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August 18, 2017

Huegli H1 sales, earnings decline

Switzerland-based food and drinks group Hügli Holding today (18 August) reported lower first-half sales and earnings, with its domestic business, as well as its operations in Germany, Italy and the UK, weighing on the results.

By Dean Best

Switzerland-based food and drinks group Hügli Holding today (18 August) reported lower first-half sales and earnings, with its domestic business, as well as its operations in Germany, Italy and the UK, weighing on the results.

However, Hügli, which manufactures products including condiments, ethnic food and protein shakes, said it was “based on the incoming orders, we are confident that sales growth will pick up again and the market trough has bottomed out”.

Nevertheless, Hügli issued a note of caution: “This notwithstanding, the entire European foodstuffs market is currently under severe strain and a large number of manufacturers are facing volume declines.” 

Hügli booked a 12.4% fall in net profit to CHF10.9m (US$11.3m). EBIT was down 18.1% at CHF13.9m.

The fall in profits came on the back of a 5.5% decline in CHF185.7m.

Hügli said sales in Germany, measured in local currencies, “remained weak”, falling 5.4%. In 2016, Hügli’s sales in Germany dropped 5.7% year-on-year. The company’s EBITDA in the market fell 16.4%.

“The orders and promotional sales on hand nevertheless indicate a positive trend for the second half of the year,” Hügli said.

The group combines its other markets in western Europe with its unit in Switzerland into one division. On an organic basis, excluding factors like its acquisition of Dutch foodservice supplier Bresc last year, sales from the division 1.9%.

Sales in Austria “developed well” but Hügli said its UK subsidiaries were affected by “the massive devaluation” of sterling.

Hügli said its business in Italy was faced with “a significant slowdown of cyclical key account orders that caused earnings to drop temporarily”.

In Switzerland, Hügli said its gastronomy sales continued to decline which, along with orders being pushed to the second half of the year, had “a considerably depressing impact on earnings”. Overall, the division’s EBITDA fell by 18.9%.

Hügli’s eastern European division reported a 3.9% rise in sales in local currencies helped by its foodservice business. EBITDA grew 40.6%.

Looking ahead, Hügli said in “gains in H2 should compensate for losses sustained in H1”. The company said it expects second-half sales growth “will compensate for the setback sustained in the first half of the year”.

If that happens, Hügli said its currency-adjusted sales in 2017 would match last year’s level. On a reported basis, Hügli’s sales were CHF385m in 2016.

The group expects its second-half EBITDA rise year-on-year, which would lead to that metric reaching to the CHF42.8m generated in 2016.

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