Barry Callebaut AG (BYCBF) June 2, 2026 Conference Transcript

Great. Well, good morning, everybody, and thank you for joining this session. And we're very pleased to have on stage Hein Schumacher, Chief Executive of Barrie Callebo, especially on this important day when you've released your strategy announcement this morning. Perhaps before we get into the details of the strategy, perhaps you could tell us about your first six months in the role your appointment was made in January what was your perception of the business as you started why why take this role and and how did you go about appraising the challenges that the company faced that's quite a few questions in one go but I do keep doing that yeah let's get started you know so so maybe to start with you know why did I take the role I mean I have a foods background I love I love global foods and you know there's only a very few companies you know in the world that have sort of that end-to-end value chain

but also and I think this is super important that have a very deep expertise in what they do and and that are truly you know truly global in nature and obviously I have a CPG background to brand the background so for me the new the new leadership opportunity was the the business the business side of things and you know so those who are probably the three the three biggest reason and I felt that this this was a company where you can really make an impact you know the company and that's sort of a segue I think in this to the other part of your question the company has been under pressure over the last couple of years from a number of things you know a perfect storm one very fast-growing cocoa prices I mean literally it shoot up almost five times to the historical average which obviously are all very well aware of secondly a few big quality incidents in in the large sides of the of the of the network and that hampered customer service and thirdly the company went on a massive transformation and you know if you do everything in one goal that had you know an impact on the people had an impact on the organization had an impact on service delivery had an impact on stability so I felt this was an opportunity to to make to to potentially make a difference and you know I think the first impressions over the last six months were sort of in line with what I expected you know there is a there is a deep expertise there are good foundations

there's a huge opportunity I feel for the medium and a long term for sure but at the same time we had to get a few things right to to to to strengthen our basics strengthen the fundamentals and making sure that we do the things that our customers expect us to do thank you hi and so So looking at the business now, after that period of discovery, perhaps we can walk through your assessment of the business as it stands, and then you can talk us through the focus for growth strategy announced this morning. If we divide that assessment maybe into people and culture, the infrastructure and the go to market, starting with people and cultures, you say it's been significant external volatility, but also a very high number of internal initiatives aimed at improving performance and also cost savings. Presumably that can take a toll on an organization. So how would you position the morale currently and was it a place you think where people who were outperforming actually got recognized?

You know I would say but when I arrived with everything that I that I sort of talked that I just talked about I think there was a bit of a fatigue factor in the company and I felt it you know many initiatives that had to be done and we had a high attrition level overall which is something that we talked about but at the same time you know this is a company we are selling joy right I mean this is joy and indulgence and it's a very global company and I felt that in the conversation with people the opportunity that we have and which is what we talked about earlier today the you know the focus for growth program to to to charter our own course and I you know I involved immediately 30 leaders from around the globe not not actually my direct reports but below and we did that exercise to handpick them and with that group we designed that focus for growth action plan that we talked about this earlier this morning in a video message um so you know involving people you know making them part of the journey uh doing this collaborative leave and co-create the pay the way forward i think was felt as a uh as a very positive step step forward so you know uh in every organization where you come in you know there's a certain culture and so forth but i think there's an opportunity to quickly to quickly put everyone get it in the right direction so I feel I feel there was a lot of enthusiasm and passion in the business but it needed to be unleashed it needed to be unlocked a bit and I think that's sort of that's where that's probably where we are on the people side I think second on the infrastructure side as I said I think there was a an immediate opportunity to strengthen fundamentals I felt that the customer service process our planning process our quality assurance process were not as robust as I would have liked to see it so I want to be very upfront about that but at the same time you know with a high operating focus and you know requiring discipline around those I think we are making progress it's not a silver bullet will not happen overnight we need a bit of time which I talked about at the end of our second quarter hence we also you know changed our guidance for this year but at the same time you know I feel that we're making rapid progress now and I think it's a matter of I would say you know towards the end of the year and we should get that stability right so that's on the processes I think the second one is on stability in the network you know the the the network was very aimed at you know closing sites in the last couple of years to reduce cost and that's a wonderful thing but at the same time you need to service your customer so what I'm very focused on is first of all to get the right capacity in because the customer and the consumer has evolved over the years for example customers I mean it's bifurcation that you're looking you know that's pretty global and we're seeing it in chocolate to affordable solutions then that means cocoa coatings and compound solutions and premium solutions so you know dark chocolate you know specialties etc etc and our network was not was very focused on the mainstream so we had to make some changes and that's what we're doing now tactically to make lines more flexible so you know they can either produce those compound solutions or the full solutions but we also had to invest in capacity and we had to cut through a couple of knots quickly so which was also announced this morning it means a significant investment in North East US you know it's a place called Penn Sorkin it's a significant investment in Canada and we announced the planning or the the building of a new site in the Midwest so North America which is about 23 percent of our volume I wanted to absolutely prioritize that make sure that that's where the money goes and you know revamp the network there but it was needed so that was the infrastructure part you had another one yeah well it's on the go-to-market yeah I mean I guess when we think about the the digitization of your business is sometimes a perception that the level of investment required to fully modernize Barry hasn't perhaps been made is it is that fair at all yeah I think I think that's fair I think you know we had an opportunity on digitization and the use of AI on three areas one in R&D but I'll talk about that later but you know the most important one for us is I would say in the planning and in the customer interaction so do you know what the customer really wants where is the signal and how can you you know have your supply chain cater for that so I think that was opportunity one secondly it's in our gourmet segment you know so that's our premium set most premium segment and you know we inspire chocolate making and recipe making around the world we're by far the global leader on that but we do that to chocolate academies we have 20 of them around the world but we had an opportunity to digitize that and not just inspire on recipes but also convert into e-commerce

and that still it strikes me given the experience in B2C but it's still at a relatively early stage and that's you know I believe it's an area where we can where we can lead and that's where the investment in digital now goes and what would be your assessment of the way I guess you've sought to maximize those growth opportunities before I mean you've sort of alluded to perhaps a lack of rigor perhaps in the planning and assessment of those opportunities because how quickly will that will that change and in terms of the sort of

oversight and accountability how you'll actually be getting the reports and the MIS systems is that something that's going to to change and yeah so what I saw was an organization that was pretty hybrid in its execution you know so we had people managing the commercial operations in the regions so we are a food company and I believe therefore a regional focus or having a regional way to conduct your business is the right choice to make it's because the way people consume chocolate and use chocolate in North America is different and in Asia is different than in Western Europe is different than in Latin America so I want to steer the business really on a regional basis we have defined five regions and that's where the P&L suits it that's where the resources should sit and as a function global functions you know they have a very important role to play on the how on planning processes on what tools to use etc so there is clearly a value for the company but we needed to get that clear that wasn't clear so it was a it was quite matrixed and I feel that bringing that clarity now is is super important that was one second it the world was our oyster and that's a good thing but we've now defined ten markets that are more than two-thirds of our volume and definitely more than two thirds of our profit they get the first column resources so when it comes to solidifying planning for example and service first us I want you know it was very clear with that that that is number one secondly four countries in Western Europe and then thirdly for emerging markets and I think look choosing is not losing learn that the hard way across my over my career but you need to yeah but but to make it explicit and then you know and then organizing coherently your resources behind those choices that usually it takes a little bit of time but but but but I feel it's happening and by the end of our fiscal year which is by the end of August I believe you know we will organizationally be in the right place thank you as well let's move on to today's announcement in particular then say in your own words how would you like to give an overview of the focus for growth action plan that you announced and its key elements yeah sure so I would say three things you know first relentless focus on these fundamentals that I talked about you know we had customer service and on time in full rate on our important segments below 80% last year that needs to be no two customers that need to deliver 95 or 98% to the retail so we just simply have to step it up there so that for me is not is priority number one it's a bit brilliant boring basics but you simply have to do it so I think that's number one number two we are we've made a clear choice to to do what I would call everything chocolatey so that is full chocolate solutions compounds and coatings but also chocolate replacement opportunities and that includes you know sunflower experiments that we're doing on a global basis as well as cell culture so we really want to lead that so that's two third we are making a clear shift towards premiumization if I would add up the gourmet segments which I just talked about plus specialties plus some of our premium powder solutions at the moment it's just shy of a third of the volume of the company already but that's where we can make a difference both in profitable growth as well as in in in absolute growth so clear shift to premium and be intentional about our resources and then finally point number four in those market segments in those ten markers that I talked about that we believe are attractive and that's not the only chocolate confectionary but think of the use of chocolate as an ingredient in ice cream in protein bars in pastry snacking provide a more holistic solution to the customer so that we become a one-stop shop for them and that includes everything chocolatey but that can also include a specialty like a decoration a filling which we already have but we didn't we weren't intentional about it and I want to scale that up significantly so for ice cream for example we're ice cream we're we're working with ten out of ten of the largest ice cream companies in the world and you know I think with everything that I've seen in the company we can sort of provide that you know that holistic solution a filling a decoration and caramelized nut solution plus the chocolate side and that is very attractive if we get that right so those are the four elements okay thank you and obviously given an assessment of the categories and and you've sort of outlined the geographies where you intend to allocate the the the majority of your resources to are there any areas of the business that you'd consider exiting where you can't make the required yeah return so when you list those specialties that I talked about for example you know I think we need ultimately around six or seven type specialty so chunks baked inclusions so these are for example the dose and and so forth the caramelized nut solutions that I mentioned one shot fillings for ice cream that's a list of around six seven roughly and I would say at the moment in the periphery of the company we have around 25 26 and that clutters the company and that requires an adjustment in the portfolio those are not huge in terms of volume but they require attention they require capex they require people they require processing he said you know so there do we need to make a choice and we will and the company's been through a number of costs by the way just Tom before I go because I think also that differentiates us a bit you know versus the competition you know there without you know going into all kinds of competitions but there are and then one of the companies is actually currently for sale but they would be a specialty solutions provider for around 30 or 40 different specialties all very small and so forth we

do need to provide a certain scale to think so you know that's we need to make choices at the same time we're not a trader you know we are we are a company that is truly end-to-end we're putting our our emphasis on the value-added side right now but then you need to choose on what you can do in a bigger way okay thank you and say if we look at the the cost side of the business as we said there have been a lot of initiatives before a lot of cost initiatives over the last few years there isn't a cost-saving target as part of your profitability targets where is the product of a productivity going to come from going forward and can you still make these productivity savings without

affecting your ability to supply your your customers yeah look I mean first of all we didn't specify a productivity target as such I mean of course however However, we did say, I mean, on the medium term, but, you know, also on the shorter term that we expect profit to grow ahead of volume, right? So you do need leverage in your P&L, and I feel that we can do that. If you look over the last couple of years, the company has invested also 250 million in extraordinary items, so one-offs. I expect that level to be way lower going forward. So that's, I think, a remark number two. I think three I feel that the current cost base that we have is mostly served by growing in the areas that I talked about you know the four things and we need to shift to shift resources behind those things first and I felt that announcing now a major you know global restructuring after you know the last couple of years that I talked about was not the right message to in the in the company and we first need to make sure that we resource the priorities in the right way after that of course you know you can never exclude it but it wasn't part of the plan as such today okay thank you we don't expect I also don't expect major cost increases we talked about capital expenditure we were a level of 300 ish we're ramping that up probably to 350 and on an OPEX level I'm very keen to you know to to to get inflation compensated by productivity so that's all in the plan but not a major restructuring okay so in terms of the priorities for investment through the P&L obviously in your presentation you give a red box that says investments but that's the that's that's not quantified at this stage in terms of the incremental objects well as I said I'm On capital expenditure, I think we're pretty clear. 75%. And that's the step up that we're going to have to make. On OPEX, I feel that with everything there, whether it's digital, but also with the plans that we have, we should be capable to drive net productivity ultimately in fixed costs, which would be a trend change already. but as I said you know this is also not a plan for a major restructuring or a major step up on OPEX I feel it's a it's a shift plan people are doing too many things have been doing too many things investments as a result get diluted and I want to bring clear focus in everything that we do and bring consistency in our performance and in terms you mentioned the obviously the higher capex the investment that you're putting in to support the growth in the four key areas and how do we should we think about whether you're actually building out capabilities that you already have or that you're actually having to build muscle in areas that you don't necessarily have now yeah you know as I think to give you a statistic you know our our network at this point is capable without going too technical but 35% of our lines they can sell cocoa coatings or switch back to real chocolate solutions and cocoa coatings tend to be more affordable right because cocoa coatings in combination with oils and fats are an important ingredient list for many of our customers but interestingly you know when the cocoa price which is around now 3,000 pounds per tonne when it drops so no when it's higher than that around 3,500 or something then these cocoa coatings become a lot more financially interesting when we're at the current level that's sort of an inflection point and people do prefer taste and do prefer the more premium solution and they tend to go for chocolate you know and we can talk about that and say well we like this or we like that I'm taking a fairly pragmatic approach and I'm saying hey you know we need to bring that chocolatey experience and that means I need to have lines that are flexible and we need to increase that flexibility and agility so a third of our lines can do that in our important geographies but I feel we still need to have a stick we can still make a step there secondly on the specialties as I said you know we have for example we have baked inclusions which are super popular on ice cream and they're constant they have been out of stock because the demand has been there we have a supply point in Europe we've got a supply point in India wonderful but we need to step that up in other markets and I feel that that's something that we need to be faster on you know when we see those trends happening okay that you know caramelized nuts we produce in Spain wonderful solutions in combination with chocolate and particularly chocolate that performs great when it's frozen in ice cream again that

combination is golden all right great how do we how do we move faster and I feel that something that's a muscle that we need to build up and you know that will take a bit of time but I feel those are probably the two changes that we need to bring so there's a lot of aspects that we've spoken about so perhaps if we bring that together to the targets that you're setting the phases of the plan and the time frame in which you're looking to deliver those outcomes. You're targeting 2% to 4% volume growth, margin on the margin side, mid to high single digit EBIT growth and low teens PBT growth with the impact of lower financing costs, as well as cash flow, 300 to 400 million. What are the key phases of the plan and the milestones that we should all look for, for delivery?

So, first of all, that's a medium-term algorithm that we feel is feasible in combination, by the way, with 11 to 13% ROIC, as well as, you know, a leverage in a company that should get us to a safer level than what we were a few years ago. And I think that's ongoing and going in the right direction. But, you know, it's a medium-term outlook. in the short term we've guided towards a volume growth you know for the next 12 to 18 months that is not two to four but around one two three now what's dry first of all what's driving that you know first of all we've seen 50% price increases over the last three years and we need to see prices come down and we need to see the consumer responding to that I am positive that that's happening because we've guided for this fiscal year you know for the second half of our fiscal year towards volume growth already and that's with all the knowledge that I have today that is indeed coming through and we expect that to continue to some extent next year but of course it will depend on on the pricing and how consumers are responding so I would say I just want to be a bit cautious on on that one in combination with higher fuel costs and disposable income and so forth so that's one on volume on profit we expect also for a shorter term we expect profit to be ahead of that volume but I want to be careful as well you know we are making investments behind in our capabilities that I talked about we need to step from them up step of fundamentals we have things to repair so I just want to be a bit cautious we have a cost headwind on the fuel side particularly and logistics which is an important part for us and you know I feel that we're gonna make steps but and the steps will be also the profit before tax actually will be ahead I expect in the shorter term will be ahead of the midterm algorithm because of you know reducing financing costs that are coming through you know to to a faster extent than what we anticipated which is all good but I want to caution you know to great expectations on on on on margin development per se okay and in terms of the definition of medium term or milestones I mean is there anything you can sort of say about what medium term means, I suppose.

I would say, you know, around 18-24 months you should get to a medium term type of view. Okay, thank you. If we link this to your mission to be a reliable and innovative global leader, how do you think about the balance between wanting to get that volume growth and the positive benefits of operational gearing and wanting to provide a more consistent, solid foundation to that growth yeah I think you know I think the world is I mean to talk the world and what we do is changing a bit you know so and we talked I talked about it this morning in the Q&A as well you know the chocolate confectionery market from what I can see versus the past is not growing to the

same extent you know it's as you know I said for the short term but I feel overall will be sort of between one and two percent that's lower than probably what it historically has historically been but i feel that chocolate as a very versatile ingredient is used in adjacent categories that are super interesting you know ice cream which i know from some experience has been growing and will grow you know i would say between two and four roughly snack snack occasions such as protein bars and where chocolate is the preferred by far the preferred taste an ingredient will grow faster but also pastries will go faster so the second thing that we need to do is to move in those adjacencies and therefore expand our addressable market more intentionally and then third as I talked about our service look you know I feel that stepping up the fundamentals is arguably our for our best lever for growth right right now so you know your question i look i think this is the three things that we need to do and that will give consistency over time but we do need that to build that machine and as i said i you know i'm not asking here for everything long term i say hey one to three percent volume growth in the shorter term profit ahead of volume and pbt somewhat ahead of the the midterm guidance because of the particular dynamics around financing costs but at the same time we do we do need to build a machine and that But it's not an overnight exercise.

And you've very clearly introduced more oversight and accountability at organisations in your, you've been in charge of in your career.

What can you say about the degree of rigour to that which will be brought to Barry? and will that affect the rewards and incentives framework that the business operates on answers yes so as I said you know I felt the organization is a fairly matrixed organization in terms of global functions regional responsibilities that are not fully defined and so forth so what we're gonna do five global regions a simple set of targets for the regions in which they way of accountability to deliver, and of course a global target set that's there. Key functions, supporting the regions in a few important areas, supply chain and engineering, obviously finance and operations to global shared services. We have now four locations, and I want to stabilize that, get the cost levels out there, which I believe will help us to reduce that inflationary impact that you have every year, which i talked about so that's for me finishing a journey um and i would say those are probably the key uh the key things but um um we do need to get the accountabilities in the organization absolutely right and i want to be very straightforward if you're the president of north america in our organization then you run that show and you know our regions are around 85 percent self-sufficient you know so a large region like north america for example is around 85 to 90 percent almost self-sufficient and then there's some of course you know chocolate from belgium which is super famous and that's what we own uh cacao barry we're here in france which is a very super premium chocolate it's wonderful you should taste it um and that's something that we can export but for the rest you know they should run the show based on and with the help of uh of global colleagues but uh clear light light regional offices light head office designed for fit for purpose and put the resources as close as you can to the market yeah i i have to admit yeah i did that that's something i've done a few times you know i've experienced before as you probably are aware of um and i think it works to have the accountabilities right absolutely um so sustainability has been a top priority for well for the industry clearly and and particularly for

yourselves as a as a global leader what role does this play in the focus for growth you know No, it's bigger than you think.

I think it's worth saying that the undercurrent of sustainability in particular for us in the ESG framework, the S, so child labor issues, but also of course deforestation issues in the chain, I take them extraordinarily serious, but not just that, but actually we see the demands from our customers and the brand owners are going up and not down so while the topic of sustainability is sometimes not you know hitting the front pages these days the undercurrent on the demands the action that the industry is taking you know I think a very serious and we have a program it's called forever chocolate that was started ten years ago big credit to my predecessors on that and we are not relaxing our targets on that and I'm not going to make major changes I want to make sure that the couple of key targets that are in there that we hit them and so I'm prioritizing three or four and that's what we will go after but I think by doing that we will be capable to to prompt to provide something to our customers that no one else can because that's a clear level of differentiation so we've spoken about a number of different aspects across the uh across the plan that you've announced and obviously a number of different stakeholders as well so in your view what what does success look like in the focus for growth action plan um we cannot have in our most important segments uh customer service levels below 80 they need to be you know 93 4 5 plus and that needs to be reached pretty quickly second that 30% of premiumization in the portfolio needs to go up as a percentage of the total because it's a clear trend that we need to address it and third you know the segments that we want to win in I called out ice cream I called about bakery I called out you know snacking and protein with the specialties that I talked about we need to win those segments and be the absolute market

leader for me those are the three big ones and of course a very um motivated and happy organization but you know uh that's something you probably won't see from the outside so much okay well look we've been through an awful lot this morning uh in a short period of time and some significant actions that you're taking to improve the performance but barry say thank you very much for joining us today and giving us this chance to to speak on on this important day as you launch the strategy. Thank you.

I appreciate your time. Thank you.

Okay.