financial year 2017 annual results presentation · strategy 2017 –2021 21 hochdorf’s vision is...

Financial Year 2017Annual Results Presentation

HOCHDORF Holding Ltd Zurich, 05 April 2018

1. Welcome address Thomas Eisenring

2. HOCHDORF Group Thomas Eisenring

3. Financial details 2017 Marcel Gavillet

4. Update Thomas Eisenring

5. Outlook and Calendar Thomas Eisenring

AgendaAnnual Results Presentation

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• Acquisition of Zifru Trockenprodukte GmbH

• Acquisition of the brand Snapz

• Baby Care Division has developed very well with Pharmalys

• Work on the new spraytower line lags slightly behind the original

schedule (start for commercial production in June 2018)

• Important impacts on the good result 2017:

– Strong and profitable growth of Pharmalys Laboratories SA

– Weak margins in the Dairy Ingredients Division

– Pleasing growth in turnover and profitability of Marbacher Ölmühle

Welcome Address

Successful forward integration

The results 2017 show that the move closer to consumers has turned out to be the right strategic decision.

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Legal form by 1.1.2018

HOCHDORF Holding Ltd is organised in three business units.

HOCHDORF Group

HOCHDORF Holding Ltd

• HOCHDORF Swiss Nutrition Ltd (100%)

• HOCHDORF Baltic Milk Ltd (100%)

• Uckermärker Milch GmbH (60%)

• Ostmilch Handels GmbH (26%)

Baby CareDairy IngredientsCereals &

Ingredients


• Pharmalys Labora-tories SA (51%)

• Pharmalys AfricaS.à.r.l (51%)

• Pharmalys TunisieS.à.r.l. (51%)

• HOCHDORF AmericasLtd (60%)


• Marbacher Ölmühle GmbH (100%)

• Zifru Trockenprodukte GmbH (100%)

• HOCHDORF South Africa Ltd (90%)

• Snapz Foods AG (65%)

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Financial details 2017

TopLines

Satisfactory business year despite very difficult market situation in the EU.

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2017 2016 in %

Volume of liquid processed 650,017 t 741,770 t -12.4

Quantities produced 186,845 t 236,179 t -20.9

Net sales 600.5 Mio. CHF 541.6 Mio. CHF +10.9

EBITDA 55.7 Mio. CHF 33.4 Mio. CHF +67.0

EBIT 42.6 Mio. CHF 22.5 Mio. CHF +89.7

Net profit 40.8 Mio. CHF 19.4 Mio. CHF +110.5


Key figures income statement

Record figures in EBITDA and EBIT.

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in CHF 1,000 2017 2016 2015

Net sales 600,527 541,606 551,476

Earnings before interest, tax, depreciation and amortisation (EBITDA)As % of production revenue

55,719

9.2

33,360

6.1

30,455

5.6

Earnings before interest and tax (EBIT)As % of production revenue

42,6167.1

22,4644.1

20,1463.7

Net profitAs % of production revenue

40,8466.8

19,4063.6

13,0242.4

• All-time high prices for milk fat in the international market vs. very low

prices for milk protein and skimmed milk powder

• Difficult market environment in Europe for Dairy Ingredients.

• Integration of Pharmalys Group companies

• Group profit mainly supported by Baby Care Business Division

• Baby Care: strong net sales and income growth of the Pharmalys group

but lower production volumes of infant formula in Switzerland (Egypt &

Libya)

• Dairy Ingredients: lower export funding and margin losses

• Cereals & Ingredients: significant margin increase at Marbacher Ölmühle

• Costs correspond to the expectations

• Successful issuance of mandatory convertible securities

• Successful placement of a public hybrid bond


Key factors

2017: A challenging and interesting business year.

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Balance sheetWith the Convertible and the Hybrid Bonds low equity as perprior year back to normal level. Solid financing basis forfurther growth.

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ASSETS

in CHF 1,000 31.12.2017 31.12.2016

Current assets 278,680 47.9% 208,013 48.9%

Non-current assets 303,589 52.1% 217,461 51.1%

Total assets 582,269 100.0% 425,474 100.0%

LIABILITIES

31.12.2017 31.12.2016

Current liabilities 215,843 37.1% 139,424 32.8%

Non-current liabilities 57,144 9.8% 240,246 56.5%

Total liabilities 272,987 46.9% 379,670 89.2%

Shareholders equity 309,282 53.1% 45,804 10.8%

Total liabilities and shareholders equity

582,269 100.0% 425,474 100.0%


Cash flow statement

Investments in fixed assets and Pharmalys. Expecting negative free cash flow for 2018.

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in CHF 1,000 31.12.2017 31.12.2016

Cash flow before changes in net working capital, interest and taxes

56,035 9.3%* 32,213 5.9%*

Change in net current assets -50,016 -7,987

Cash flow from operating activities 6,019 1.0%* 24,226 4.5%*

Cash flow from investing activities -90,097 -57,746

Free cash flow -84,078 -14.0%* -33,520 -6.2%*

Cash flow from financing activities 79,924 58,131

Currency translation 307 74

Net change in cash and cash equivalents

-3,847 24,685

Cash and cash equivalents at 1.1. 67,707 43,023

Cash and cash equivalents 31.12. 63,860 67,708

* As % of net sales


Share information

High interest in HOCHDORF and good results lead to sustained share prices.

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2017 2016 2015 2014

Profit per share (in CHF) 18.43 14.12 11.73 17.45

Dividend per share (in CHF) 4.00* 3.80 3.70 3.70

Dividend return 1.40%* 1.23% 2.19% 2.68%

Share price as of 31.12. (in CHF) 286.25 309.75 168.70 138.00

Market capitalisation as of 31.12. (in CHF million)

410.7 444.4 242.0 147.8

Price/earnings ratio P/E as of 31.12.

15.5 21.9 14.4 7.9

*Proposal of the Board of Directors to the General Assembly


Net sales by region

Export share continuous to rise as expected.

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Switzerland200.3 Mio.

33.4%

Europe237.1 Mio.

39.5%

Asia22.6 Mio.

3.8%

Middle East / Africa

132.2 Mio.22.0%

Americas / Rest

8.3 Mio.1.4%


Number of employees

With the construction of Tower 9, the number of employees will rise by around 80 employees.

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Currently 34 apprentices in 6 professions

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573625 633

695

0

100

200

300

400

500

600

700

800

2013 2014 2015 2016 2017


Net sales by division

Lower milk intakes due to difficult price situation in EU.Lower production volumes of infant formula in Switzerland (Egypt & Libya).

162014 and 2015: gross sales revenue in mio. CHF per division.

298.6

110.0

17.9

415.4

110.4

24.9

393.1

123.0

25.5

405.1

168.8

26.6

0

50

100

150

200

250

300

350

400

450

Dairy Ingredients Baby Care Cereals & Ingredients

2014 2015 2016 2017

In M

io. CH

F

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Dairy Ingredients

Difficult market conditions in the milk business due tolow milk prices and harder competition in market.

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2017 2016 2015 2014

Net sales(in CHF 1,000)

405,131 393,099 415,379 298,563

Revenue generatedabroad

55.4% 55.1% 55.2% 26.1%

Tonnes 165,846 212,421 216,511 80,737


Baby Care

Higher turnovers due to Pharmalys. Negative impact Libya and Egypt.

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2017 2016 2015 2014


168,751 123,029 110,417 109,988


95.8% 95.5% 91.7% 91.3%

Tonnes 16,751 17,159 16,763 15,651


Cereals & Ingredients

Growth because of new product launches and range adjustments.

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2017 2016 2015 2014


26,645 25,478 24,859 17,913


53.1% 49.0% 45.9% 22.9%

Tonnes 7,902 7,474 8,547 3,733







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HOCHDORF’s VisionStrategy 2017 – 2021

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HOCHDORF’s vision is based on its future business model, whereas the transformation has already started.

«We transform this company into a most profitable niche player

in global premium food markets.»

USP of HOCHDORFStrategy 2017 – 2021

1. We are a Swiss company• We reflect the whole bunch of Swiss values, like “reliability”, “quality”, “precision”

2. We are a mid sized company• We work with leanest possible structures• We are aware that nothing is more difficult to copy than a personal business relationship• Our talents are our main assets

3. We are an independent company • As one of the few dairy companies we are independent from milk producers and are able to

focus on customer and shareholder values independent from our suppliers

4. We are an agile and responsive company• Our customer service is best in class

5. We are a courageous company • We develop markets where competitors hesitate• Our marketplace is this planet• We consider personal business relationships as the most valuable assets

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HOCHDORF acts consequently as a Swiss mid sized company in a global market.

Value Proposition Policy Strategy 2017 – 2021

1. Focus on premium markets• In every business we are active, we focus on the premium segment

2. Focus on «unsaturated» countries with high growth rates• MEA countries, Asia and LATAM are still the countries we focus on• China still limited to 25% market share in Baby Care• Exceptions only in special cases (e.g. organic for USA)

3. Development of higher margin products• Chocolate• Kids’ Food• Added value Base Powders (Baby Food grade) & enriched Instant Products

4. Enhance margins in existing businesses• Forward integration• Elimination of intermediaries where possible• Development of branded business

5. Professional focus on cost• Cost efficiency is always key

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HOCHDORF’s aim is to increase added value in its products sold significantly.

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Update

Product Offensive 2016

Product offensive showed in 2016 that HOCHDORF has to increase the capabilities to efficiently develop new products.

Base PowdersAs ingredients for morebasic infant formulas

Weaning FoodsOnly branding/trading

Kids´ FoodsWith fruit, vegetableand wheat

Instant MilksFortified with minerals and vitamins

ChocolateProduced in South Africa«on the continent for thecontinent»

Base PowdersAs ingredients for morebasic infant formulas

Kids´ FoodsWith fruit, vegetableand wheat

Instant MilksFortified with minerals and vitamins

ChocolateProduced in South Africa«on the continent for thecontinent»

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Update

Product Offensive 2017

Progress in our product offensive in 2017 has been quite impressive.

SpecialitiesInstant milks with medical claims

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Update Dairy Ingredients

Challenging Situation in Dairy Ingredients

Divergent development of fat and protein markets lead to moreand more challenging situation in traditional dairy ingredients.

1. HOCHDORF Baltic Milk• With a strong focus on proteins and in a very difficult political environment in Lithuania

HOCHDORF Baltic Milk is under review

2. Portfolio reassessment• Portfolio of Dairy Ingredients will be consequently reassessed with an impact of production

volumes• Milk prices must be aligned to the market situation

Photo: Spiegel

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Update Dairy Ingredients

Way forward in Dairy Ingredients

The way forward in Dairy ingredients is a consequent focus onniches and branded businesses.

1. Niches• We have a development program in place which focusses on instant milks with special

nutritional requirements, medical claims and new trends

2. Branded business• Also in Dairy Ingredients we develop our own brands in selected BTC markets• Focus on MEA countries, use of PHARMALYS distribution network

Photo: Spiegel

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Update Baby Care

Significant more Capacity in Baby Care

With the new production line for infant formula we tripled our capacity to now 50’000 tons.

Photo: HOCHDORF

1. New production equipment• New production equipment consists of a 35’000 t spraying tower, a new tin line and a high rack

storage; all of latest technology• The Sulgen plant is one of the most advanced in Europe and starts commercial production in

June 2018

2. New profile is challenging• With this size, HOCHDORF becomes a seriously taken player in the infant formula market• New customers are much more demanding than in older times

Update Baby Care

Focus on Sales is now Key

Our organisation has been restructured and strengthened to achieve best possible project pipeline.

29Photo: NNPC

1. Power team independent from hierarchies• The position of a CSO has been skipped and transformed into a highly skilled acquisition team

independent from hierarchies

2. Very promising pipeline• We have been able to create a project pipeline with more than 30’000 t and developed new

potential partnerships

Impressive Performance of PharmalysUpdate Baby Care

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The impressive performance of PHARMALYS will continue in the coming years.

1. New product launches• The recipe of our brand “Primalac” will be changed from vegetable oil to milk fat, which is a

clear trend• New brand “Nutrimilk” will be launched this summer• Additional launches of instant milks with medical claims

2. Further market penetration• There are many markets where we just started; the growth potential in these markets is

considerable

Marbacher ÖlmühleUpdate Cereals & Ingredients

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Quality and profitability in wheat germs, special oils and crisps have improved significantly.

1. Wheat germs• Production of Viogerm® crisps and cereals is much more cost efficient and competitive for the

world markets

2. Special oils• Our oil specialties have now achieved a quality level which is highly respected in the industry

and received various awards

Zifru and SnapzUpdate Cereals & Ingredients

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With the acquisition of Zifru and Snapz we can now play a different game in interesting markets.

1. “All under one roof”-approach• With extrusion, MIVAC drying and packaging under one roof Zittau becomes our most efficient

plant for extruded products and healthy snacks

2. With Snapz we go where new trends usually start• With Snapz we have now access to the US market where the development of healthy kids

snacks is most developed

SummaryUpdate

1. Restructuring of Dairy Ingredients• Dairy commodity markets will remain difficult; we have not to be in any business and will

restructure our portfolio

• The rules in Switzerland will change in 2019; we will be prepared for it

2. Watching out for further forward integration opportunities• The forward integration with Pharmalys proved the enormous potential of this approach; we

watch out for other opportunities

3. Still play professionally the BTB role• The BTB business is still important for us; with our new customer base requirements are tougher;

we have to play our role professionally

4. Develop Cereals & Ingredients to another HOCHDORF pearl• With the new set-up in Cereals & Ingredients we have the base to develop this business to a real

pearl in HOCHDORF’s portfolio

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HOCHDORF’s development in 2017 shows that we are on the right way to play in another league, but we are still at the beginning.







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Important influences:

• Ongoing projects for achieving our strategic goals

• Market the additional capacities in the Baby Care Division

• Bring our business of healthy Kids’ Food and Snacks to market

• Distribute the developed high value-added new products in the Dairy Ingredients Division

Expected net sales CHF 600 – 630 Mio.

Expected EBIT as % of production revenue 7.0 to 7.5%

Outlook and Calendar

Financial Outlook 2018

2018 represents a transitional year and will be challenging.

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• 04 May 2018 Annual General Meeting

• 30 August 2018 Letter to the shareholder with half year results

Outlook and Calendar

Financial Calendar 2018

Upcoming events of the HOCHDORF Group

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financial year 2017 annual results presentation · strategy 2017 –2021 21 hochdorf’s vision is...

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