Hugli has posted a profit in the first half of 2014

Hugli has posted a profit in the first half of 2014

Hugli has reported a 16.3% rise in profits for the first half of 2014 despite a "sluggish food market in Europe".

The firm reported a rise in profits to CHF11.7m (US$12.8m) and an increase in earnings before interest and tax to CHF16m.

Sales, however, were affected by a slowdown in volume, particularly in Europe. Hugli reported an increase in revenue of 1.5% to CHF185m.

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Hiigli with significant yield increase

  • Sales increased by + 2.1% to CHF 185.0 million organic
  • Gross margins stabilized, lean cost structures have a positive effect
  • EBIT rises in H1 2014 by + 14.3% to CHF 16.0 million, EBIT margin: 8.7%
  • Net profit by 16.3% + grows to CHF 11.7 million
  • Outlook 2014: Organic sales growth on the previous year (+ 2.4%),

    EBIT margin in the mid range of the strategic target range of 8% - 9%

Resinous European economic environment in most sales divisions

The Hiigli group sales increased organically by 2.1% +, but was belastetet by negative currency effects. Overall, sales rose by 1.5% to CHF 185.0 + million, in a still sluggish food market in Europe, which had no growth in most areas. This is particularly true of the market for the out of home market of the largest Food Service Division. Only two small paragraph countries in Eastern Europe could be achieved through good market performance remarkable growth rates. The Food Service division total laid in the first half of organically only + 0.3%. Business with Hiigli own-brand products in Consumer Brands suffered temporarily with a decrease of -1.1%.

The major customers of the Business Division Private Label (food retailing) showed very divergent developments in each country. All four Eastern European countries like UK also performed significantly negative due to no longer executed customer orders, at least at Topline. On the other hand, new customers in Western Europe could be obtained, which generated a remarkable growth in this region. The Division has been growing organically in the first half for the time being by + 1.4%, but with very good prospects for the second half of the year.

After two difficult years, the Food Industry Division now showed with + 3.1% again attractive growth rates. Particularly well developed sales with seasonings for the food industry and with diet products.

Furthermore dynamically with + 10.2% increased sales of Brand Solutions Division. Very popular were further products from organic farming, which rose well above market levels. The organic market in Europe with growth rates in the high single-digit percentage range represents one of the few dynamic markets. Too, very pleasing to the newer area of ??Health & Nutrition developed with nutritional supplements.


Positive income patterns in the peripheral countries

The most important geographical segment Germany posted an organic growth of + 3.3% to CHF 111.1 million, mainly generated in the Divisions Private Label and Brand Solutions. A lower gross margin due to changes in customer mix, coupled with personnel cost increases, however, resulted in a lower profitability. The EBIT fell by -5.2% to CHF 10.7 million more, which corresponds to an EBIT margin of 9.7% is still good, but below the previous year's level of 10.5%.

The country segment Switzerland / Rest of Western Europe has experienced sales growth in local currencies of total + 1.2%. The restructuring took place in the production companies in the UK and in Italy brought the announced positive trend in earnings and led to significant increases in EBIT.


Switzerland also reported good capacity utilization and could easily improve the high level of income. The EBIT of the segment total countries rose nearly 90 +% to CHF 4.5 million, the EBIT margin rose from 4.1% to 7.7%.

The segment Eastern Europe experienced a very sharp decline in sales customers of the Private Label. Nevertheless, it was the quantity produced will be increased overall as a result of the positive development in the food service and production services to other group companies. From a low level coming doubled the EBIT of CHF 0.4 million to CHF 0.8 million, for 2014 an EBIT margin of 5.3%.


Disproportionate increase of consolidated EBIT and a gain in

The gross margin stabilized and was slightly higher than the previous year, this ongoing after a two-year period with increases in commodity prices. The operating cost base was reduced further in the context of lean management. Due to the current good order situation, however, were amplified on total 1'373 full-time positions in the first half of 2014, the personnel resources back to + 3.9%, mainly in the production.

Group EBIT increased from CHF 14.0 million to CHF 16.0 million, or. by + 14.3% in the first half of 2014, this corresponds to an EBIT margin of 8.7% compared to 7.7% in the previous year. Thanks to a further decline in interest expense, net income increased by + 16.3% could be increased to CHF 11.7 million.


Robust balance sheet, continued strong cash flow

The solid balance sheet shows again an improved structure. While the net current assets declined, fixed assets increased due to investments in advanced production equipment of the latest generation.

Thanks to continued strong operating cash flow and net debt decreased despite the expansion investments to CHF -8.0 million to CHF 57.4 million, which represents 1.3x with the lowest debt ratio (net debt / EBITDA 12 months rolling) of the past ten years. Shareholders' equity increased further to CHF 139.9 million, corresponding to an equity ratio of 54.4% as at end-June 2014.


Outlook - On the upswing

We assume that the revenue growth slightly increased in the second half and the full year 2014 organic sales growth on the previous year (+ 2.4%) is achieved. The EBIT margin should be doing in the middle range of the strategic target range of 8% - 9% lie.

We confirm our strategic growth objectives with a medium overall sales growth of 5% per year, based on both organic growth as well as bolt-on acquisitions.



We thank our customers, suppliers and business partners for the good cooperation, our employees for their dedication and daily use to achieve these ambitious goals, and our shareholders for their confidence that they place in us.


Original source: Hugli