HOCHDORF Holding Ltd

Annual Results 2018 - Seite 2

Expenditure of CHF 35.5 million was made in the area of investments for plant, buildings and intangible assets. By omitting the amounts for the expansion of the Sulgen plant, the ordinary investments could be financed from the current cash flow. Work on the new T9/can line 2 was largely completed in 2018. We are planning mainly for replacement investments for 2019.

As expected, free cash flow was negative in 2018 due to the new T9 building and the purchase price payments for Pharmalys and Bimbosan. We expect slightly positive free cash flow for 2019. Net debt increased from CHF 0 million in December 2017 to CHF 141.3 million. The hybrid bond and the mandatory convertible bond are classed as equity and do not affect net debt.

The equity ratio fell to 48.8% compared to the end of 2017 (53.1%). This was due to the higher debt, as outlined above. With the 2018 financial statements, the final purchase price for Pharmalys was again adjusted slightly downwards by offsetting it against equity. Overall, the HOCHDORF Group's financing therefore continues to provide a good basis for the continued growth of the company.

Dairy Ingredients division
The Dairy Ingredients division achieved a net sales revenue of CHF 354.4 million in 2018 (PY CHF 405.1 million; -12.5%) and experienced a challenging year with a still large but declining spread between milk fat and milk protein valuations in the international markets. Activities in Switzerland were mainly shaped by the implementation of the successor to the "Schoggi" law.

In Switzerland, HOCHDORF Swiss Nutrition Ltd processed practically the same amount of liquid (mainly milk and whey) as in the previous year (408,857 tonnes compared to 409,009 tonnes in 2017). In total, however, 26.2% more whey and 8.5% less milk were processed. In terms of products, loss-makers were removed from the portfolio and work was carried out on new and further developments of products with higher added value. Activities also focused on the implementation of the successor to the "Schoggi" law involving a large number of challenging customer and supplier negotiations. With its disproportionately high share of "Schoggi" law milk, HOCHDORF is severely affected by the changes.