Megatrends drive sales growth for Hügli

By Ahmed ElAmin

- Last updated on GMT

Related tags Cent Eastern europe Currency Europe

Hügli's sales growth indicates an increasing appetite for organic
foods, cheaper non-branded products, private label brands and
outsourcing services.

"We are benefiting from these prevailing major trends, thereby proving that our strategy is right,"​ the company stated today in releasing its annual report.

The diversified food manufacturer and ingredients supplier said sales rose by 16.5 per cent in 2005, boosted by what is says are the four "megatrends". Currency conversion into Swiss francs accounted for 1.1 percentage point of the increase.

Of the figure 8.3 percentage points is attributed to organic growth from existing divisions and 8.2 percentage points is due to contributions from acquisitions. The company grew its margin by one percentage point during the year to 12 per cent.

The growth continued into the first quarter of 2006, with sales rising by 19.2 per cent, with currency exchange rates accounting for one percentage point of the gain. Hügli said 7.8 percentage points is organic growth, while the rest is contributions from acquisitions.

Hügli's health and natural food division had a growth rate of 24.8 per cent during 2005, boosted by a greater demand in the industry for organic foods and ingredients.

The consumer demand for non-branded products that are cheaper but in the same quality range as branded counterparts, drove sales up by 11.3 per cent in the company's private label division, which supplies products to major European retail chains.

The trend on the part of many food manufacturers to outsource some of their production stages helped the company's industrial foods division to increase sales by 11 per cent in 2005. The division specialises in the supply of customised semi-manufactured products to manufacturers.

The trend in favour of out-of-home catering boosted the food service division sales by 10.5 per cent, the company reported.

Germany and Western Europe continues to be saturated markets for the group. The company made two acquisitions in the regions, costing a total of CHF25.6m (€16.3m). The acquisitions boosted the sales gain of 16 per cent in Germany. The country accounts for 51.6 per cent of the company's sales.

Sales in Switzerland and Western Europe markets rose by 10.5 per cent. Meanwhile sales to Eastern European markets increased by 28.5 per cent in local currency terms, a fall of ch was slightly below previous year's level. Due to this sales growth Eastern Europe for the first time had a positive operating profit, achieving a margin of 4.5 per cent.

The group's biggest production site is in Radolfzell, Germany, where the company manufactures products for all four divisions. The focus is on the manufacture of soups, sauces and prepared dishes offered in retail packages for the private label market.

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