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1. Company Snapshot

1.a. Company Description

Barry Callebaut AG, together with its subsidiaries, manufactures and sells cocoa and chocolate products.The company provides chocolates, compounds, chips and chunks, cocoa, cacao fruit, fillings, coatings, nuts, decorations and inclusions, and food colorants, as well as personalization sheets.It also offers cocoa powder, chocolate drinks, cappuccions, dessert drinks, dairy and non-dairy products, tea, and coffee.


The company provides products under the Cacao Barry, Callebaut, Carma, Mona Lisa, Van Houten Professional, Bensdorp, Cabosse Naturals, D'Orsogna Dolciaria, IBC, and La Morella Nuts names.In addition, it offers centralized treasury and management services; and conference and training services.The company serves food manufacturers and artisans; and professional users of chocolate, including chocolatiers, pastry chefs, bakers, hotels, restaurants, or caterers.


It also offers products for vending machines.The company operates primarily in the United States, Germany, the United Kingdom, Belgium, France, Mexico, Brazil, Poland, Switzerland, rest of Europe, rest of Americas, and the Asia Pacific.Barry Callebaut AG was incorporated in 1994 and is headquartered in Zürich, Switzerland.

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1.b. Last Insights on BARN

Barry Callebaut AG's recent performance was positively driven by its latest earnings release, which showed the company beating analyst forecasts. This momentum was fueled by strategic investments and pricing strategies, allowing the company to navigate a volatile market despite facing volume declines and profit pressures. Additionally, the company has been focused on making strategic gains, which has helped to boost investor confidence. The recent updates to analyst predictions also reflect a more optimistic outlook for the company's future prospects.

1.c. Company Highlights

2. Barry Callebaut's FY2025 Results: Deleveraging and Preparing for Growth

Barry Callebaut reported revenues that were impacted by a mid-single-digit volume decline, primarily due to the Saint-Hyacinthe facility closure in Canada and bean price developments affecting global cacao return prioritization. The company's recurring EBIT was CHF 703 million, increasing by 6.4% in constant currencies, driven by mix, pricing, and cost savings. However, net profit was CHF 250 million or CHF 267 million at constant currency, down 36% in local currencies. The actual EPS came out at '20.38', significantly lower than estimates at '48.94'. The company's financial performance was also reflected in its cash flow, with a strong cash inflow of CHF 1.8 billion in H2, despite a decline of CHF 312 million in free cash flow.

Publication Date: Nov -10

📋 Highlights
  • Deleverage Progress:: Net debt/EBITDA reduced from 6.5x to 4.5x, targeting <3.5x by 2026.
  • Free Cash Flow:: CHF 1.8B cash inflow in H2, with operational free cash flow expected to turn positive in 2026.
  • BC Next Level Savings:: CHF 250M cost improvement target achieved, with CHF 100M expected to contribute to P&L in 2026.
  • Cocoa Price Volatility:: Brown box (price impact) caused CHF 1.1B cash outflow, while green box (operations) generated CHF 1.2B inflow.
  • Factory Efficiency:: BCOS implementation in 29 factories achieved 20% production efficiency gains in 6 months.

Deleveraging Progress

The company has made significant progress in deleveraging, with its leverage decreasing from 6.5x to 4.5x, and adjusted leverage below 1x. The company's working capital actions, including diversifying sourcing, optimizing purchase timing and inventory levels, and reducing forward contracting, have enabled strong cash generation and deleveraging. As Peter Vanneste, CFO, mentioned, "We've taken decisive actions to reduce working capital, enabling strong cash generation and deleveraging."

Valuation Metrics

Looking at the company's valuation metrics, the current P/E Ratio is 45.51, P/B Ratio is 2.41, and EV/EBITDA is 15.17. The Net Debt / EBITDA ratio is 7.32, indicating a high level of debt. The company's ROIC is 3.62%, and ROE is 5.18%. Analysts estimate next year's revenue growth at -7.5%. These metrics suggest that the company's valuation is sensitive to its ability to deleverage and return to growth.

Growth Prospects

The company is preparing for a return to growth by focusing on customer experience, competitiveness, and unlocking new innovative solutions. The company's strategic growth priorities include deeper partnerships, Callebaut Masters of Taste, and improving the scalability of its specialty offering. The company is also investing in new facilities and upgrading its existing network, including a new facility in the United States.

Outlook

The company's outlook for FY2026 is cautious, with expectations of a tough Q1 start and a mid-single-digit decrease in group volume. However, the company expects low to mid-single-digit growth in EBIT recurring and double-digit growth in profit before tax recurring in local currencies. The company's operational free cash flow is expected to be around CHF 1.1-1.2 billion in FY2026, and bean price free cash flow is expected to turn positive.

3. NewsRoom

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Barry Callebaut to use NotCo’s AI for chocolate recipes

Nov -20

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Barry Callebaut to use NotCo AI to develop chocolate recipes

Nov -18

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Barry Callebaut (VTX:BARN) Is Due To Pay A Dividend Of CHF29.00

Nov -17

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We Think You Can Look Beyond Barry Callebaut's (VTX:BARN) Lackluster Earnings

Nov -16

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Barry Callebaut AG Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Nov -08

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Barry Callebaut AG (BYCBF) Full Year 2025 Earnings Call Highlights: Strategic Gains Amid Market ...

Nov -06

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Bernard Horn's Strategic Exit from Canadian Tire Corp Ltd: A -1.53% Portfolio Impact

Oct -29

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Does Softer Cocoa Demand and Lower Sales Guidance Shift the Bull Case for Barry Callebaut (SWX:BARN)?

Oct -11

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.57%)

6. Segments

Food Manufacturers

Expected Growth: 8%

Barry Callebaut AG's 8% growth in Food Manufacturers is driven by increasing demand for premium chocolate, expansion in emerging markets, and strategic acquisitions. Additionally, the company's focus on sustainability, innovation, and cost savings initiatives have contributed to its growth. Furthermore, the rising trend of outsourcing chocolate production by global food companies has also benefited Barry Callebaut AG.

Cocoa Products

Expected Growth: 9%

Barry Callebaut AG's 9% growth in Cocoa Products is driven by increasing demand for premium chocolate, expansion in emerging markets, and strategic acquisitions. Additionally, the company's focus on sustainability and innovation, such as its 'Forever Chocolate' initiative, has contributed to its growth. Furthermore, the rise of e-commerce and online shopping has boosted sales, as consumers increasingly purchase chocolate products online.

Gourmet & Specialties

Expected Growth: 10%

Barry Callebaut's Gourmet & Specialties segment growth is driven by increasing demand for premium and artisanal chocolate products, expansion in emerging markets, and strategic partnerships with high-end foodservice and retail customers. Additionally, the segment benefits from the company's focus on innovation, sustainability, and digitalization, enabling it to capitalize on consumer trends and preferences.

7. Detailed Products

Chocolate

High-quality chocolate products for confectionery, bakery, and ice cream industries

Cocoa Powder

High-quality cocoa powder for food and beverage applications

Cocoa Liquor

High-quality cocoa liquor for chocolate production

Cocoa Butter

High-quality cocoa butter for confectionery and food applications

Compound Coatings

High-quality compound coatings for confectionery and snack applications

Fillings

High-quality fillings for confectionery and bakery applications

Decorations

High-quality decorations for confectionery and bakery applications

Flavorings

High-quality flavorings for confectionery and food applications

8. Barry Callebaut AG's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Barry Callebaut AG is medium due to the presence of alternative products such as sugar confectionery and snacks. However, the company's strong brand portfolio and high-quality products mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the company's strong relationships with its customers, including large multinational companies and local businesses. The company's ability to provide high-quality products and services also reduces the bargaining power of customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the company's dependence on a few large suppliers of cocoa beans and other raw materials. However, the company's long-term contracts and strategic partnerships with suppliers mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the chocolate industry, including the need for significant investment in manufacturing facilities and research and development.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several large players in the chocolate industry, including Mars, Nestle, and Hershey. The company's strong brand portfolio and high-quality products help to mitigate this threat.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 35.02%
Debt Cost 5.23%
Equity Weight 64.98%
Equity Cost 5.23%
WACC 5.23%
Leverage 53.90%

11. Quality Control: Barry Callebaut AG passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sainsbury

A-Score: 6.8/10

Value: 7.4

Growth: 7.6

Quality: 2.5

Yield: 7.5

Momentum: 7.0

Volatility: 9.0

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Jerónimo Martins

A-Score: 5.8/10

Value: 5.1

Growth: 5.9

Quality: 3.6

Yield: 5.6

Momentum: 7.5

Volatility: 7.0

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Emmi

A-Score: 4.8/10

Value: 4.7

Growth: 4.8

Quality: 4.8

Yield: 3.1

Momentum: 1.5

Volatility: 9.7

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Tate Lyle

A-Score: 3.9/10

Value: 3.4

Growth: 1.1

Quality: 4.0

Yield: 8.8

Momentum: 0.0

Volatility: 6.0

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Glanbia

A-Score: 3.5/10

Value: 4.2

Growth: 5.0

Quality: 4.5

Yield: 4.4

Momentum: 2.5

Volatility: 0.7

1-Year Total Return ->

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Barry Callebaut

A-Score: 2.9/10

Value: 5.3

Growth: 2.9

Quality: 2.6

Yield: 3.1

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1245.0$

Current Price

1245$

Potential

-0.00%

Expected Cash-Flows