Barry Callebaut Sales Rise 22%, Sees Tough Year

Barry Callebaut, the world's largest chocolate maker, posted a forecast-beating 22 percent rise in first-quarter sales on Tuesday, but warned margins could face pressure due to high raw material prices.

Sales for the period rose to 1.42 billion Swiss francs ($1.29 billion), beating the 1.34 billion franc average forecast in a Reuters survey of six analysts.

"We expect the cost environment to remain challenging throughout the remainder of fiscal year 2007/08 due to sustained high raw material prices," the group said in a statement.

"In addition, consumer sentiment in North America is weakening and is expected to wane in Europe. This may lead to increased price and margin pressure."

But the group confirmed its four-year targets for the period 2007/08 through to 2010/11 and said it was on track to continue its strong sales-volume performance thanks to four large long-term supply agreements.

Barry Callebaut is aiming for annual top-line growth of 9 to 11 percent, operating income growth of 11 to 14 percent and net profit growth of 13 to 16 percent for the four-year period.

Barry Callebaut won contracts from Nestle, Hershey and Cadbury last year, as companies outsource the production of chocolate amid high prices for ingredients.

Last week, cocoa prices climbed to their highest level in more than four years and sugar prices rose to the highest level since December 2006, boosted by fund buying.

Barry Callebaut provides the food manufacturing industry with cocoa and chocolate products, fillings, coatings and cocoa powders and has more than 1,650 recipes.