Net profit fell 11.3 percent in local currencies to 121.8 million Swiss francs ($134.8 million). Analysts in a Reuters poll had forecast net profit of 140 million Swiss francs on average.

"In the last six months we initiated selective investments in our future growth. This temporarily affected our bottom-line results," Chief Executive Juergen Steinemann said in a statement.

Barry Callebaut, which makes chocolate for companies like Nestle (NESN.VX), Hershey (HSY.N), and Kraft (KFT.N) said sales volumes rose 6.7 percent in the first half, outpacing the global chocolate market.

After grappling with weak demand in parts of Western and Southern Europe in the first quarter, volume growth in Europe - the company's largest region - rose 3 percent in the second quarter, helped by specialties products.

Nonetheless, Steinemann cautioned the economic environment in Western Europe and North America remained fragile.

The company confirmed its mid-term target of volumes to grow between 6 to 8 percent on average through 2012/2013.

($1=0.9039 Swiss francs)

(Reporting by Caroline Copley; Editing by Mike Nesbit)

• A Permanent Economic Emergency