In future, the HOCHDORF Group will focus more strongly on the Baby Care Division, which has strong growth and margins. We will continue to internationalise this area. However, the Division fell far short of expectations in the first half of 2019 due to the slump in sales and, in particular, profits at Pharmalys. At the same time, extensive allowances had to be made for receivables from Pharmalys Laboratories SA.

The Baby Care Division achieved massively lower net sales revenues of CHF 30.3 million (previous year CHF 77.1 million; –60.7%) compared to the previous year, mainly due to the slump in sales in Pharmalys and the CHF 35.5 million in debtor provisions. The allowances were mainly made for receivables from Pharmalys Laboratories SA.

Pharmalys Laboratories SA achieved a considerably lower net sales revenue for the first half of the year compared to the previous year's performance. As a result of discussions about financing growth, Pharmalys reduced its distributors' inventories and accordingly ordered less, which led to significantly lower overall sales for both Pharmalys and the Baby Care Division at HOCHDORF Swiss Nutrition Ltd. In contrast, costs at Pharmalys increased massively in the first half of 2019, resulting in a significantly negative operating result.

As expected, capacity utilisation at the new production and filling line in Sulgen was still relatively low. Initial contracts with new customers were signed and the first products have now been produced. Overall, capacity was almost at the planned level. There was a longer, planned shutdown for a technical retrofit at spray tower line 8, which then influenced the production volumes available. This plant is now equipped for new, high-quality formulations, which makes it stand out significantly from the competition.

Bimbosan AG recorded a result above expectations in the first half of the year. The integration of the subsidiary acquired last year is progressing according to plan and with positive results. Bimbosan successfully maintained its strong home market position despite increasing competition. New registrations in export markets were launched and sales increased in existing foreign markets.

The business model of Pharmalys Laboratories SA cannot be successfully managed and controlled by HOCHDORF in its current form because it offers HOCHDORF no transparency and no influence on the value chain. This situation is no longer tenable/justifiable for HOCHDORF as the majority shareholder. All strategic options for Pharmalys are therefore being examined as a top priority.

By focusing on the Baby Care Division, existing resources will be used in a more targeted manner in the future and the capacity utilisation of the new production and filling line is expected to increase continuously.

The SAMR brand audit for China has been announced for the 4th quarter; final dates have still to be agreed. We are currently preparing for this forthcoming brand audit with external support. In addition, the spray tower line 9 was recently successfully approved by the Chinese authorities for dairy products, which include Baby Care base powders.

We expect a strong second half of the year but are not providing a sales forecast as a result of the uncertainties outlined above and the regained strength of the Swiss Franc.