialties will support the continued premiumization of Barry Callebaut’s Food Manufacturing and Gourmet businesses.
- Move to “fair" market share in the region Asia-Pacific (APAC): Barry Callebaut’s ambition is to double the size of its APAC business to deliver value market share in line with the wider Group. Barry Callebaut will put into place localized strategies built around the new country clusters to offer solutions tailored to local markets, with optimized distribution leveraging the digital enhancements delivered by BC Next Level. Both strong demographic trends and investments from leading FMCG players support Barry Callebaut’s ambition in APAC.
These growth priorities will be underpinned by Barry Callebaut’s new streamlined, and tech-enabled organizational capabilities following the BC Next Level measures. Barry Callebaut’s commitment to best-in-class sustainability will further drive the implementation of the growth priorities. The company aims to inspire modern cocoa farming practices and therewith create the future of sustainability for the industry. The company sees execution against its own industry-leading sustainability ambitions as a key commercial differentiator and as a key source of alignment between itself, its customers and the end consumer.
Read the full results here.