Silke Koltrowitz

ZURICH (Reuters). Despite images of the conflict in Ukraine creating “enormous stress”, Barry Callebaut, a Swiss chocolate manufacturer, said Wednesday that it will continue to operate in Russia in order to assist customers and employees.

As analysts worry about Zurich’s exposure to Russia, which is small but significant for the group, shares in Zurich fell by more than 5 percent.

With the recovery of global chocolate sales, both profits and overall sales were higher in the first half. Moscow’s invasion of Ukraine forced companies that sell consumer goods to Russia to change their strategy.

Although Nestle’s Russian customers have stopped selling KitKat chocolate bars in Russia, Barry Callebaut has three Russian factories, 500 workers, and the Russian factory that produces them.

Peter Boone, Chief Executive of the company said that they are feeling immense pressure from just looking at the pictures we receive during the conflict and could not help but look in the boards of the other companies.

According to him, the question about whether Russia should be left was being raised both internally and externally by his family. However, it was vital to preserve the employment of Russian staff.

We are still in regular contact with our Russian 500 colleagues, and they have clearly not requested this Russian government decision. It feels right for us to keep close to our customers and employees,” he stated, adding that the chocolate and cocoa from the company went into many products, including breakfast cereals and drinks.

According to him, Russia was the fourth largest chocolate confectionery market according to Euromonitor. Russia also represented less than 5 percent of the group volume. The company had to take a $5 million Swiss Franc (5.4 million USD) impairment due to the higher risk of customers default. Also, it has stopped all capital investment.

At 1123 GMT, shares in the group fell 5.7%. This was below the European food sector index.

“The exposure to Russia with close to 5% of the group’s volume as well as the flattish EBIT per tonne despite strong volume growth could partly explain the share price drop,” Vontobel analyst Jean-Philippe Bertschy said in an emailed comment.

Boone acknowledged that Russia is still not under Western sanctions, making it difficult to import raw materials.

Company confirmed that it will achieve 5-7% growth in sales and earnings before tax and more volume growth than volume for the three-year period ending August 2023.

Sales volumes rose 8.7% over the period from February to February due to strong chocolate sales, and an improvement in its gourmet restaurant business. The net profit increased by 3.1%.

($1 = 0.9333 Swiss francs)