Callebaut beats forecasts as chocolate outsourcing booms


* More chocolate outsourcing as confectionery demand surges

* Net profit falls to 229 mln Sfr, beats poll

* Sales volumes up 11.4 pct, 8.7 pct without Petra

* Confirms midterm guidance of 6-8 pct volume growth

By Silke Koltrowitz

ZURICH, Nov 7 (Reuters) - Barry Callebaut, theworld's No. 1 chocolate and cocoa maker, beat analysts'forecasts on Thursday as big food groups, such as Nestle andMondelez, outsource more chocolate making and as confectionerysales rise worldwide.

Sales volumes rose 11.4 percent in the full year to August,compared with a Reuters poll forecast for 10.3 percent, and netprofit fell 5.4 percent to 229 million Swiss francs ($251.36million), beating a forecast of 213 million.

Profits were squeezed by costs related to buying PetraFoods' loss-making cocoa business. Without Petra,volumes grew 8.7 percent. Sales revenue rose slightly to 4.88billion Swiss francs, roughly in line with expectations.

It beat 2.1 percent growth in the European chocolateconfectionery market with 8.1 percent sales volumes growth andalso generated double-digit growth in the shrinking Americanmarket, notably thanks to a deal with Hershey.

Major customer Nestle said confectionery salesrose 6.1 percent in the first nine months, and Mondelez, also a customer, reported double-digit sales growthfor its Milka and Cadbury Dairy Milk brands on Wednesday.

"We will continue to focus on pushing our topline while alsopaying attention to a further margin improvement," chiefexecutive Juergen Steinemann told Reuters on Thursday. Heconfirmed the group's midterm 6-8 percent volume growth target.

Steinemann said he was happy with how the Petra integrationwas progressing and was confident of achieving forecastsynergies of 30-35 million Swiss francs by 2015/16.

Vontobel analyst Jean-Philippe Bertschy said in a note thatresults were "reassuring". "Underlying results were in line withexpectations, and Petra's negative impact slightly lower thananticipated," he said, noting that the Petra integration wouldbe challenging.

Chief Finance Officer Victor Balli said the dispute over thePetra sale price was not linked to the performance of thebusiness but rather to asset valuations. "For us, there's onlyupside here. We've already paid and booked the acquisition."

Barry Callebaut bought Petra Foods' cocoa business for $860million this year, $90 million less than the initially agreedprice. It is trying to get a further $98 million reduction,which Petra Foods refuses. "We hope to solve this quickly,"Balli said, without giving a time frame.

He said he expected Petra's operating profit to be 30million francs in 2013/14.

Steinemann and Balli said capacity problems in Asia-Pacific,where operating profit fell by 9 percent, would soon be solvedas a new factory in Japan was now operational, and that earningsin the region should improve in this fiscal year.

Price rises for cocoa beans and lower prices for cocoapowder weighed but the situation should improve, Balli said.

"I think cocoa powder prices have bottomed out because stocklevels have been reduced and processing capacities have not beenincreased again," Balli said.

He expects cocoa bean prices to stay at current levels,while Steinemann sees powder prices rising slightly and cocoabutter prices starting to fall.

Liffe cocoa prices have risen around 11 percent inthe past three months, hitting a two-year high in October of1,774 pounds, as expectations for a second consecutive globaldeficit supported the market. Balli said he expected the deficitto be "relatively small".

The group said it would propose a dividend of 14.50 Swissfrancs per share, below the 15.70 francs forecast in the poll.

Shares, up 8 percent this year, rose 2.9 percent to 972francs by 0957 GMT, outperforming a flat sector index.

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