Switzerland-based food manufacturer Huegli has seen half-year profits slump due to climbing raw-material prices and the strength of the Swiss franc.
The company today (16 August) reported a 20% slump in EBIT to CHF16.6m (US$21.2m) for the first six months of the year. Its EBIT margin was 9.8%, a level Huegli dubbed “satisfactory” but was below last year’s “record” 10.6%.
Consolidated profits fell 27.2% to CHF15.4m. Huegli pointed to the impact of foreign exchange on profits made abroad and the impact on last year’s results of the sale of product line in the first half of 2010.
Huegli’s sales were down 13.2% at CHF170.1m but inched up 0.1% when measured in local currencies.
Huegli commented that the results suffered in comparison to its “unusually strong performance” in 2010 and difficult economic conditions. While sales began to rise again after a bad start into 2011, the Swiss franc’s foreign exchange rates wreaked havoc.
Although it acknowledged the still-growing negative effect of the Swiss franc will continue to exert pressure, Huegli predicts the second half of 2011 will be relatively stable both in operating terms and in local currencies.
The company forecasts a slightly lower gross margin for the second half of 2011 due to increased raw materials prices and the “massively over-rated” Swiss franc and anticipates sales of CHF320m and EBIT of approximately CHF31m.