Barry Callebaut AG/ADR (BYCBF) September 8, 2026 Conference Transcript

Great. Super. Well, we're delighted to welcome Barry Calibo back to Boston and welcome Hein Schumacher, CEO of Barry, the world's largest B2B chocolate and cocoa ingredients company. Since joining earlier this year, Hein launched the Focus for Growth strategy and Q3 marked the return to volume growth, I think, for the first time in two years, helped by obviously improving execution and a slightly more supportive demand environment. But clearly, at the same time, there are some challenges. Cocoa prices remain pretty volatile. There's some concern over El Nino, which perhaps we can touch on. So I guess investors are debating the pace of recovery and the pathway back to historic profitability. Hi, and you bring, obviously, a unique perspective, having led many of the world's largest food businesses, so we're delighted to have you here today. And maybe we could start at the highest level. When you arrived in February, what did you diagnose as the key issues facing Barry Calibo? And what are the two or three most important things that focus for growth is... You know, designed to fix, yeah.

It's great to be here, Alex, and good to see you again. So, you know, I think the first, for me, the first one was, I would say, dilution of our resources, whether it was capital, whether it was operating expense and investment, or whether it was people. So, you know, there were not really clear priorities in the group. You know, a transformation had started, but it, you know, consisted of many, many different initiatives. And I felt there was an absolute opportunity to prioritize. which I'll come to in what we did. The second thing was I felt that our fundamentals were not in order. So customer service levels were too low. Our deliveries on time in full, which we measure, of course, were not in order. And our customers, as a result, were not super happy. And then third was all about quality. We'd had some quality scares in our major factories, the largest factory in Belgium that was already a few years ago, but also at the end of 2025 in Canada, our largest site for North America, and a big site in Mexico. So, you know, there was sort of a priority question, service and fundamentals to customers, and then something that you need to get right in food always, and that's quality. So in Focus for Growth, we addressed indeed all of them, and it's all about prioritization. So first, we focus our resources on 10 important countries, not the whole world. 10 important countries. Within those countries, we focus on two important segments. One is what we call gourmet, which is the highest margin business, and that's particularly for chocolatiers, for hotels, for restaurants, and so forth. And we are focusing much more on what we call providing solutions. So that's not just chocolate, but also specialties like nut specialties, fillings, caramel fillings, for example, inclusions like, you know, soft baked inclusions that you would find in ice cream and so forth. So that will lead to margin accretion for us. And it focuses us much more on segments where we can really win. So priority was number one in focus for growth, then restoring fundamentals. So instead of doing many different things, I had to make an intervention on quality investments and making sure that that is a non-negotiable in the company. Absolutely not. Since then, you know, the good news is you have seen quality incidents really coming down that's good, and I think it's something, you know, it was self-inflicted, and I wanted to have people really on two or three big fundamentals, restoring service, restoring on-time in full, restoring quality credentials, and I think, you know, that's sort of, that's working. But if you would ask me, it's about priorities, fundamentals, and then, of course, the execution that the company had lost a little bit. But those are the big ones.

Makes a lot of sense. And as we think about that execution piece, I mean, I think a couple of weeks ago, you recently announced the appointment of Thomas Gangler, a COO of the company. He's like a COO of the company. He obviously comes from Mondelez.

Yeah, our largest customer.

Yeah, so maybe you could talk a little bit about what he's bringing and what his role is.

Yeah, so I think the way to think about it is, you know, we went from strategy, i.e. the action plan that I talked about, right, so priorities plus fundamentals. That was number one. Then second, we had to address structure. The structure of the company was quite hybrid, so some things were global, some things were very local, and some things were regional, but it lacked a clear accountability focus. So we've put the accountability back to regional leadership because ultimately food tends to be quite local. So we reduced the number of global headcounts quite significantly and moved that to regional responsibility. And then the third lens, of course, after you've, you know, on strategy and structure is the people lens. And that's what we're really in the middle of. So I felt that we needed a change in our supply chain. That is the reason that customers come to us. You know, I mean, if we don't have service at all the time in full and quality, right, that's a problem. And I felt that a change was probably appropriate for the next phase. And, you know, Thomas is very experienced, coming indeed from our largest customer, so that was a good conversation with them to have. But they were very happy eventually that he will lead our operations and service them really very well. And, I mean, he's, you know, very experienced. He knows the industry really well, so I was really glad to have him.

Makes a lot of sense. And on the people side, you brought it up there. I mean, Barry Caliber has been through quite a lot of disruption over the past five years. You know, we had COVID, the cocoa crisis, quite a few changes in top leadership. So how do you ensure sort of like, I guess, buy-in from the sort of broader organization for focus, for growth in that context?

You know, I think it's absolutely critical. And we've seen indeed in the last couple of years, there was quite a bit of attrition. but I think first of all we created the action plan or the focus for growth plan it was a co-creation with people so you know there have been many consultants in the company we've said hey we stop that so we made the plan with 30 people in the company not my direct reports but actually a layer below to make sure there was buy in we focused our priorities as I said and we converted those priorities into personal objectives for people It was something that was new for them, and we started with that on the 1st of September, so a couple of days ago into our new fiscal year, so that people are really clear about what needs to be done. And then, as you said, we make a few changes, but I'm really looking for solutions inside the company. There's a lot of knowledge there, but we need to get people into that sort of, hey, this is what you're accountable for. These are your priorities, and I think that requires quite a bit of what I would call cultural change. but essentially it's about behaviors and it's about making sure that, you know, not saying, I can't tell you what you should not do, but I can tell you what's really important. And I think it's starting to work, but it will be a multi-year journey to get everyone in that mode.

Makes sense. And you touched on it. You know, part of the strategy is evolving from being, you know, not just a chocolate manufacturer, but becoming a solutions provider. What does that actually mean in practice? And I guess, you know, how different could that make Barry Calibo look in five years' time?

Yeah, no, I think this is a very fundamental choice. So, you know, let me explain it with ice cream. It's a sector that I know well, obviously, from my own past. So, you know, if you sell, if you take a segment like ice cream, you know, we are doing business with 10 out of the largest 10 ice cream producers in the world. So with all of them. And it's not just about chocolate that performs under frozen temperatures, but actually, if you could say, hey, here's your chocolate, but I also give you caramelized nuts. I also give you fillings in your ice cream. Think of a Magnum or think of a Ben & Jerry's because that's the brand that most people know. If you take a Ben & Jerry's, you have chunks in there, and many of them are chocolatey flavored. Some of them are not, but we give a total solution. So we provide chocolate, whether it's not solutions, filling solutions, inclusions in the ice cream. And then you say, hey, here's the total package. And actually, we start innovating with that and how these flavors can come together. And I'm super excited about that because it's not only stickiness of customers, but it also helps us to drive margin accretion over time. So it's a value-added strategy. And, yeah, it's growing well. we just need to choose wisely which segments we want to provide these total solutions to because you can do them all so ice cream is an important one for us the other one is bakery you know it's exciting if you look at bakery in in retail private label is gaining a lot of share and for example in the uk we're working with a with a chain like marx and spencers you know we're selling a lot of the private label chocolate in the uk and we started from a normal biscuit we We added chocolate coating and now there's, you know, layers and fillings and pistachios and, you know, and it enhances the value in the category, but it's also good for us in terms of what we can offer to the customer. So I'm very excited about this route.

And it's not a one-year strategy, obviously, but, you know, if we're sitting here in one year's time, hopefully we are, you know, what are maybe two or three things that investors should be looking at to decide whether focus for growth is working? Yeah, no, absolutely.

So number one, we do need to grow our gourmet business faster than our average, for sure, because that's an absolute focus point, because it has the highest margin in the company, and we want to make sure that we grow that faster. So that's one. Secondly, we need to grow our specialties. The ones that we choose to win in the segments that I talked about, they need to grow much faster than the average in the company. So that's two. Third, I want to make sure that our top 10 countries, about two-thirds of our global business, grow faster than the average of the company as well. So that's the growth part. The second one is I want to make sure, whether you can see if it's working, our service levels have to go up, and we will report about that, what it was and where it is. And that should result in a higher market share. Now, if you think about it, you know, in the last quarter we reported growth. The sector was quite a bit down, so we are taking share. The fourth quarter, which I cannot comment on because it's finished a couple of days ago, but we implied growth in the fourth quarter given our full-year guidance, and that also suggests we're taking share, and that's something that I would like to see in a year's time as well. And then finally, our profit should grow faster than volume growth as a result of all of that.

It makes a lot of sense. I mean, maybe turning to the here and now, and you touched on Q3 and the implied outlet for Q4, I mean, the business did return to nice volume growth in Q3, but I think you sort of cautioned a little bit that the underlying chocolate demand environment was still quite weak, and maybe there was an element of kind of stock or comps from last year and maybe a stocking up. But what gives you sort of the confidence in the sustainability of the growth in Q4, but out into next year as well?

You know, I think it's really important. So let me take a step back first. Over the last three years, if you look at the numbers, prices have gone up in a little bit over three years by 50% globally. Volumes globally are mid-single-digit down by 5%. So in a way, that's already pretty resilient. At the COCO price level that we are today, which is about, you know, $4,500, we believe that, from what I can see, is that prices, because of hedges that were taken, those levels are already priced in. And we see now, for the first time, the latest Nielsen reports, we see prices coming down a little bit in Western Europe. So, first of all, I don't, at the moment, I don't see that there will be more price increases, you know, coming. I think there will be moderation or even decrease. So that's number one. Second, as a company, we are only, well, it's a lot, but we are only around 40%, 45% exposed to classic chocolate confectionery. The majority of our sales is actually where chocolate is an ingredient. So in bakery, in ice cream, in protein bars, in granola. And those segments are actually growing. And we clearly see that in our sales numbers. Where we're growing in those segments faster than let's say in the classic confectionary only so that's an internal point Yeah, and finally, you know as I said we are Focusing you know our efforts on Higher value-added segments or the gourmet segment as well as the the the specialties But gourmet when people tend to eat less chocolate for example in the u.s. Which goes of GLP one We see people snacking less, but they tend to go to higher quality solutions, and that's where we are usually disproportionately, you know, we have a higher share than our competitors, so I feel good about that.

Makes sense. And you touch upon kind of service levels as a KPI that, you know, you're going to report on. It's clearly a big opportunity. How much of the 2% to 4% medium-term volume growth algorithm that you're targeting you know, could come through simply as a result of kind of taking back market share that you may be lost because of those services. I mean, how much visibility does that give you?

So, as I said, if you take the different categories or the different chocolate confectioning categories plus the other ones that I talked about, that should take care of growth of around, you know, 2%, we believe, globally. And then, you know, taking market share is the next step. And that should come from restoring fundamentals. I mean, you know, we're doing that now. and I feel that that will certainly be a source of growth also in the two to four. I mean, to be exact, is it 1%? Is it 1.5%? It's helping and customers want to work with us. So yes, that is definitely part of it. We are assuming market share growth.

And is that primarily a North America phenomenon in terms of where the service levels have dropped and need to be improved?

We had it pretty much, you know, in our main markets in Europe as well as North America. In North America, it was more sticky. We are investing in our largest site in Brantford in Canada at the moment. It's a very new site. We're de-bottlenecking on compound production. So I don't know, I mean, if you knew, but so our customers, they're making a choice, right? But do you buy chocolate, i.e. cocoa butter solutions or compound solutions? And because of the COCA crisis, many have shifted to compound solutions. But our capacity did not hold up for these evolving customer needs. So what we've done in the last couple of months is very quick de-bottlenecking in those areas where our customers were actually going. And therefore, I feel it has gotten a lot better. So it's percentage points better than where I started. But in North America, I feel we still have steps to take, and we can grow further. you know, we're not perfect yet. In the other regions, it's a better picture.

Good to hear. I mean, historically, outsourcing was a big growth pillar and part of the strategy for Barry Callibault. It didn't make as much a feature in your focus for growth strategy, perhaps because of where we are with the service level side. But, you know, thinking long-term, maybe beyond focus for growth, So is outsourcing still a material opportunity for Barry Calibo? Has the industry maybe changed how it thinks about outsourcing?

It's a very good point. And if you, I mean, many of the companies that are here, so I want to be quite straight and direct. So if you take our global top seven customers, okay, they are 25% of our chocolate volume, okay? And what we've said is they have, because of the last couple, not just because of service levels, but because category was under pressure, they lost volume, and, you know, the utilization in the factories came down, and therefore they've insourced. You know, so that's happening. And I said, therefore, that is the group of companies who can actually insource because of the scale. And I said, look, that will bottom out in 27 because once the capacities are filled and or when the cattery is coming back, will they then invest in complete new factories for insourcing? I don't think so. We are better placed. We have those conversations. And therefore, I think we assume and I believe we will grow after 2027 with them. So that's comment number one. then two obviously we're working a lot with the regional players you know regional companies there's so many of them and they are either taking share or retail private label share they are not outsourcing you know so that's they rely on us to do what we need to do so you know i think it outsourcing in a way is natural for them and obviously we will grow with them going forward so I and I believe the large ones if we innovate and come up with solutions that are outside of the basic products that they have they will also we're seeing that already now they will also come to outsourcing with us so you know it's probably not the growth engine with the large accounts for the next 12 to 18 months hence the lower volume projection but for the company as a whole but it will reignite behind innovation as well as production capacity after 27 on the big ones and we will continue to grow with the regional players as well as through the gourmet and the and the specialty sections that I'd already talked about yeah it makes it and I want to stick on gourmet is clearly that's a big part of the strategy in terms of yeah driving growth out performance there it's historically been very nicely margin accretive for Barry Caliber as well.

So, I mean, part of the reset on profit outlook for 26, which came through sort of earlier this year, was sort of a miss, if I understood it correctly, a sort of a mismatch between selling prices from some of your competitors and the decline in cocoa input costs. So maybe you could sort of elaborate on that a little bit and as to why you don't see that as a problem sort of beyond this year.

Yeah, so our gourmet business is critical, and we've said it's a priority. I was very clear, wanted to be very clear about it. What we've done in Q3 and what we've done in Q4 is, and I think we announced that with Focus for Growth, we said, hey, we're investing a bit in margin because we saw that we had longer hedges out there than others, and, you know, I wanted to keep the customers with us, you know, and that's what we've done, and that's what drove quite a bit of the growth in Q3. It will be an engine as well to some extent in Q4 But you know, of course our profitability is getting better when the head when these hatches expire and that's what we see happening So I think that was a good decision that we took I think when you look at the next year First of all gourmet is all about availability, you know, and I felt that the service level and that was too low I talked about that by now the service level has increased substantially because we're treating it as a make-to-stock business and not a make-to-order business. In order to make it make-to-stock, we've really worked hard with the team to get to a core SKU list of around 200 SKUs of Callabout brand and Cacaberry brands, you know, the brands that we have for the B2B market, and that's working very successfully. We've also made very clear tiering. We brought that back into the gourmet business. So our cacobarry is for chocolate cheese and Michelin star restaurants around 140 index 145 price index the same for the signature collection of color about then the call about selection made in Belgium claim is around 125 price tiering and then we have our local, you know regional brands like Van Houten You know we have many of those and I think we've been very clear on price tiering very clear on the proposition of what they should bring so I'm super excited about The re-ignition of that business. It's also a bit closer to where I come from So that's working Yeah, and you know, I think that should be a great engine for us in 27 as well as in 28 and beyond Besides all of that we now need to get the innovation engine going behind it and Therefore we've launched four big platforms Which I'm also excited about and that is about taste You know we're enhancing taste to fermentation and more to that to come in the course of the year We're doing more on health and wellness with high flavonol solutions, which is working very well in Asia. We're working on cocoa replacement. That's a Choviva concept that we launched so that customers can actually, you know, they can choose between a cocoa solution as well as a non-cocoa solution. So, yeah, you know, I think pricing, tiering, availability, innovation, so gourmet and digital. So our gourmet segment is really from all cylinders and that is where we are going to make a big difference.

Very clear. We haven't talked about cocoa prices yet. And obviously, you know, part of your focus for growth strategy, you have to make a planning assumption on cocoa prices. I think it talks about £3,000 per ton. Obviously, we are now sort of above that level. And obviously, there are some concerns around supply again with El Nino. So, I mean, has your view changed at all on kind of what constitutes a sort of a sustainable cocoa price in that environment? Or is $3,000 still the right kind of level to plan for?

You know, I mean, first of all, where are we now? And if you sort of look short term, right? So the cocoa price is around $4,500 today. Yeah, and that is indeed based on quite a bit of you know news from about El Nino and that the crop will not be as good and so Forth, I think the important thing to call out is Globally, there is more than 500,000 tons surplus in the market So even if the crop will not be that great, you know There's there's much more buffer than there was a couple of years ago when the cocoa crisis started And this is the second consecutive year of of service because last year there was also some so and that's still carried on By by many of by many players in the industry. So I believe there's quite a bit of buffer I think that's number one you know, I think secondly The the reaction that we've seen to the cocoa price market is a bit more extreme than what you've seen in the past So yeah, there's obviously El Nino if it's there and it if that really impacts the crop that will come in October or November, you know, that could be something. But the reality is we're not seeing that yet, so we're seeing quite extreme reactions in the market. And I think it will tend to that price corridor that what we talked about, which is about $3,000 to $5,000 in the medium term. That's what we believe, and that's what we're still backing. Maybe last word about the cocoa price, and that's interesting. You know, many of our customers, they've taken positions at around 4,500, 5,000 pounds, and that has already been priced in in the retail price, what I talked about earlier. So at the current levels, even while they're a little higher than what they were a couple of months ago, it will not translate into even higher retail prices. In fact, I see a little bit of a downward price decrease is coming.

Yeah, that is super interesting and perhaps a sort of a slight mismatch between all of the noise around Del Nino and what we're actually seeing in sales and data.

Yeah, and we need to see what El Nino, what it does. I think for us, what we've done is we wanted to build a lot of resilience, right, because it's not one-size-fits-all. I mean, a couple of years ago, we were super dependent, of course, on Ghana and Ivory Coast only. If you look now, whether it's West Africa, but we're expanding with larger-scale farming in Brazil and Ecuador, so we have more resilience in global sourcing. That's super important that we do that. the crop that we saw in June was equal to what it was last year so wait, there might be movements and I'm not trying to underestimate it absolutely not, but I want to put a bit of nuance to the sometimes quite extreme reactions that we're seeing in cocoa price volatility.

That's fair and I mean somewhat related obviously profitability per tonne in terms of PBT per tonne. Barry has come under some pressure in recent years and the guidance for 26, you took it down a bit further in part because of the gourmet challenges that we talked about. But you've been quite clear that, you know, long-term you think profitability per tonne, PBT per tonne can go back to pre-COVID levels. So maybe you could speak to, you know, like what are the key drivers from getting to, from where you'll end 26 to that rebuild level.

Yeah, I need to be a little careful.

Yeah, I'm not asking you for the time frame.

Because, I mean, of course, you know, our year has ended a couple of days ago, so I'm in a silent period, but a few building blocks, you know. It's very important, so for everyone, that EBIT, you should always look at our EBIT in conjunction with profit before tax because in our EBIT, we have what we call finance charges that are related to the price of the cocoa that we pass on to customers. So if the prices of cocoa come down or if interest rates come down, we don't pass on so much. But of course, at the same time, we would have less interest costs, so that neutralizes on PBT. So we need to look at both, okay? Next year, we will definitely have much lower finance costs pass on, so our EBIT will be down from that, but it's compensated in our profit before tax. So that's number one. The second lever, obviously, for next year, if I talk the big building blocks, is I do expect a better margin from gourmet and growth. You know, I think those are probably the two big levers down and up.

Makes sense. In terms of that sort of movement in Cocoa Price, I mean, one of the other knock-on impacts was clearly a quite big strain on Barry Calibo's balance sheet, if we rewind sort of 18 months ago. I think it peaked at net debt to EBITDA at six and a half times, I think, in April last year. You've done a great job actually proactively deleveraging and then the lower cocoa prices also helped. But how are you thinking, as leverage does normalize, between the balance of investing in the business and maybe pursuing any sort of bolt-on M&A or returning cash to shareholders? Yeah.

So, you know, our leverage has come down, well, we guided for the end of this year, and we haven't changed guidance. So again, without saying too much, I think we can say, hey, around three is where we expect to end the year. And, you know, I think it's important to point out, we said that at the time that the cocoa price was around 3,000. Now it's trending around 4,500. So we're sticking to that guidance. And it means we have become more resilient as a company, you know, in terms of leverage. So we've optimized working capital. We have shortened some of the hedging that we did so that we're closer to the market. And obviously, we've changed our financing structure to cope with potential volatility. So I've been really focused in the last couple of months to make the company more resilient for that. Now, back to your question, you know, we will generate obviously quite some cash this year. What does that mean going forward? Well, first, I want to make sure that we invest in our own network behind the priorities. Ten countries, gourmet specialties. I'd be very hard-pressed to do anything else. That's it. But we need to do that really well. Second, in the capital expenditure, the choice is ensuring absolutely strong fundamentals, no more quality problems. So that's number two. So investments in our own network go first. Second, deleveraging. Yes, but I would expect to end up between two and a half and three. You know, that should be an ideal level, depending on the coca price. If it goes up further, it will be slightly north of that. But, you know, I don't have no intention to deliver it further, but that should be a good level for where we are. So that's two. Three, the dividend. It's now 30%. You know, if we could do more, we can do more. But I would say for now, that's it. If there will be more cash generated, then that's where that will go. And then finally, it's opportunistic M&A. as you know in our sector we cannot do something transformative because we are an N is one there's no company that is exactly like us so if we were to do it it will be bold on and we have a couple of opportunities that we're looking at but I'm careful because I really want to create that replicable model first and then make an acquisition and do it really well makes sense and in terms of those investments in the network that you described focused on the 10 key markets um have those been i mean you know does the scope of that change with thomas coming on board or you know it's kind of that oh he bought he buys into the plan yeah you know i mean you know i've also in my in previous you know previous companies where i worked i want to you know you've got to be very very clear and rip repeat repeat repeat it's 10 markets in those segments that is going to lead us to the to the profitable growth equation and then it doesn't mean i say it very often. I mean, many people ask me in the company, what should I stop? I always say, I can't tell you what you need to stop, but I can't tell you what's really important, and that's really what we're going to do. And I think that's a good and exciting journey. I think the company, in one or two years' time, will be a different one what it was a while ago, and I think it will strengthen. I feel very positive about the direction that we're taking, but it's not overnight.

Yeah, that makes sense. So I'm conscious of time. I think one final question behind before we go to the breakout, if there are more questions behind. As you've met investors, customers, employees over the last nine months that you've been in the CEO role at Barry, what do you think is the biggest misconception about Barry Calibre that you've come across and that you maybe like to change?

I think well I'm not sure if it's a misconception but I think it's important you know we are we are in what I call an N is one there is no company that is the same as we are because we have that integrated chain you know we have essentially resource about a quarter of the world's cocoa but it allows us to provide A availability B traceability see segregated streams You know for big concerns that are out there whether it's child labor wares deforestation And rightly so and I and we are I would say Spearheading things like diversifying sourcing, you know We are working with large farming solutions in Brazil as I talked about we have Nurseries for you know seedlings for cocoa seedlings in Ecuador. So we're really developing that and I think you know the future of the industry I think we are we are playing a very important role in that but by doing that extraordinarily well I feel that the deep expertise that I detected in the company if you go deeper on processing those beans from different locations understanding what exactly that means and turning that into a final chocolate solution is pretty unparalleled and yeah that makes us an NS1 that's always harder because you know what then you could ask you know what are your peers what are your benchmarks what is the comparable I leave that very wisely to you but what my job is to is to create the maximum value out of this uniqueness and when you're unique you're hard to

replicate and when you're hard to replicate that gives you a huge strategic benefit and that's what I like excellent we've hit the buzzer there Hein, so thank you very much for your time and insights today and coming to Boston. Pleasure.

Thank you.