Hochdorf is doing better
The restructuring of the Hochdorf Group initiated in summer 2019 has had a positive impact in the first half of this year.
In the first half of 2020 the Hochdorf Group processed 187.9 million kg (-15.2% compared to previous year) of milk, whey, cream and buttermilk (liquid quantity) in Switzerland and sold 46,357 tons of products, which generated net sales of CHF 158 million. (first half year 2019: CHF 243 million). The decline in net sales is primarily due to the sale of Uckermärker Milch GmbH in February this year.
With an EBITDA of CHF 5.0 million, the company closed positively at the middle of the year and thus also fulfilled the bank covenants. The positive EBIT of CHF 1.2 million (previous year CHF –52.4 million) is slightly influenced by capital gains from the sale of Uckermärker Milch GmbH. Due to the low capacity utilisation of the production lines for the manufacture of baby food, the necessary depreciation has not yet been generated. The Group’s net income was slightly negative at CHF –4.1 million due to high interest payments. The result after minority interests was CHF –3.9 million compared to CHF –43.4 million in the same period of the previous year. The balance sheet total at the end of June was CHF 418.6 million and the equity ratio was 56.8%. In addition, the Hochdorf Group generated free cash flow of CHF 2.9 million, which also includes the purchase price payment mentioned above.
In the absence of interested buyers, the liquidation of Zifru Trockenprodukte GmbH, Snapz Foods AG and Snapz Foods USA Inc was decided. The liquidations are carried out with no impact on earnings, according to the Hochdorf management.
The Dairy Ingredients division achieved net sales of CHF 120.7 million. This includes sales of CHF 25.4 million from the operational business of Uckermärker Milch GmbH.
A decline in the amount of liquid processed in Switzerland of -15.2% is explained by the higher consumer demand for fresh milk products during the coronavirus lockdown, the alpine pasture of the cows three weeks earlier and the lower milk prices in competition with cheese as a result of the successor to the Chocolate Act. With the exception of cream, the ability to deliver was never endangered due to the smaller quantities of milk. The production facilities were also well utilized in the first half of the year.
With “OPTIMA”, the management started a company-wide cost efficiency programme. The first five sub-projects work on cost savings in the areas of systems and buildings, production processes, logistics, administration and purchasing. For 2021 the company expects savings in the range of CHF 2.0 to 3.0 million from “OPTIMA”.
In the Baby Care division, Hochdorf does not expect the coronavirus pandemic to have any significant negative effects on sales and earnings in the second half of the year. However, the company had to accept corona-related delays in long-term new customer projects in the first half of the year, some of which could be further delayed. If travel restrictions persist, the internationalisation of the Bimbosan brand cannot rule out the possibility of postponing the measures taken to open up the market to 2021. In contrast, the coronavirus impact on the Dairy Ingredients division is likely to be stronger. In the case of ongoing travel restrictions, Hochdorf in particular expects fewer product calls from the Swiss chocolate industry, the development of which will be very dependent on the progress of the pandemic. However, Hochdorf continues to assume that it will be able to meet the end-of-year forecast made in March with net sales of CHF 280-320 million and a positive annual result at EBITDA level.