Oklo stock tumbles as Financial Times scrutinizes valuation
Introduction & Market Context
Barry Callebaut, the world’s leading manufacturer of high-quality chocolate and cocoa products, presented its 9-month key sales figures for fiscal year 2024/25 on July 10, 2025, revealing a company navigating what it describes as an "unprecedented market environment." The Swiss chocolate giant is facing extraordinary challenges as cocoa prices have skyrocketed from a historic average of £2,000 to between £6,000-£10,000 over the past two years, creating exceptional volatility in the market.
The cocoa futures market has experienced dramatic fluctuations, though the company noted that the market has self-corrected several times to better reflect supply realities. Despite these corrections, prices remain elevated, with cocoa beans up 43% year-over-year in the first nine months of the fiscal year.
As shown in the following chart depicting the unprecedented market volatility:
The International Cocoa Organization (ICCO) continues to expect a slight surplus for 2024/25 despite a weaker mid-crop. There are promising productivity developments in non-West African origins, including Ecuador and Indonesia, though the company acknowledges these improvements will take time to significantly impact the market.
Quarterly Performance Highlights
Barry Callebaut reported a 6.3% decline in overall group sales volume for the first nine months of fiscal 2024/25, with chocolate volumes down 5.1% and cocoa volumes falling more sharply at 11.3%. Despite these volume challenges, the company achieved remarkable revenue growth of 56.7% in local currencies, driven by the exceptional pass-through of higher cocoa prices to customers.
The following table details the volume dynamics across different segments:
Regional performance varied significantly, with Latin America standing out as the only region posting positive growth at 8.3%, primarily driven by strong performance in Brazil. Meanwhile, Western Europe saw the steepest decline at -6.8%, followed by North America (-5.8%) and Central and Eastern Europe (-5.5%). The Asia Pacific, Middle East & Africa region showed modest growth of 0.5%.
This geographical breakdown provides more insight into the regional performance:
The company attributed volume declines to several factors, including U.S. tariff uncertainty, changing customer behavior in response to higher prices, and strategic prioritization in the cocoa segment. Customers have been adjusting their purchasing patterns by slowing call-offs, destocking, timing orders around market movements, and shifting business across their networks.
As illustrated in the following chart, the cumulative pricing impact has been substantial:
Strategic Initiatives
Barry Callebaut continues to make progress on its BC Next Level transformation program, which focuses on standardizing factory processes, upgrading food safety protocols, implementing global business services, and advancing digital capabilities. The company reported that its factory standardization has been rolled out in six factories with 21 more planned by October, while 93% of knowledge transfer sessions for global business services have been completed.
The company’s strategic growth pillars are showing resilience despite market challenges:
To address financial pressures from elevated cocoa prices, Barry Callebaut has implemented a comprehensive action plan focused on deleveraging. According to the earnings call transcript, the company aims to reduce its net debt/EBITDA ratio from the current 6.5x to below 3.5x through three key initiatives:
These measures include structurally lowering inventory levels, optimizing cocoa sourcing and bean blending, implementing pricing actions for financing costs, and developing less cash-consuming solutions to manage volatility.
Forward-Looking Statements
In response to the challenging market conditions, Barry Callebaut has revised its outlook for fiscal year 2024/25:
The company now expects a mid-single-digit volume decrease in Global Chocolate and a double-digit volume decrease in Global Cocoa, resulting in an overall group volume decrease of approximately 7%. Despite these volume challenges, Barry Callebaut anticipates a mid to high single-digit increase in recurring EBIT in local currencies.
CEO Peter Feld emphasized the company’s resilience during the earnings call, stating, "We play to win. We are leveraging our cost plus pricing model," and noting that "Crisis usually triggers innovation, and that’s good for Barry Callebaut."
The company’s long-term strategy focuses on enhancing resilience and agility through three key actions:
Barry Callebaut continues to leverage its cost-plus model to pass through significant cocoa price increases while prioritizing key growth pillars of outsourcing, gourmet, specialties, and expansion in Asia, Middle East, and Africa. The BC Next Level transformation program remains central to delivering better customer experiences while enhancing agility, scalability, and cost efficiency.
Despite the current challenges, the company maintains that it is building a stronger and more resilient Barry Callebaut for the future, with a focus on sustainable, profitable growth in an increasingly volatile cocoa market.
Full presentation:
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