Swiss food manufacturer Huegli has said its 2012 profits will not hit its forecasts after a drop in sales in recent months.
Huegli, which makes products from soups to desserts, saw revenues increase in the first half of the year but said yesterday (8 November) sales fell in August and September.
The weak performance in those two months means Huegli now expects second-half sales to fall 3%. Sales, when measured in local currencies, are now forecast to drop 1% this year.
"Company management is now assuming that it will not be able to reach the target range communicated thus far, with an EBIT margin of 7% to 8% throughout 2012, and will close with slightly lower operating results," it said.
However, Huegli added: "We are reservedly optimistic about the coming year of 2013. We expect moderate sales growth overall, as well as an above-average increase in profitability."
Media Release 8 November 2012, 5.30 p.m.
Drop in sales in Q3 reduces forecasts for 2012
Sales in recent months have not been as strong as expected. Following organic sales growth of +1% in the first half-year of 2012, sales dynamics did not increase to +3% in the second half-year as forecasted, and indeed showed negative figures, particularly during the months of August and September. Key account businesses in the Food Industry and Private Label divisions, which showed lower order quantities, were especially affected by the sales downturn.
For the second half-year, we are now assuming a drop in sales of more than -3%, amounting to an approximate -1% drop in sales in local currencies throughout 2012 instead of the +2% rise previously forecasted. The negative currency effect will register at around -2%, reducing declared sales in CHF by approximately -3%.
Despite consistent cost management, the sales drop is affecting forecasted profitability. The EBIT margin of 7.5% in the first half-year of 2012, subsided in Q3. Company management is now assuming that it will not be able to reach the target range communicated thus far, with an EBIT margin of 7% to 8% throughout 2012, and will close with slightly lower operating results.
Nonetheless, the corporate profit margin should lie in the region of 4.5% and further strengthen the solid equity ratio to more than 50%.
We are reservedly optimistic about the coming year of 2013. We expect moderate sales growth overall, as well as an above-average increase in profitability.
Detailed sales reporting as well as the first indications concerning business results for 2012 will be published on 29 January 2013.
