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May 13, 2019

Hochdorf launches business review amid warning on first-half outlook

Hochdorf has launched an assessment of its business strategy as the Swiss infant-formula maker faces challenges in integrating recently-acquired subsidiaries.

By Dean Best

Hochdorf has launched an assessment of its business strategy as the Swiss infant-formula maker and dairy firm faces challenges in integrating recently-acquired subsidiaries, warning its first-half results are expected to be “significantly” below last year’s.

The business has been struggling financially of late and issued a series of profit warnings last year before reporting a 56% slide in EBIT to CHF18.6m (US$18.4m). Sales dropped 6.6% to CHF561m.

Hochdorf lost its chief executive Thomas Eisenring in March and had also faced pressure from one of its largest shareholders ZMP Invest, the investment arm of Swiss milk cooperative ZMP, to appoint new members to the board of directors. But ZMP won the day when its favoured candidate Bernhard Merki was elected as board chairman in April.

In a statement today (13 May), Hochdorf said it will aim to “sharpen the group’s strategy” by the end of June and will announce more details of its business review and outlook.

“The challenges of integrating the subsidiaries acquired in recent years are bigger than expected,” the company said. “As a result of higher costs and depreciation – despite a currently satisfactory sales performance – the half-year result is therefore expected to be significantly below the previous year.”

Hochdorf said it is working with its “most important stakeholders” in the process. The ZMP co-op holds 14.5% of the business, making it the second-largest shareholder behind Amir Mechria, the founder and CEO of Swiss nutrition and infant-formula firm Pharmalys, with 20%. The Weiss family owns a portion through Innovent Holding.  

Last November, Hochdorf increased its stake in milk distribution company Thur Milch Ring to give it a majority shareholding of 56%. And a year ago, it also bought Bimbosan, which manufactures nutritional food for children. In 2017, it acquired German dried fruits and vegetable firm Zifru Trockenprodukte and its Snapz organic snacks brand for an undisclosed sum.

Alain Oberhuber, a consumer goods analyst and CEO of MainFirst Schweiz, said he interprets Hochdorf’s announcement as guiding markets toward a loss for the first half, predicting a CHF11m EBIT loss compared to a positive CHF2.9m in the same period last year.

For the full year, he sees EBIT coming in at CHF35.2m versus CHF18.6m in 2018.

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