EQS-Adhoc: HOCHDORF Holding AG: HOCHDORF posts record earnings in 2016

EQS Group-Ad-hoc: HOCHDORF Holding AG / Key word(s): Final Results
HOCHDORF Holding AG: HOCHDORF posts record earnings in 2016

13-March-2017 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
HOCHDORF Group press release: Annual results for 2016

HOCHDORF posts record earnings in 2016

Hochdorf, 13 March 2017-The HOCHDORF Group significantly increased its earnings
in the 2016 business year. With gross sales revenue at the previous year's level
of CHF 551.5 m, the Group achieved record levels of EBITDA and EBIT, at CHF 33.4
m and CHF 22.5 m, respectively. Taking into account the major capital
investments, the Board of Directors is applying to the Annual General Meeting
for a slight increase in the dividend, from CHF 3.70 to CHF 3.80 per registered
share, payable from capital investment reserves.

In the 2016 business year, the HOCHDORF Group sold products totalling 237,054
tonnes (-2.4% compared to previous year). This generated gross sales revenue at
the previous year's level of CHF 551.5 m (PY CHF 551.2 m). The Group processed
741,769 tonnes of milk, cream, whey and milk permeate (PY 761,240 tonnes;
-2.6%). This decline is explained partly by the difficult market situation in
the Dairy Ingredients area, and partly by an unfavourable ratio of raw material
purchasing costs to the market price for selling our Dairy Ingredients products
in some cases. The fact that gross sales revenue was nevertheless generated at
the previous year's level is due to the sharp rise in turnover in the Baby Care

Record figures for EBITDA and EBIT
At 25.2%, the gross profit in percentage terms was higher than in the previous
year (23.9%). More important than this, however, is the further nominal rise in
gross profit to CHF 136.8 m (PY 130.1 m; +5.1%). Personnel expenses were up on
the previous year, largely due to the higher staffing levels required. The
higher operating costs year-on-year are due to the higher cost of premises and
logistics, together with higher sales commissions. All in all, however, the
targets set for 2016 were largely met.

The HOCHDORF Group achieved an EBITDA of CHF 33.4 m, setting a new record (PY
CHF 30.5 m; +9.5%). EBIT also reached a new peak at CHF 22.5 m (PY CHF 20.1 m;
+11.5%). These figures are very satisfactory for a company that operates for the
most part in the business-to-business segment of the food industry. The Swiss
business made the main contribution to the encouraging result. Due to their
product lines, the foreign plants felt the harsher wind of the international
milk market. Compared with the rest of the sector, we have coped well with the
demanding situation in the Dairy Ingredients market. At CHF 19.4 m, consolidated
net income was also a record figure (PY CHF 13.0 m).

The good earnings figures would not have been achievable without the
organisational and structural changes introduced in 2014. The path chosen at
that time is proving to be right for the HOCHDORF Group, with its focus on the
three divisions, with some of its own logistics on site in Sulgen, with the
adjustment to the product range and various other measures.

Cash flow and financing
In comparison with the previous year, cash flow from operating activities has
risen from CHF 19.0 m to CHF 24.2 m. Earned capital also increased from CHF 24.9
m to CHF 32.2 m, the main reason being the improvement in the operating business
and in the financial result. In 2016, the HOCHDORF Group invested a total of CHF
43.2 m. As a result of the high level of investments, the free cash flow was
negative as expected, at CHF -33.5 m. Due to the investments in expanding
capacity, HOCHDORF is also expecting negative free cash flow in the current
business year.

At 31/12/2016, net borrowing stood at CHF 213.5 m (PY: CHF 21.3 m). The main
reason for this sharp rise is the outstanding purchase price owed for acquiring
the Pharmalys companies. The large-scale investments also contributed to the
increase. This figure should return to normal on conversion of the mandatory
convertible bond to be issued at the end of March 2017. The equity ratio has
been reduced to 10.8% in comparison with the end of 2015 (56.6%). This is due to
the offsetting of goodwill from the acquisition of the Pharmalys companies
directly against equity. This figure will be balanced again as at 31 March 2017,
since the mandatory convertible bond can be counted in full as equity. The
HOCHDORF Group's financing as at 31 December 2016 still forms a solid basis for
the company's continued healthy growth.

"All in all, we have generated a very good result as a business-to-business
company. We nevertheless hope that the Pharmalys acquisition will help us
increase the earnings figures for 2017 significantly once again", said Dr Thomas
Eisenring, CEO of the HOCHDORF Group.

Dairy Ingredients Division
The Dairy Ingredients Division achieved gross sales revenue of CHF 401.9 m in
2016 (PY: CHF 415.4; -3.2%). This figure comprised the Swiss business at CHF
211.8 m (-6.9%), HOCHDORF Baltic Milk UAB at CHF 19.8 m (-21.7%) and Uckermärker
Milch GmbH at CHF 170.3 m (+4.7%). The lower turnover is due to the low price of
milk, which had to be passed on to customers, and the challenging market
situation. The higher turnover at Uckermärker Milch GmbH is due to the sharp
rise in the price of butter in the second half of the year, and the more
attractive selling of buttermilk in terms of price.

The volume of liquid purchased and processed by HOCHDORF Swiss Nutrition Ltd
rose by 5.2% on the previous year, to 409,119 tonnes (PY 388,927 tonnes). The
need for whey increased with the regular manufacture of lactose for our own
infant formula: in 2016, HOCHDORF processed a total of 79,752 tonnes of whey
(+44.9% compared to PY). The supplied quantity of milk fell sharply, following
the very high quantities in the first half of the year. By year-end, HOCHDORF
had processed 315,553 tonnes of milk in Switzerland (PY: 324,951 tonnes; -2.9%).

From its plant in Lithuania, HOCHDORF sold 13,261 tonnes of product on the
international markets (-25.2% compared to PY). The main reason for this
substantially lower quantity is the weak market situation and the
politically-motivated high price of milk in Lithuania. In these circumstances,
Lithuanian milk products were not competitive on the international market.

At 271,700 tonnes of milk, milk permeate, buttermilk and cream, Uckermärker
Milch GmbH processed -8.4% less liquids in its facilities than in the previous
year (296,696 tonnes). The creamery and the filling plant for buttermilk were
well utilised throughout the year. In the first half of the year, the plant also
sold skimmed milk powder to the state intervention programme.

Baby Care Division
In the 2016 business year, the Baby Care Division increased gross sales revenue
by +11.8% to CHF 123.4 m (PY CHF 110.4 m). The successful optimisation of the
existing production facilities, as well as the customer and product portfolio,
were instrumental in generating this growth. In contrast, the volume sold
increased by only +2.4% to 17,159 tonnes (PY: 16,763 tonnes). The percentage
difference for the increase in gross sales revenue demonstrates the
restructuring of our customer base due to the continuing capacity bottleneck.

Cereals & Ingredients Division
The Cereals & Ingredients Division achieved total gross sales revenue of CHF
25.7 m in 2016 (PY: CHF 24.9 m; +3.2%). This figure included the Swiss business
at CHF 18.4 m (PY 18.0 m). The slightly higher gross sales revenue was achieved
through an improved product mix: the sold quantity of products went down by
-6.3% to 3,449 tonnes (PY 3,681 tonnes). The division is on course, thanks to
various measures for cost optimisation and streamlining the product range.

Marbacher Ölmühle GmbH generated gross sales revenue of CHF 7.2 m in 2016, up
+5% on the previous year (PY CHF 6.8 m). In 2016 the entire sales organisation
was successfully restructured.

HOCHDORF South Africa Ltd generated its first sales in May 2016. As a classic
start-up firm, gross sales revenue was at a low level. As far as the quality of
the products is concerned, the company received consistently positive feedback
from its customers and continues to do so. The marketing campaigns were geared
towards making our products well known in the market.

Forward integration
The majority stake in the Pharmalys companies made the HOCHDORF Group a first
step closer to the end consumer last year. Integration work is proceeding on
schedule. "HOCHDORF's task is firstly, to create more structure in the
administrative area, secondly, to distribute existing products that are
interesting for the markets via the Pharmalys distribution channels, and
thirdly, to bring the business model to new markets", said HOCHDORF CEO

In order to finance the majority holding, HOCHDORF Holding Ltd is issuing a
three-year mandatory convertible bond for CHF 218.49 m on 30 March 2017. Details
of the mandatory convertible bond are included in the press release sent on the
same date. Shareholders listed in the share register will receive additional
information on the mandatory convertible bond by post.

Change to the Board of Directors
The Chairman of the Board of Directors, Josef Leu, and Board member Meike
Bütikofer will be resigning from the Board of Directors at the forthcoming
Annual General Meeting. Josef Leu worked for 14 years on the Board of Directors
of HOCHDORF Holding Ltd, since 2014 as its chairman. He assisted and led the
HOCHDORF Group with his knowledge of politics, agriculture and business. Meike
Bütikofer supported the HOCHDORF Group for eight years in her role in Marketing
and Strategy, chairing the Board of Directors' Market and Strategy Committee
since 2014. The Board of Directors extends its thanks to both for their valuable

An expert in marketing, distribution and brand positioning, Ulrike Sailer, is
available to fill the post of Board member. Ms Sailer has many years'
international management experience in the food industry. Over a period of
around 21 years, Ulrike Sailer gained extensive distribution and marketing
experience in the food industry. During this period she built up and developed a
number of brands. The countries she has worked in include China, Germany,
Denmark, South Africa, the UK and Switzerland. Her global networking reflects
this breadth of experience.

As announced in 2016, the Board of Directors will again be reduced to seven
persons. For the office of Chairman of the Board of Directors Dr Daniel Suter
will be proposed at the Annual General Meeting on 5 May 2017.

Outlook 2017
Integration of the Pharmalys companies into the HOCHDORF Group will have a
significant impact on the balance sheet and income statement. International milk
markets have also recovered in recent months. Accordingly, with the milk volume
remaining more or less the same and with prices marginally higher, HOCHDORF
expects gross sales revenue in the range of CHF 635 - 670 m and EBIT of 6.1 to
6.6% of production revenue. Eisenring stresses that, due to the majority stake
in Pharmalys, a leap in profits at EBIT level can be expected.

TheDairy IngredientsDivision is expecting turnover of CHF 440 - 465 m in the
current business year. In this respect, it is necessary to monitor the ratio of
purchasing and selling prices closely and identify opportunities. In line with
the strategy, the focus will be on dry products with higher added value on the
development side. It is also essential to assist with a number of
customer-specific projects. The Prenzlau plant is to become more independent in
future: in order to further improve the earnings situation, in future an
experienced CEO will manage the plant locally and its own purchasing and sales
department will be built up.

In 2017 we still do not have available any additional production capacity for
theBaby CareDivision. Due to the majority stake in Pharmalys, significantly
higher gross sales revenue in the range CHF 170 - 180 m is nevertheless
expected. The closer cooperation with Pharmalys will be organised in the current
business year. HOCHDORF is paying particular attention to evaluating additional
HOCHDORF products that could be sold through the Pharmalys distribution network.

From the 2ndquarter of 2018 at the latest, additional production capacity will
be available for the Baby Care area. Existing customers are planning to increase
their sales activities accordingly and new customers will be acquired. However,
HOCHDORF is also reserving capacities for its own brands, under the strategic
objective of forward integration.

In 2017 theCereals & IngredientsDivision is focusing on developing and
introducing market-ready Kids' Food products, which will be distributed through
the existing Baby Care sales network, among other channels. An entry into the
bio-market for extrusion products is also planned. After expansion of production
capacity has been completed in the spring of 2017 at Marbacher Ölmühle GmbH,
this company can expect a substantial rise in production volume for high-quality
organic-vegetable oils and organic-flour. At HOCHDORF South Africa Ltd, the
current business year is again completely dominated by development of the
market. An investment is also being made in a more powerful production plant.
The Cereals & Ingredients Division expects gross sales revenue to exceed the
previous year's level.

Slight dividend increase proposed
On the basis of the good results and taking into account the major capital
investments, the Board of Directors is applying to the Annual General Meeting
for a dividend payment from capital investment reserves of CHF 3.80 per share
(PY CHF 3.70). With the slight dividend increase, a dividend return of 1.23% is
achieved as at the closing date, 31 December 2016. This cautious and sustainable
dividend policy will be continued.

Key figures of the HOCHDORF Group for 2016

TCHF                                                                  2016
2015       Change

Gross sales revenue                                                   551,476
551,208    --

Earnings before interest, tax, depreciation and amortisation (EBITDA) 33,360
30,455     +9.5%

as % of production revenue                                            6.1

Earnings before interest and taxes (EBIT)                             22,464
20,146     +11.5%

as % of production revenue                                            4.1

Net profit                                                            19,406
13,024     +49.0%

as % of production revenue                                            3.6

Staffing levels as of 31.12.                                          633
625        +1.3%

Earned capital                                                        32,213
24,870     +29.5%

Processed liquid volume (milk, cream, whey, etc.) in tonnes           741,769
761,240    -2.6%

Quantity produced (including cream) in tonnes                         236,179
241,754    -2.3%

Quantity sold, in tonnes                                              237,054
242,821    -2.4%



Total assets                                                          425,474
340,396    +25.0%

thereof shareholders' equity                                          45,805
192,788    -76.2%

as % of total assets                                                  10.8


Share Information                                                     2016

Earnings per share (in CHF)                                           14.12
11.73      +20.4%

Dividend (in CHF)                                                     3.8*
3.7*       +2.7%

Price at close of trading on 31.12. (in CHF)                          309.75
168.70     +83.6%

Market capitalisation (in CHF m)                                      444.4
242.0      +83.6%

Price/earnings ratio (P/E) as at 31.12.                               21.9
14.4       +52.1%
* Subject to approval at the Annual General Meeting on 5 May 2017.

The full Annual Report is available at:http://report.hochdorf.com/en.

Additional features:

Document title: HOCHDORF Group: Annual results for 2016
End of ad hoc announcement------------------------------------------------------
--------------------------Information and Explanation of the Issuer to this

The HOCHDORF Group, based in Hochdorf, achieved a consolidated gross sales
revenue of CHF 551.5 million in 2016. It is one of the leading foodstuff
companies in Switzerland, employing 630 staff as of 31.12.2016. Made from
natural ingredients such as milk, wheat germ and oil seeds, HOCHDORF products
have been contributing to our health and wellbeing since 1895 - from babies to
senior citizens. Its customers include the food industry and the wholesale and
retail sectors. Its products are sold in over 90 countries. The shares are
traded on the SIX Swiss Exchange in Zurich (ISIN CH0024666528).


Language: English

Company:  HOCHDORF Holding AG

          Siedereistrasse 9

          6281 Hochdorf


Phone:    +41 41 914 65 65

Fax:      +41 41 914 66 66


Internet: www.hochdorf.com

ISIN:     CH0024666528

Listed:   SIX Swiss Exchange


End of Announcement EQS Group News Service


553179  13-March-2017 CET/CEST

Weitere Meldungen: HOCHDORF Holding AG

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