Swiss chocolate maker Barry Callebaut will keep operating in Russia to help its customers and employees there, even though images from the war in Ukraine create 'enormous pressure,' it said on Wednesday.
The Zurich-based group posted higher profits and sales volumes for the first half of its fiscal year, helped by a recovery in the global chocolate market.
But Russia's invasion of Ukraine has forced all consumer goods companies with a presence in the region to rethink their strategies.
While its customer Nestlé has stopped selling most foods, including KitKat chocolate bars, in Russia, Barry Callebaut's three Russian factories and 500 staff are still working.
"We are under enormous pressure just watching the images we get from the war and we cannot not look into the boardroom of other companies," Peter Boone, chief executive told reporters.
"We are in contact with our 500 colleagues in Russia, they clearly have not asked for this decision by the Russian government. For us, it feels like the right thing to do to stay close for our employees and our customers," he said, adding the company's chocolate and cocoa went into all kinds of products including drinks and breakfast cereals.
'Fourth-Largest' Chocolate Market
He said the business in Russia - the fourth-largest chocolate confectionery market, according to Euromonitor - represented less than 5% of group volumes and the company was taking a 5 million Swiss franc ($5.4 million) impairment to reflect the increased risk of customer default there.
It has also stopped new capital investment in the country.
Boone said it was difficult to get raw materials to Russia, but still possible as food is not covered by Western sanctions.
The company confirmed its goals for 5-7% sales volume growth and earnings before interest and tax above volume growth for the three years to August 2023.
Strong chocolate sales and a recovery in its gourmet business with restaurants helped sales volumes rise 8.7% in the six months to the end of February. Net profit climbed 3.1%.
Its shares were down 2% in early trading.