Financial report

Net sales revenue

In the first half of 2021, the HOCHDORF group achieved a net sales revenue of CHF 140.3 million (PY: CHF 158.3 million). The decrease of CHF 18.0 million (–11%) is a result of the divestments made and liquidations initiated in 2020 in the Food Solutions division. The corresponding companies generated net sales revenue of CHF 28.4 million in the first half of 2020. On a comparable basis, the result achieved therefore corresponds to solid organic growth of 8%.

Net sales revenue in the Baby Care segment decreased to CHF 27.9 million (PY: CHF 37.6 million; –26%). This was caused by the temporary decline in sales with the largest customer, Pharmalys Laboratories, (see also Notes 4 and 8 to the consolidated half-year financial statements as at 30.06.2021), as well as generally restrained demand from Baby Care customers in the first half of 2021.

Despite the effects of the divestments, net sales revenue in the Food Solutions segment was CHF 112.4 million (PY: CHF 120.7 million; –7%). The growth of CHF 20.4 million in the core business compensated for 70% of the decline in sales and contributed to the pleasing result. While sales to chocolate customers were at a similarly low level to the first half of 2020 due to the Covid-19 pandemic, the net sales to milk/cream customers increased above average. This increase in sales to cream customers reflects HOCHDORF's improved access to the Swiss milk market. HOCHDORF was able to purchase and process a total of 20% more milk. The resulting cream by-product was sold on in a correspondingly larger volume than in the previous year.

Gross operating profit, EBITDA, EBIT, net profit

Based on net sales revenue of CHF 140.3 million, the HOCHDORF Group was able to achieve a gross operating profit of CHF 36.4 million (PY: CHF 48.1 million, including CHF 3.3 million from divested units), which corresponds to a below-average margin of 21.4% of production revenue (PY: 27.5%). Gross profit decreased due to lower volumes, a higher milk price (+11%), a deliberate inventory build-up and a temporary sales mix shift with a higher share in the Food Solutions segment (share 80% in the first half of 2021 vs. 76% in the same period last year). The increased share of dairy and cream products within the Food Solutions division also had an impact here.

With 390 employees, personnel costs were CHF 19.5 million as at 30.06.2021 and thus below the comparative figure for 2020 of CHF 21.5 million (427 employees as at 30.06.2020). The reduction of 37 employees is due to the sale of Marbacher Oelmühle GmbH on 31.12.2020 and the closure of the Welschenrohr site. Other operating expenses of CHF 19.7 million (PY: CHF 21.6 million) were also significantly below the previous year, mainly due to the divestments.

The lower gross profit led to a negative EBITDA of CHF –2.8 million compared to CHF 5.0 million a year ago; the improved cost structures in personnel and other operating costs could only partially compensate for the depleted margin.

Depreciation of property, plant and equipment and amortisation of intangible assets of CHF 5.8 million are lower than in the first half of 2020 (CHF 7.5 million). This positive deviation resulted primarily from the value adjustment of the spray tower line 9 and the associated canning line 2 at the Sulgen site as of 31.12.20. The positive EBIT of CHF 1.2 million in the first half of 2020 includes a one-off gain from the disposal of subsidiaries of CHF 3.7 million (disposal of Uckermärker Milch GmbH) and is therefore only comparable to a limited extent with the EBIT of CHF –8.6 million generated in the first half of 2021.

The financial result of CHF –0.9 million improved compared to the first half of 2020 due to the partial repayment of the syndicated loan, conversion of the debt bond and currency gains. The net result at Group level is therefore CHF –9.0 million (PY: CHF –4.0 million).

Assets, financing, cash flow

Current assets have increased by CHF 21.2 million to CHF 166.1 million since 31.12.2020. On the one hand, receivables from deliveries and services to related parties decreased by CHF 15.8 million (payment received of CHF 26.6 million and new deliveries of CHF 10.4 million to the customer Pharmalys Laboratories SA). On the other hand, inventories almost doubled from CHF 29.2 million (31.12.2020) to CHF 58.0 million (30.06.2021). This increase is due to the seasonal nature of the available milk supply. In the second half of the year, we expect a significant reduction of the inventory through sales. Fixed assets decreased slightly from CHF 178.9 million (31.12.2020) to CHF 172.9 million, mainly due to depreciation.

Liabilities increased from CHF 143.2 million (31.12.2020) to CHF 167.5 million due to higher trade payables at the balance sheet date and the increased utilisation of available credit limits of CHF 10 million. Net dept was CHF 101.3 millon at 30.06.2021. Due to the seasonal nature of the dairy business, the Board of Directors and the Group Management have agreed with the syndicate banks to suspend the audit of the required financial key figure "debt factor" as of 30.06.2021. The next audit date is 31.12.2021; as of 30.06.2021, there is therefore no violation of the covenants. Due to the negative corporate result, equity decreased slightly to CHF 171.4 million, but still corresponds to a stable equity ratio of 51%.

The cash flow from working capital was slightly positive at CHF 0.7 million. Due to the negative change in current assets of CHF –8.6 million, the cash flow from operating activities remained negative at CHF –7.9 million. However, this showed a significant improvement compared to the same period of the previous year (CHF –15 million). After low payments from investment activities of CHF –1.9 million, the free cash flow was negative at CHF –9.9 million. The cash flow from financing activities was CHF 6.4 million. Overall, this resulted in the first half of the year in a cash outflow of CHF –3.7 million, whereby the negative operating cash flow, mainly driven by the build-up of inventories (outflow of CHF –28.8 million), was financed by the higher utilisation of the credit limit from the syndicated loan (inflow of CHF +10.0 million).

Events after the balance sheet date

Negotiations with the Pharmalys companies on the adjustment of existing agreements were successfully concluded after the balance sheet date. Pharmalys Invest Holding AG paid the outstanding purchase price instalment of CHF 30 million to HOCHDORF in full; the money will be used, among other things, to repay the credit limit (see also note 4 and 8 of the Notes to the consolidated half-year financial statements as at 30.06.2021). In addition, an agreement was reached on a long-term supply contract with fixed minimum sales volumes until 2026, as well as an adjusted payment plan for the now significantly reduced outstanding receivables of CHF 29.5 million (31.12.2020: CHF 72.7 million) with a focus on payment by 30.06.2022.