Dear Shareholders

The strategy of forward integration and development of high value-added products is the right path to success for the HOCHDORF Group. This is clearly shown by the latest income figures. In the first half of 2017, we worked intensively on implementing this strategy.

In total, the HOCHDORF Group processed 377.6 million kg of milk, whey, cream and milk permeate (liquid quantity), slightly less than in the corresponding period in the previous year (415.9 million kg; –9.2 %). The substantial decline was primarily attributable to the foreign milk plants. Although the incoming liquid quantity in Switzerland was the same as in the previous year, less milk was processed. Year on year, the product volume sold also dropped 10.9 % to 111,948 tonnes (previous year: 125,604 tonnes).

Higher net sales, lower sales volume

The HOCHDORF Group generated gross sales revenue of CHF 312.1 million (previous year: CHF 278.4 million; +12.1 %). The gross profit increased to CHF 79.3 million (25.3 % of production revenue) (previous year: CHF 70.7 million; 24.1 % of production revenue). Consolidated EBITDA increased to CHF 21.7 million, and EBIT to CHF 15.8 million.

Although the income was higher than in the previous year, it remained below our expectations. The higher income figures were mainly attributable to Pharmalys Laboratories SA. In the first half of the year, the income of HOCHDORF Swiss Nutrition Ltd suffered compared to the previous year from the lower export funding, the lower production volume of infant formula and margin losses especially in the Dairy Ingredients Division. The lower production volume of infant formula resulted mainly from the reduction of the delivery time from six months to three months and the temporary loss of quantities in Egypt and Libya. However, the order books for the second half of the year are well filled, and we expect a high plant utilisation. Further measures have been taken to improve results.

Pharmalys integration successfully started

We are doing our best to ensure maximum efficiency of the integration. The continuing strong net sales and income growth of the Pharmalys Group show that our efforts are successful. The integration progressed especially well in the fields of IT and administration and has already been successfully completed in some areas.

Large investment in Sulgen

In Sulgen, HOCHDORF is investing a substantial amount in a modern spray tower line for infant formula, an equally high-performance can line and a high-bay warehouse. The work on these important projects is progressing according to plan. As planned, the new lines are to go live in the first quarter of 2018. This major investment impacts the key figures of the cash flow statement as well as the current expenses. For example, we have already recruited a number of new employees who are now being trained in operating the systems. On the sales side, we intensified our efforts to gain new customers with the goal of filling the new capacities in Sulgen as quickly as possible.

Strategy in Uckermark defined

Since the beginning of April 2017, Dr Peter Pfeilschifter has served as Managing Director of Uckermärker Milch GmbH, using his experience on behalf of the company's success. Meanwhile, the HOCHDORF strategy for the Prenzlau location has been determined, and the (production) processes there have been optimised. In July, we unfortunately had to announce the discontinuation of the curd business as of the end of October (for further information, please refer to section 5. Events after the balance sheet date in the notes to the consolidated half-year financial statements).

Success story in Marbach

The investments in additional processing capacities and marketing measures at Marbacher Ölmühle GmbH have yielded a significant net sales increase of more than 30 %. The company is pursuing a niche strategy with special oils, which is currently successful. Moreover, it considers itself a specialist for healthy oil flours.


We expect the milk price and thus the corresponding product prices in the second half of the year to be higher than in the previous year. However, it is rather unlikely that we will be able to make up for the net sales shortfall of the first half of the year, as we expect the market for milk mass products to remain difficult. Therefore, we have decide to correct the projected annual gross sales revenue of CHF 635-670 million to CHF 610-650 million.

As of the end of the first six months, the EBIT margin in relation to the production revenue amounted to 5.0 %, i.e. less than the communicated target range of 6.1-6.6 % for the year. Owing to the well-filled order books in the Baby Care Division and the measures initiated for the purpose of improving the income figures, we do not adjust this EBIT margin forecast.

Kind regards from your BEST PARTNER
HOCHDORF Holding Ltd

Dr. Daniel Suter
Chairman of the Board of Directors

Dr. Thomas Eisenring

Dr  Thomas Eisenring
Dr  Daniel Suter
Chairman of the Board of Directors