Barry Callebaut issues profit warning as cocoa prices fall

Swiss chocolate maker Barry Callebaut on Thursday cut its operating profit forecast, citing falling cocoa prices, industry overcapacity and potential supply disruptions linked to the Iran war.

The company, which is the world’s largest chocolate maker, has now said expected Earnings before interest and tax (EBIT) will decline by a “mid-teens” percentage in the 2025 to 2026 financial year.

The outlook reflects a significant decline from just three months ago, when the Zurich-headquartered company Said It was preparing for a return to growth.

Hein Schumacher, who was appointed CEO of Barry Callebaut in late January, warned of a “turbulent period” of disruption in the industry on Thursday, saying the company has a “unique market position” and fundamental growth opportunities.

“In the first half of our fiscal year, cocoa bean prices have declined, which is encouraging for future chocolate market momentum and supports strong free cash flow generation,” Schumacher said in a statement.

“Nonetheless, the competitive overcapacity market, volume declines and the unique pace of market drawdown coupled with supply disruptions impacted EBIT performance and adjusted our profitability outlook for the year as we prioritize restoring volumes and moving the market back to growth,” he said.

Shares in Barry Callebaut fell as much as 17% on Thursday. The stock was last seen down about 15.8% shortly after 2:30 p.m. London time (9:30 a.m. ET).

Cocoa prices fell 0.72% to $3,537.28 a tonne on Wednesday. Despite the rally over the past week, cocoa prices have fallen 41.6% since the beginning of the year, and 57.6% over the past 12 months, according to trading economics data.

Like most commodities, the closure of the Strait of Hormuz has impacted cocoa prices, with limited supply and higher costs. However, stronger yields than in recent years, when prices have risen, have kept cocoa costs in check.