Barry Callebaut Case Study Summary

Barry Callebaut is a world’s leading manufacturer of chocolate and cocoa products established in 1996 by Klaus Johann Jacobs. The company was created as a result of the merging of Callebaut – Belgian chocolate producer and Cacao Barry – a French chocolate company. Barry Callebaut’s head office is located in Zürich, Switzerland. The company has 53 factories operating in 30 countries in Europe, North and South America, Asia and Pacific.

Barry Callebaut has opened their first Van Houten Beverage Academy center in Kågeröd, Sweden for chocolate, cocoa, and powder-based beverage products. Despite its strong position on the market, the company has a few competitors such as Cadbury, Kraft Foods, Mars, Nestle, Hershey’s, Lindt and Cargill Incorporated.

European and American continents yield 49.7% and 35.6% of sales revenue respectively. The company has experienced an increase of 7.6% in sales volume for chocolate products and a 12% decrease in cocoa products, which happened due to China’s devaluation of their currency and Brexit referendum that caused the depreciation of 12% in the British pound against the US dollar.

The sales volume in EMEA (Europe, Middle East, Africa) went up by 6.6% to 814,236 tonnes in 2016. Especially strong is the growth in Germany, Netherlands, the British Isles, Turkey, and Russia. The sales volume constitutes 1,834,224 tonnes with the compound annual growth rate of 7.4%. The sales revenue is CHF 6,676.8 million (USD 6.8 billion) with the compound annual growth rate of 8.4%. Operating profit is CHF 401.7 million (USD 397 million) with the compound annual growth rate of 3.3%.

As of August 31, 2016, the pie chart shows the information for the ownership of Barry Callebaut common stock. The share capital of the company equaled CHF 102,092,759 amounted to “5,488,858 fully paid-in shares with a nominal value of CHF 18.60 each.” (Annual Report 2015-16) The majority shareholders are Jacobs Holding AG (50,1%), Renata Jacobs (8,5%), Oppenheimer Funds (3,1%) and other shareholders

According to Readyratios.com, the Debt to Equity ratio should be normally 1,5-2,0 or smaller. The data in the excel table extracted from the Barry Callebaut Annual report concludes that a company is doing well in terms of its liabilities and equity proportion. Despite a gradual increase in the ratio from 64,9% in 2011 up to 100,7% in 2014, the company’s ratio is currently declining, and is at 74,3% in 2016 which shows that the company is financed more from its own financial sources rather than by those of creditors’.

The Payout ratio gives information about the percentage of net income that is used to pay the dividends. Since Barry Callebaut is a large company, its payout ratio is quite high: more than 30%. The payout ratio has been somewhat stable for the last 6 years; yet an increase of 6% can be observed, which means that the company pays 39% of its net income to its shareholders, where the rest 61% is used for other operating costs and