W.Christmas is the time when many investors try to keep one thing out of their own body depot: the so-called and unpopular “hip gold”. But that is going to be difficult, because the last weeks of the year are traditionally the chocolate season par excellence alongside Easter. For the big players in the industry, it is about important sales shares.
Whenever the topic of chocolate is on the stock exchange, investors come across Barry Callebaut very quickly. The name is probably almost unknown to consumers, but the products of the Swiss group are not. Barry Callebaut can be found in one in four cocoa and chocolate products consumed around the world.
From the procurement and processing of cocoa beans to the production of the finest chocolates, including fillings, decorations and chocolate mixes, the group is involved. The more than 60 production sites are spread across the globe in 40 countries. Customers include the “who is who” of industrial food manufacturers as well as commercial and professional users such as chocolatiers, confectioners, bakers, hotels, restaurants and catering companies.
Group is growing faster than the overall market
To get an idea of Barry Callebaut’s work, it is important to take a look back. For a long time, mankind only knew the three types of chocolate, dark chocolate, white chocolate and milk chocolate. In 2017 – around 80 years after the market launch of white chocolate – Barry Callebaut presented the fourth type of chocolate, Ruby chocolate. This is made from the ruby cocoa bean and has a fruity taste.
But even such new products could not completely protect Barry Callebaut from the effects of the corona crisis on the catering and chocolate industry. Still, the company subsequently benefited from the reopening of the economy. In the 2020/21 financial year (to the end of August), Barry Callebaut was able to increase its sales volume by 4.6 percent to almost 2.2 million tons. The chocolate business thus exceeded the level of the 2018/19 financial year before the corona pandemic. In addition, the group grew faster than the overall market and secured additional market shares.
Adjusted for currency effects, sales rose by 8.7 percent to 7.2 billion Swiss francs. Adjusted for currency effects, operating profit (EBIT) even increased by 18.9 percent year-on-year to 566.7 million Swiss francs.
The bottom line was a profit of 384.5 million Swiss francs. This was a currency-adjusted increase of 20.4 percent compared to the previous year. Shareholders get bright eyes here, because Barry Callebaut has been known as a reliable dividend payer for many years. Now they are to receive a dividend of CHF 28.00 per share. This corresponds to an increase of 27.3 percent compared to the previous year and a payout ratio of 40 percent of consolidated profit.
Barry Callebaut has set itself ambitious medium-term goals so that the distribution can also increase in the coming years. According to the company, average volume growth of 5 to 7 percent is planned for the financial years 2020/21 to 2022/23, while EBIT is expected to grow faster than the currency-adjusted volume growth.
Barry Callebaut also wants to try to be a pioneer when it comes to sustainability. In the “Forever Chocolate” program, climate and sustainability goals are formulated and are to be achieved by 2025. Among other things, the group wants to lift more than 500,000 cocoa farmers within the Barry Callebaut supply chain out of poverty as part of the program. At the same time, child labor is to be completely eliminated, while the group wants to work carbon and forest-positive.
Overall upward trend
Even if the Barry Callebaut share price was unable to escape the corona crash in March of last year, Swiss securities are a very solid investment. After the sharp setback in March 2020 in the area of the CHF 1,600 mark, the Barry Callebaut share started a new upward movement. It went up to new record highs of around 2380 francs by August, which was followed by a sideways movement, which continues to this day. In terms of the chart, this consolidation could be completed if the breakout above the August all-time high at 2,380 francs succeeds. In the medium term, the next big target price would then be at the 3000 mark.
In view of the share price development so far, Barry Callebaut was very convincing. The share is listed in a long-term, overarching upward trend. Over a ten-year perspective, the price has increased by an average of ten percent annually. The title was characterized by a comparatively high level of price stability. So every Barry Callebaut shareholder is happy about one or the other plastered chocolate Santa Claus or Santa Claus. Hip gold or not.
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