18 August, 2008 - The Hügli Group increased its sales by 24.7% to CHF 202.1 million in the first half of 2008. EBIT and earnings remained within the range of the previous year, with a rise of
3.2% and 0.3%, respectively. Thanks to a successful and consistent strategy, the outlook is still positive.
Owing to its consequent pursuit of a long-term strategy, the Hügli Group achieved a dynamic sales growth by 24.7% (26.0% in local currencies) to CHF 202.1 million in the first half of 2008. Organic sales increase stand at 15.3%, whereof 4.1% related to price increases and a considerable rise of sales volume of 11.2%. Acquisitions realised in the second semester of 2007 and in the beginning of 2008 contributed 10.7% to sales growth.
The strong sales development confirms our market strategy s and product portfolios accuracy and success potential. Nevertheless, contrary to the previous years, we could not make full use of these favourable sales conditions to trigger an according growth in profits in the first half of 2008. Two main reasons account for this development: Shifting the entire
massive price increases in agricultural raw material and transport costs to our customers was not yet possible in all group segments, and where feasible, only with a considerable delay.
The above-mentioned 4.1% growth related to price increases were only achieved through hard-fought negotiations. The second reason is the currency development, which overall proved unfavourable for the Group. The very strong Czech Crown, its strength in particular manifesting itself toward its Eastern European neighbour countries, decreased the competitiveness of our Czech production site. As our Czech plant supplies our subsidiaries in Slovakia, Poland and Hungary, we were fully exposed to the Czech Crown s development. Offsetting the currency fluctuations by price increases was made more difficult by the soaring raw material prices, which called for additional price adjustments.
Two further factors, inherent to changes in our Group structure, had negative impact on profits. Owing to the launching costs, our two acquisitions in Italy and the UK could not considerably contribute to EBIT and earnings. The reorganisation of Hügli Eastern Europe, which is currently in progress under the new management, will begin to show positive results only in the second half of 2008. At the same time, these momentary internal problem areas also hold substantial future prospects.
All of these factors combined yielded growth results for EBITDA (+6.8%), EBIT (+3.2%) and earnings (+0.3%) which fell far below the increase in sales. In absolute numbers, however, the EBIT and EBITDA results constitute the highest Hügli ever achieved in a first semester.