Barry Callebaut: Navigating the Cocoa Crisis with Scale Advantage
🍫 Barry Callebaut, the world's largest chocolate manufacturer, faces challenges from the cocoa price surge but benefits from contracts that pass inflation to clients like Nestle and Mondelez, protecting its margins better than competitors.
📉 The crisis increases working capital needs due to higher inventory costs, leading to negative free cash flow and requiring more debt, although Barry's strong balance sheet (investment grade) and low borrowing costs mitigate this risk.
🥇 As the best-positioned player with scale advantages, Barry could gain market share if smaller competitors falter, offering a long-term opportunity despite short-term volume declines and market volatility. Valuation is attractive at 10x earnings vs. historical 25x.
