Hügli: Weaker sales reduces expectations for 2016

21-Nov-2016 - Germany

sales fell organically by -1.6% in the first nine months of the year under review. The unexpectedly weak revenue growth to date in the fourth quarter reduced the amount forecast for the final quarter to an even lower figure. The current difficult market for the foodstuffs industry in Europe means that almost all of the sales divisions are affected by the weaker sales, also including our key account business due to the lower quantities ordered by key accounts. The substantial downturn in sales of around -10% for Hügli’s own brands in the Consumer Brands division had a particularly negative impact. In addition, this division is also impacted by the dynamic changes in the sales channels and a major increase in competitive pressure. What is more, exchange rates also played a role, in particular the slump in the value of British pound, which had a negative income on the sales disclosed in Swiss francs.

As a result, we are forecasting sales to fall in 2016 by around -2%. As a result of the revenues of around EUR 12 million acquired in 2016 (+3.5%) by the new subsidiary, consolidated sales will still be slightly higher than the previous year’s figure.

Despite our continued consistent cost management, the downturn in sales is putting pressure on our anticipated earnings. Our previous forecast for operating results was slightly lower than in the previous year with an EBIT margin for 2016 of almost 8.0% (2015: 8.1%). The Group’s management is now forecasting an EBIT margin of a good 7%.

Growth drives have now been initiated in view of the unsatisfactory course of business. These are coupled with a review of additional potential for cutting costs - with the aim of returning profitability to the level defined in the strategy. We are confident that we will achieve this.

The detailed sales report for 2016 and indicators of the results will be published on 31 January 2017.

https://www.yumda.com/en/news/1149826/huegli-weaker-sales-reduces-expectations-for-2016.html