Hügli hoping to accelerate geographic expansion and "exploit potential" of new products

Hügli hoping to accelerate geographic expansion and "exploit potential" of new products

Hügli Holding, the Switzerland-based food group, is embarking on changes to its business structure in a bid to boost its profitability after a year in which margins declined.

The company is consolidating "the key account business" of three of its divisions - private-label retail, brand solutions and food industry. The new division, called customer solutions generates 35-40% of Hügli's sales.

Hügli said it wanted to "strengthen cross-national cooperation" between the sales divisions and production units in its various markets, which it believes will "increase process quality and cost efficiency".

The rejig is also aimed at "accelerating" Hügli's geographic expansion and "exploiting the new product lines' market potential more effectively", the company, which supplies products from soups and sauces to vegetarian food, added.

CEO Thomas Bodenmann said: "I am confident that with this further evolution and new focus we are building upon the strengths of our organisational structures and at the same time eliminating weaknesses and optimising process quality and cost-efficiency."

News of the revamp came alongside the publication of Hügli 's 2016 sales figures and some tentative forecasts for 2017.

Hügli forecast its EBIT margin would rise in 2017, which would follow a year in when the company's profitability by that metric looks to have declined.

The company predicted an "increase" in its 2017 EBIT margin alongside underlining its expectation it would have fallen to 7% in 2016 from 8.1% in 2015.

Hügli said it expects "moderate sales growth" in 2017 to follow a year in which the company's sales rose 1.8% to CHF385.2m (US$387.7m). However, Hügli's top line was helped by exchange rates and M&A. Stripping out those factors, Hügli's sales fell 2.6% in 2016.

On an organic basis, Hügli saw sales fall from each of its foodservice, private-label, brand solutions and consumer branded businesses. On a reported basis, Hügli's foodservice arm was the only one of the four to see sales rise.

Hügli's food industry unit reported sales growth on a reported and an organic basis for 2016.

On a geographic basis, Hügli's sales in Germany, its largest market, fell 5.7% on an organic basis amid "heightened competition" and the discontinuing of some lines because of their "unsatisfactory margin".

Hügli's combined Switzerland/western Europe unit saw sales rose 1.2% on an organic basis. In eastern Europe, the smallest of the three geographic units, sales climbed 7.3% on an organic basis.