German dairy and meats group Hochwald Foods has forecast its sales will fall again in 2016 after seeing its top-line decline by more than 9% in 2015.
Hochwald reported a 9.4% drop in sales for 2015 to EUR1.44bn (US$1.6bn), as the global trade of milk products struggled against weak demand in China and Russia’s ongoing trade embargo.
Global milk prices fell by about a quarter in 2015 compared to the previous year, Hochwald said. Exports made the largest contribution to sales although business was also affected by the fall in crude oil prices and “political crises in a number of sales markets”.
Despite 2015 being a “difficult year for the milk industry”, Hochwald said it “held its ground better than the German industry average”. Sales to third countries “even increased by over 7%”, the group said.
Chief financial officer Detlef Latka said: “Despite market trends, we expect that even in 2016 an above-average milk price can be paid by the group (to suppliers) – though at a lower level than 2015. The payment price was already above the German national average in the first few months.”
Latka said: “International trade is suffering under stagnant growth of global markets, though initial signs of recovery can be identified.”
Meanwhile, Hochwald said it is committed to a programme of “sustainable corporate development” and is expanding high value-added business areas. Chief operating officer Karl Eismann said: “By tapping into the baby and infant nutrition segment and commissioning the drying plant in Huenfeld, at Hochwald we have reached a new level of milk processing.”
In addition, Hochwald said restructuring operations as part of its 2020 strategic plan will help the group move ahead in what is expected to remain a tough business climate. The firm said the “first steps” have already been taken with the sale of its canned-sausage and sausage product making subsidiary in Meppen, plus the signing of a long-term cooperation agreement with fellow German dairy Schwaelbchen.