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Barry Callebaut AG Stock Quote BARN

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Morningstar's Barry Callebaut AG Stock Analysis

Valuation
Currency in CHF
Is it the right time to buy or sell?
Is it the right time to buy or sell?

1-Star Price

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5-Star Price

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Economic Moat

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Capital Allocation

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Another Solid Quarter for Barry Callebaut; Wieze Factory Shutdown To Hit Q4; Shares Cheap

Ioannis Pontikis, CFA Senior Equity Analyst

Analyst Note

| Ioannis Pontikis, CFA |

Wide-moat Barry Callebaut reported fiscal 2022 nine-month results, with group sales volumes up 7.9% (7.1% excluding the European Chocolate Company acquisition), higher than company-compiled consensus estimates. Within this, the key drivers were the gourmet and emerging-market segments—both continued strong recoveries in the third quarter (gourmet up 27.4%) and emerging markets also grew robustly by 8.7% and outsourcing was up by 6.9%. We expect the fast recovery of the gourmet and emerging-market segments to continue to have a positive effect on margins, as these are materially more profitable than the rest of the group. After the salmonella incident at the Wieze factory, Barry Callebaut now expects the first lines to restart production in early August 2022 with a gradual ramp-up to full capacity over the following weeks. The company is still unsure about the full financial impact, but does expect it to be notable in fourth-quarter results. Based on our analysis in our July 4 note, and assuming roughly two months of no- or undercapacity production activity, we would expect the impact to be no higher than 2% on the top line (on full-year numbers, hence the much higher fourth-quarter numbers). Management reiterated midterm guidance (5% to 7% volume growth and EBIT above volume growth by fiscal 2023 versus 6.1% in our model). We maintain our CHF 2,400 fair value estimate. With shares trading in 4-star territory, and the chocolate business' defensive characteristics (against inflation concerns and recessionary fears), we think Barry Callebaut makes a compelling investment case for the defensive long-term-oriented investor.

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Key Statistics - BARN

Company Profile - BARN

Business Description

Barry Callebaut is a significant manufacturer and supplier of cocoa and chocolate ingredients, employing over 12,000 people. Customers include food and beverage makers as well as craftsmen, chocolatiers, pastry chefs, and bakers who utilize chocolate professionally. Barry Callebaut is vertically integrated from raw material (cocoa bean) procurement through chocolate manufacture, while not owning any cocoa farms. The firm produces around 40% of the world's industrial chocolate (open market), and its products are used in approximately 20% of the world's chocolate and cocoa goods. Barry Callebaut's sustainability endeavors are reflected in the fact that the company's Sustainalytics ESG Risk Rating is the lowest in its subcategory and first among its peers.

Contact
Hardturmstrasse 181
Zurich, 8005, Switzerland
T +41 432040404
Industry Confectioners
Most Recent Earnings
Fiscal Year End Aug 31, 2022
Stock Type
Employees 13,289

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