Shares of Barry Callebaut retreated 4.1% during today’s session, settling at CHF 1,135, after the Swiss chocolate and cocoa group released its trading update for the third quarter of fiscal 2025/26. The report included a positive volumetric signal but left investors concerned about the company’s near-term profitability.
On volumes, the company posted Q3 group growth of 5.7% - its first quarterly expansion in more than two years - a recovery the firm attributed to stronger cocoa demand and improved service levels in North America. Despite that uptick, aggregate volumes for the first nine months of the fiscal year remain below last year’s level, falling 2.8% to 1,557,239 tonnes.
The top-line remained under pressure. Nine-month sales revenue declined to CHF 9.56 billion from CHF 10.95 billion in the prior-year period, reflecting a pronounced reduction in cocoa-linked pricing. The company noted a 47% year-on-year drop in average terminal market cocoa prices, which materially eased the revenue base compared with the prior period.
Management adjusted its full-year volume guidance, tightening it to a decline of approximately 1% - an improvement relative to the earlier range of -1% to -3% - but left its recurring EBIT guidance unchanged. The guidance continues to call for a mid-teens percentage decrease in recurring EBIT in local currencies. Investors had anticipated that the volume recovery might prompt a less severe EBIT outlook, but management did not revise the profitability forecast.
Analyst reaction added to the downward pressure on the shares. Deutsche Bank retained a Sell rating on the stock and cut its price target to CHF 960 from CHF 1,000, underscoring concerns about the company’s near-term earnings trajectory.
Market context suggests the share movement was driven by company-specific developments rather than a broad selloff in Swiss equities. The Swiss Market Index (SMI) traded in a relatively contained range during the session, indicating that Barry Callebaut’s decline reflected disappointing elements of its update rather than macro-driven pressure on Swiss stocks.
Intraday price action illustrated the shift in sentiment: the stock opened near an intraday high of CHF 1,230 but moved lower through the day to an intraday low of CHF 1,135. Market observers attributed the retreat to a combination of factors outlined in the update - namely, the unchanged and still-negative EBIT outlook, the fresh analyst price target reduction, and a revenue base that remains sharply lower as a result of falling cocoa prices. Together, those elements outweighed the positive signal from the quarterly volume recovery.
Key points
- Q3 group volumes grew 5.7%, the first quarterly increase in over two years, while nine-month volumes fell 2.8% to 1,557,239 tonnes.
- Nine-month sales revenue decreased to CHF 9.56 billion from CHF 10.95 billion year-on-year, driven by a 47% drop in average terminal market cocoa prices.
- Management narrowed full-year volume guidance to roughly -1% but kept recurring EBIT guidance at a mid-teens percentage decline; Deutsche Bank maintained a Sell rating and cut its price target to CHF 960 from CHF 1,000.
Risks and uncertainties
- The unchanged recurring EBIT guidance - calling for a mid-teens percentage decline in local currencies - poses a continued earnings risk for shareholders and affects expectations for profitability.
- A persistently contracting revenue base due to sharply lower cocoa prices remains a headwind for reported sales, even as volumes recover; this affects the materials and consumer goods segments tied to cocoa and chocolate production.
- Analyst downgrades and target cuts, exemplified by Deutsche Bank’s maintained Sell rating and reduced target, introduce additional downside risk to market sentiment for the stock.
Overall, the update left investors balancing a meaningful volume rebound against a still-deteriorated revenue profile and an unchanged, negative EBIT outlook. Those factors combined to press the share price lower in a session otherwise stable for Swiss equities.