Dear Shareholders

The HOCHDORF Group has implemented further steps towards the financial recovery and strategic transformation of the company:

  • 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.
  • This resulted in sales of CHF 303.5 million despite the effects of the Covid-19 pandemic. At the same time, milk price increases, in particular, had a significant impact on the company result of CHF 2.6 million. The operating activities therefore resulted in a negative result below expectations.
  • For this reason, HOCHDORF is planning to implement its strategy focusing on Smart Nutrition and accelerate the reorganisation of its product portfolio in order to reduce dependence on milk costs and increase profitability.

The 2021 financial year was difficult for the HOCHDORF Group, with many challenges to deal with. These included the strained balance sheet situation, market-related factors such as the high milk price or restrictions and cost increases on procurement markets, as well as the impact of the Covid-19 pandemic. The Board of Directors and Group Management have reacted to these developments with targeted measures, gradually strengthening the company and significantly improving HOCHDORF's financial profile in the reporting period. However, the changes undertaken so far are not yet sufficient to improve the company's performance in a sustainable way and to strengthen its positioning on the market. We will therefore accelerate implementation of the strategy agreed in 2021, which increases our focus on innovation and Smart Nutrition and intensifies market development.

Balance sheet relief

At the beginning of the business year, the HOCHDORF Group's balance sheet continued to be burdened by high debt of around CHF 100 million (excluding the hybrid bond) from the failed forward strategy from 2017–2019. This situation has taken a significant and sustainable turn for the better thanks to several important initiatives. The company structure introduced at the start of 2021 has led to greater efficiency coupled with costs savings made by the OPTIMA project. At the beginning of August, an agreement was reached with Pharmalys Laboratories SA on the repayment of the unpaid purchase price instalment. The receipt of CHF 30 million significantly relieved pressure on the balance sheet, but it failed to create the necessary financial scope to develop the company.

In order to further stabilise the balance sheet and to support the sustainable development of the company, the Board of Directors took the decision in the autumn of 2021 – having considered all the strategic financial options – to concentrate production at the Sulgen location in the future and to sell the site in Hochdorf. This sales process was swiftly implemented and it was possible to complete the transaction at the end of December 2021. The sale of the land and buildings to the Hochdorf municipality involved a one-time cash inflow of CHF 50.2 million. This repaid the bank debt and reduced borrowings to CHF 57 million. By focusing on the Sulgen site from 2024, HOCHDORF anticipates annual operating savings in the high single-digit million range from 2024 onwards.

Focus on the Sulgen site

The Sulgen plant is an ultra-modern facility in terms of Baby Care production and holds sufficient capacity reserves for strategic development as well as for the creation of a competence centre for Smart Nutrition. By optimising the site, the Sulgen plant will be become more profitable in all areas by increasing plant utilisation. Until the relocation of the plant is completed, the Hochdorf production site will also continue to be of great importance for the further development of the company.

Group Management, administration and central services such as sales, marketing, development, product management, quality and human resources management, regulatory affairs, customer service, communications, finance and IT will remain at the headquarters Hochdorf. The HOCHDORF Group has signed a 4-year lease agreement with the Hochdorf municipality, as the new owner of the properties, with the option to extend by a year.

Strategic focus intensified

In operational terms, the reporting year confirmed the need to transform the company consequently in the coming years and to develop into a Swiss competence brand for technologically ambitious, functional speciality foods in line with the new strategy. HOCHDORF wants to focus even more on market developments and move into more value-intensive areas by concentrating on Smart Nutrition offers. This development will result in a reduction in cost dependency on milk as a raw material.

"Food for Life" pinpoints HOCHDORF's future purpose as a company. As an innovative company we want to make a contribution to modern nutrition that promotes good health and sustainability. With our expertise in the area of Baby Care as a starting point, we want to develop our Human Care range and increasingly provide Smart Nutrition products for all stages in life. The food market is showing strong, sustainable growth around the world for functional foods, which are tailored to the specific nutritional requirements of defined target groups.

In terms of raw materials there is a clear tendency towards reduced milk quantities in Switzerland with a resulting cost adjustment to guarantee secure provision: scarce milk resources are allocated to stronger value sales channels first. HOCHDORF is responding to this trend and has brought several newly-developed finished products and semi-finished products to market in the area of Smart Nutrition in the last 12 months. These include Bimbosan goat milk, the specialist infant formula Riso PH, lactose-free milk powder, a vegan whole milk powder alternative and whey protein concentrate for use in infant formula.

The adverse effects of Covid-19 on operational development

The Covid-19 pandemic and related restrictions have undermined project implementations for new and existing Baby Care customers. Projects were also postponed in the second half of the year due to the tense logistics situation on the global market, leading to supply delays and reduced sales. Consumer behaviour and the changes in demand for milk products during the pandemic led to significant price increases in milk as a raw material by CHF 0.05/kg on average (compared to previous year). From the early summer there were also cost increases for other important raw materials for infant formula production. Intense competition has meant that it has not been possible to pass these price increases onto the customer in full so far, which has had a negative impact on operating profits.

This resulted in net sales in Baby Care of CHF 85 million, 15% less than in the previous year. Despite the challenges posed by Covid-19, we managed to acquire new partners/countries in Asia for our high value-added Bimbosan and babina own brands. In Switzerland, Bimbosan consolidated and extended its position as market leader, introducing Bimbosan Premium goat milk to the specialist trade at the start of the year. In addition, a long-term purchase guarantee was agreed with Pharmalys, HOCHDORF's largest customer, until 2026. At the same time, cash management and payment flows had to be optimised, especially to the supplied regions in the Middle East and North Africa.

The Swiss chocolate industry recovered from its Covid-19 low in 2020. The volumes sold in the second half of 2021 reached and partially surpassed pre-coronavirus levels. This is mainly due, in particular, to warehouse restocking due to transport bottlenecks and the development of new sales markets. As a result, Food Solutions achieved sales of CHF 219 million, which represents an increase of 6% compared to the previous year. The positive sales for lactose-free milk powder are particularly noteworthy, as is the substantial interest from the chocolate industry in the vegan whole-milk powder alternative for "milk chocolate".

Operating profits at EBIT level increase to CHF 6.5 million

Net sales revenue of CHF 303.5 million was achieved at Group level, 1% lower than the previous year. Lower sales in Baby Care and generally higher input costs led to operating profits at the EBITDA level of CHF 24.7 million. The EBIT reached CHF 6.5 million, equivalent to a margin of 1.9%. This positive result was boosted by specific factors. On the one hand, the sale of the site in Hochdorf and Welschenrohr resulted in a profit (after deducting all direct costs) of CHF 38.6 million, while the production relocation to Sulgen involved one-time provisions of, among other things, around CHF 14 million for agreements that impact the social plan and value adjustments in Hochdorf. Group net profit was CHF 2.6 million (previous year: CHF –70.3 million).


We expect the transformation of HOCHDORF from a volume-driven milk processor to a margin-oriented milk refiner and speciality expert to pick up even more speed under new management. To this end, HOCHDORF is developing its network through cooperation with complementary industrial and marketing partners in Switzerland and abroad. Innovation and sales will be strengthened in the organisation and focused on the common goal of value-added offers for customers all over the world. Communication and emotionalisation are to be significantly strengthened and awareness and relevance for modern nutrition markets increased.

The challenges on the procurement markets remain significant in the current financial year 2022, with logistics capacities and related price increases. Ongoing delays and postponements of projects make it difficult to estimate precise order receipts. HOCHDORF is using this situation to streamline its range in order to improve profitability.

By consistently implementing the strategy agreed in 2021 by Group Management and its new leadership, HOCHDORF is focusing on increasing margins and promoting innovation. The related streamlining of our range and evaluation of the traditional business areas will take place in the first half year of 2022. This is not therefore the best time to forecast net sales and earnings. We will make our forecast when the half-yearly financial statement is published.

Thank you

We owe particular thanks to all our employees for their flexibility and their great commitment in difficult circumstances over the last year. We would also like to thank our customers and partners for their productive cooperation and our shareholders for the trust they have placed in HOCHDORF.

Jürg Oleas
Chairman of the Board of Directors
Ralph Siegel, CEO and Delegate of the Board of Directors of the HOCHDORF
Ralph P. Siegl
CEO & Delegate of the Board of Directors