Barry Callebaut, the world’s largest chocolate maker, slashed its full-year profit outlook on Thursday after a steep decline in cocoa prices exposed margin weaknesses and operational bottlenecks, sending the company’s shares down sharply and signalling a difficult transition year for the broader chocolate industry.
The Zurich-based company now expects earnings before interest and tax to fall by a mid-teens percentage in its 2025/26 fiscal year, a significant reversal from guidance issued just three months ago when management had been preparing for a return to growth.
Group sales volume fell 6.9% to 1.01 million tonnes in the six months to February 28, 2026, while recurring operating profit declined 4.2% in local currencies to CHF 310.9 million. Revenue dropped 3.7% on a constant-currency basis to CHF 6.75 billion. Net profit nonetheless rose to CHF 89.4 million, supported by lower financing and tax costs.
Shares plunged as much as 17% on Thursday following the announcement, with the stock trading down approximately 15.8% in afternoon London trading.
The paradox at the heart of the results is that falling cocoa prices, which might have been expected to ease cost pressures for a major processor, instead created new problems. Cocoa bean prices fell 61% over the half-year period — a move that exposed a mispricing in Barry Callebaut’s Gourmet division, where the company held long positions as prices declined, leaving it with an uncompetitively high price list in a falling market. Gourmet volumes dropped 3.4%.
In order to compete with companies that bought cocoa later and at lower prices, Barry Callebaut had to reduce its own prices despite having purchased beans at higher cost earlier in the cycle.
New Chief Executive Hein Schumacher, who took the role in late January after leading Unilever, acknowledged the scale of the challenge ahead. “We have an unparalleled market position and fundamental growth opportunities. At the same time, we have significant work to do to reinvigorate the company after a turbulent period of industry disruption and transformation,” he said.
Schumacher has responded by launching a “Focus for Growth” programme aimed at streamlining operations, addressing capacity bottlenecks, and incomplete digital transformation he identified in his first months in the role. The company’s immediate priority has shifted from margin defence to volume recovery.
North America was a particular weak point, with volumes there dropping 12.6% following the temporary closure of the St. Hyacinthe factory in Canada. Asia Pacific, Middle East and Africa was the strongest regional contributor, growing 8.5%, driven by market share gains in China and momentum with key customers in India.
Despite the weaker earnings picture, the company’s financial position provided some cushion. Free cash flow reached CHF 801.8 million, and net debt fell to CHF 3.60 billion from CHF 6.11 billion a year earlier, enabling rapid deleveraging. Management now targets net debt to recurring EBITDA below 3.0 times.
On the demand side, the picture remains uneven. Europe’s first-quarter cocoa grind fell 7.8% year on year to 325,852 tonnes, reinforcing weakness in the region that has been building for several quarters. Asia offered a partial offset, with first-quarter grindings rising 5.2% to 223,503 tonnes — a signal that lower prices are beginning to stimulate processing demand outside mature markets.
Barry Callebaut now expects full-year volumes to fall between 1% and 3%, an improvement on its prior forecast of a mid-single-digit percentage drop, with the company anticipating a return to volume growth in the second half of the fiscal year.
Analysts at J.P. Morgan said the revised guidance was likely to trigger roughly a 20% reduction in consensus earnings forecasts for the full fiscal year.
The company said it would provide a further update on its growth strategy at an investor event in June.
For West African cocoa producers, the results carry direct relevance. Barry Callebaut operates grinding facilities in Ghana and sources significant volumes from the region. The company’s volume recovery timeline and pricing behaviour will shape demand signals reaching origin markets over the coming quarters, at a time when Ghana’s own cocoa sector is navigating disease pressure, financial strain at the Ghana Cocoa Board (COCOBOD), and a sharp retreat in farmgate prices from the peaks of the previous cycle.
