HUEGLI HOLDING AG Media Release 29 January 2015, 07.30 a.m.
Solid sales growth 2014, over-proportional increase in earnings
- Sales increase in 2014 by +3.6% (+2.6% in CHF) to CHF 377 million
- Strong growth dynamics of +5.2% in H2 2014
- Germany as growth driver
- Expected earnings 2014: EBIT growth over-proportional compared to sales
- Outlook 2015: mid-single digits growth in organic sales, slightly over-proportional organic EBIT growth. The currency relations prevailing since mid-January 2015 negatively offset the good operating progress; Sales and EBIT 2015 is thus expected to come in at around the previous year's level.
Sales 2014 | million CHF | Change to previous year in % |
in CHF | organic | ||||
Food Service | 161.6 | -1.3% | +0.3% | ||
Private Label | 77.4 | +9.1% | +10.7% | ||
Brand Solutions | 56.1 | +7.7% | +7.1% | ||
Food Industry | 36.7 | +1.4% | +0.7% | ||
Consumer Brands | 44.6 | +1.4% | +2.8% | ||
Other | 0.6 | ||||
Group total | 377.0 | + 2.6% | + 3.6% | ||
Germany | 229.0 | +6.0% | +7.3% | ||
Switzerland/Rest of Western Europe | 117.9 | -1.2% | -1.9% | ||
Eastern Europe | 30.1 | -5.7% | -0.8% | ||
Group total | 377.0 | +2.6% | +3.6% |
Acceleration of growth in the second half of the year
Hügli achieved organic sales growth of +3.6% year-on-year. This increase is mainly due to higher sales volumes, the price effect was +0.8%. Owing to currency losses, sales in CHF increased by +2.6% to CHF 377.0 million. Because of a slow start of the first quarter of 2014, the sales dynamics in the first half of the year came to +2.1%, and in the second half, accelerated to +5.2%.
Steep growth of Brand Solutions and Private Label sales divisions
The Private Label sales division (food retail organisations) saw a particularly dynamic development, its mid-year growth rate of +1.4% quickening to +19.7% in the second half of the year. The high volume of newly won orders largely stems from a delivery backlog of a competitor that struggled with financial problems, but returned to the market under new management in the meantime. The Brand Solutions division (products for branded-goods companies), after having grown by +17.8% in the previous year, again showed good growth with +7.1%. Products from organic agriculture were still in high demand whereas conventional products suffered a partial downturn in sales.
Challenging economic market conditions slow down growth
The Food Industry division succeeded in compensating for the loss of two key accounts for consumer packages with orders from new customers. The Health & Nutrition segment grew particularly well. Despite additional support from the Snack Seasonings segment, the increase nevertheless amounted to only +0.7%. Food Service, the largest division, continued to record almost no growth (+0.3% in local currencies) due to the still weak and at times declining consumer demand in the out of home market (gastronomy, canteens). Exceptional growth was again recorded by Poland, Hungary and Slovakia.
Organic segment reinforces brand business
Within the Consumer Brands division (production and sale of own branded products), the Heirler brand developed well overall, thanks to increases in the sale of vegetarian products and despite several other product categories' decline in turnover. The organic brand Erntesegen also maintained its good performance in the market and even exceeded growth expectations. The takeover of the two well-established brands EDEN and granoVita in the beginning of 2015 further strengthened the natural food business segment.
Sustained strong growth dynamics in Germany
Germany, the largest country segment, enjoyed a successful development with strong organic growth of +7.3%. All divisions, except Food Industry, contributed to this growth. The geographic segment Switzerland/Rest of Western Europe recorded a negative development (-1.9%) overall. While very slow business in the Food Service segment depressed Switzerland and Austria, the UK suffered a temporary setback resulting from the loss of a Private Label key account. Italy recorded a further decline in sales in the country, yet enjoyed a very positive development with regard to the production of Italian sauces and their sale abroad. The outstanding turnover achieved by the Food Service business in all four countries (CZ, SK, PL, HU) of the Eastern Europe segment (-0.8% in local currencies) was overshadowed by the downturn in sales of the Private Label business.
Profit situation 2014
Based on the overall stability of raw materials prices, gross margin remained on the previous year's level. Moreover, thanks to the continuous and consistent cost management, costs rose only slightly - in spite of the increase in headcount justified by the favourable order situation. We therefore anticipate the increase of EBIT to be over-proportional when compared to sales. EBIT margin is expected in the middle range of the strategic target corridor of 8% - 9%.
Outlook 2015
The significant changes that currency relations have been undergoing since 15 January 2015 show a heavy impact on reporting. We therefore split the outlook 2015 into two perspectives, presenting it first from an organic angle and second against the background of the currency effect resulting from the massively overvalued Swiss Franc. For the year 2015, we expect a mid-single digits organic sales growth. Further, the acquisition as per 01.01.2015 yields an additional turnover of around CHF 20 million. The organic EBIT growth rate will show a slightly over-proportional increase compared to sales. The acquisition's planned profit contribution will not be significant in its year of integration due to one-off costs, causing EBIT margin in local currencies to remain at the previous year's level. All currencies relevant for Hügli, among them the Euro in particular, are subject to the exchange rates applicable since mid-January 2015, which stand 10% to 19% below the rates prevalent in 2014. As a result, translation effects on this scale lower the 80% and more of Hügli Group's value add achieved outside of Switzerland. Because Hügli Switzerland applies a good natural foreign currency hedge, foreign currency revenues can largely be utilised as operating expenditures so that operating currency losses only arise from the exchange of small surpluses in foreign currencies (transaction effects). Based on the assumption that the prevailing currency relations will last until the end of the year, we expect that they will negatively offset the good organic operating performance, and therefore project the recorded sales and EBIT 2015 to stand at the previous year's level.
Detailed information on the financial year 2014 (Annual Report) and the sales figures of Q1 2015 will be published on 15 April 2015 and commented at the following Media and Analysts' Conference.
Financial reports, information on corporate governance and on the Hügli share listed on the SIX Swiss Exchange (HUE / security no. 464795) can be retrieved from our Investor Relations website: http://www.huegli.com/en/investor-relations
For further information:
Andreas Seibold, CFO, Tel. +41 71 447 22 50, andreas.seibold@huegli.com
Hügli Holding AG, Bleichestrasse 31, CH-9323 Steinach
Financial calendar
15 April 2015 | 07.30 a.m. | Media Release: Annual Report 2014, Sales Q1 2015 |
10.30 a.m. | Media / Analysts' Conference, Widder Hotel, Zurich | |
20 May 2015 | 04.30 p.m. | Annual General Meeting, Seeparksaal, Arbon |
19 August 2015 | 07.30 a.m. | Media Release: Half-Year Report 2015 |
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