The company revealed sales fell to €1.59bn in 2021, down from €1.65bn a year earlier. Exports now account for 48% of the group’s revenue and global sales increased to €256.4m, up from €218.2m.
“The macroeconomic general conditions for the milk industry in 2021 were challenging. The entire milk value creation chain faced significant increases in costs for, among other things, packaging, logistics, additives and auxiliary materials, and energy in 2021. After two years of stagnation, milk production in Germany began to decrease once again,” the dairy coop reflected.
Nevertheless, higher international demand and lower global supplies pushed up Hochwald’s overseas revenue and dairy commodity prices. “Lower worldwide milk production, contrasting with increasing sales, in particular in south-east Asia, led to rapidly increasing prices throughout the year, beginning with bulk products.”
Higher prices to boost sales in 2022
Looking ahead to the remainder of this year, Hochwald warned that the Russian invasion of Ukraine has dampened the global economic outlook and delivered ‘significant political uncertainty’. “Ongoing high prices for energy and raw materials, as well as the lack of food and fertiliser exports from Ukraine and Russia, are probable consequences,” the company warned.
Pre-war, Hochwald said, the economic outlook was ‘robust’ despite the spread of the omnicron variant of COVID-19. “The decline in global milk quantities, combined with stable worldwide demand, has led to shifts in the range of products on the one hand. On the other hand, exploding prices resulted from the uncertainties caused by the Ukraine war and the anticipated supply bottlenecks.”
Looking at its domestic market, Hochwald said upward price pressures mean ‘dairy products in Germany are becoming more expensive than ever before’.
Higher dairy prices are expected to lift Hochwald’s sales. “Based on the sales trend for the opening months of the financial year, we expect annual turnover to significantly exceed the levels of the previous year in 2022. We expect that an above-average price for milk can be paid by the corporate group in 2022. We expect a pre-tax group operating profit slightly above average for 2022,” the group said.
Against the backdrop of this situation, Hochwald opened what it describes as the ‘most advanced’ dairy plant in Europe in Mechernich. CEO Detlef Latka said this investment demonstrates Hochwald’s strategy to strengthen its productions.
“With the opening of the Mechernich dairy plant and investments in our other plants, a whole range of building works as part of our strategy has come to an end. Now we have to build on the successes of recent years and continue to develop Hochwald's strategy systematically. In the future, we will specifically focus more and more on issues like sustainability, diversification and digitalization,” he noted.