The 2021 business year was marked with difficulties and challenges for the HOCHDORF Group. The balance sheet debt was significantly reduced with the receipt of the purchase price payment from Pharmalys of CHF 30 million and the sale of the site in Hochdorf for CHF 50.2 million. The company result of CHF 2.5 million is characterised by positive special effects from the sale of land to the municipality of Hochdorf, but also by negative special effects in connection with the relocation of production to Sulgen. The adjusted operating result from operating activities remained negative.
Despite the sale of parts of the business in 2020, the net sales revenue from deliveries & services of CHF 303.5 million remained at the previous year's level (CHF 306.2 million), with different developments in the two business divisions.
In the Baby Care division, the net sales revenue from deliveries & services fell by 15% from CHF 99.5 million to CHF 84.9 million. While the Branded Business Switzerland (Bimbosan) grew by 8%, the Private Label segment, which has the highest sales, declined in particular due to lower sales to the largest customer Pharmalys Laboratories and other customers, and sales fell by 17%.
The net sales revenue from deliveries & services in Food Solutions rose overall from CHF 206.7 million to CHF 218.6 million, an increase of 6%. The previous year's figure included CHF 31 million in net sales from companies that were sold or liquidated. Adjusted for this effect, net sales increased by 24% to CHF 42.7 million in the year under review. This solid growth was driven by chocolate customers and cream sales.
The share of net sales revenue realised in Switzerland rose to 67% (CHF 203 million), boosted by increased sales of cream and milk powder for chocolate production to domestic customers. Sales in Europe fell from CHF 69.2 million to CHF 34.8 million, triggered by the sale of German subsidiaries in 2020. While sales in Asia and South America remained stable, the share of net sales revenue in the Middle East/Africa decreased to 18% (CHF 53.3 million) due to a decline in business with the customer Pharmalys Laboratories. In Latin America, net sales increased significantly from a low level, from CHF 4.4 million to CHF 7.1 million.
Gross profit increased in absolute terms to CHF 111.2 million (previous year: CHF 94.3 million) and the gross profit margin increased to 31.8% (previous year: 30.9%). However, the gross profit margin adjusted for the book profit from the sale of the properties in Hochdorf and Welschenrohr is 23% and thus below the previous year's value (adjusted gross profit: CHF 70.6 million). The higher milk prices (on average CHF 0.05 per kg or +7% higher than in the previous year) and other price increases on the procurement market led to higher material costs. The higher input costs could only be partially passed on to customers.
It was possible to realise cost savings in the low single-digit million range as part of the OPTIMA cost efficiency programme; however, these could not compensate for the price increases.
Personnel expenses rose slightly from CHF 39.7 million to CHF 40.3 million due to provisions made in connection with the closure of the Hochdorf production site. Hochdorf had 387 employees on the reporting date (previous year: 391). Other operating expenses were also higher at CHF 46.2 million (previous year: CHF 40.7), as this was burdened by one-off expenses in connection with the sale of the properties at the Hochdorf site and other project costs for the relocation of the site to Sulgen.
EBITDA was CHF 24.7 million (previous year: CHF 13.9 million), significantly above the previous year. Depreciation and amortisation of CHF 18.2 million includes additional value adjustments of CHF 5.7 million on assets at the Hochdorf site to account for the shortened useful life following the planned closure of production at the Hochdorf site by 31 December 2023.
After adjusting this result for the special effects from the sale of the property to the municipality of Hochdorf (CHF 38.6 million) and the provisions for costs already incurred and impairments in connection with the closure of the production site in Hochdorf and the move to Sulgen (CHF –13.9 million) as well as other special effects (CHF –1.4 million), the operating result was CHF –16.9 million (previous year: CHF 2.3 million).
The net result at Group level was CHF 2.5 million, with the financial result of CHF 5.3 million only slightly above the previous year's level (previous year: CHF 5.1 million). Interest expenses were slightly higher due to higher interest rates; there were also exchange rate losses.
Due to the negative operating effects described above, the earned capital was CHF –3.9 million (previous year: CHF 11.1 million). In addition, net working capital of CHF –13.6 million was built up compared to the previous year's value, mainly due to the inventory build-up and higher trade receivables from Pharmalys Laboratories SA. Therefore, the operating cash flow at the end of 2021 was CHF –17.9 million, (previous year: CHF 11.3 million).
Due to the purchase price payments of CHF 52.6 million received for the sold land and buildings in Hochdorf and Welschenrohr as well as the payment of the last outstanding purchase price instalment of CHF 30 million in connection with the sale of Pharmalys Laboratories SA, the free cash flow was CHF 61.2 million. This was partly used to repay the syndicated loan (CHF –43 million). Overall, a positive cash inflow of CHF 11.8 million resulted in the 2021 financial year (previous year: CHF –7.7 million). As of 31.12.2021, the HOCHDORF Group had cash and cash equivalents of CHF 24.3 million, which was significantly higher than in the previous year (CHF 12.4 million).
Compared to 31 December 2020, net debt decreased significantly from CHF 87.6 million to CHF 32.7 million. The hybrid bond is considered equity and does not affect net debt.
Thanks to the positive company result and the debt reduction undertaken, with the significant relief of the balance sheet, the equity ratio rose to a good 62.5% (previous year: 55.8%).
Looking at the balance sheet, thanks to the debt reduction and the good equity ratio in 2021, a stable basis was created for future development in the current 2022 business year.
By consistently implementing the strategy agreed a year ago, HOCHDORF is focusing on increasing margins and promoting innovation. The related streamlining of our range and evaluation of the traditional business areas is planned for the first half of 2022. In addition, Emmi and Hochdorf have agreed a cooperation in the area of speciality powders, for both milk-based and vegan products.