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Hero Group operating profit up 5%

Published: Friday, March 31, 2017
  • Hero continues to increase profitability driven by strong performance in European core markets

The Hero Group, on a mission to delight consumers by conserving the goodness of nature, has posted a 5.2% increase in operating profit to CHF 113.8 million for 2016 compared to an already strong 2015. In its Annual Report 2016, published today, the Group reported an organic growth of 0.1% despite a year of challenges. Operational profitability as a percentage of net sales was up to 9.0% from 8.6% in 2015, while the income for the year reached CHF 73.4 million, an increase of CHF 1.6 million over the previous year.

“Net sales growth of branded products in our core categories of Baby & Toddler Food, Jams, and Healthy Snacks accelerated to a satisfying level of 3.8%. This positive development was counterbalanced by a decrease in sales of our Baby & Toddler Milks caused by changes in the regulatory environment in China as well as adverse developments in our specialties and non-branded businesses. In 2016, the Hero Group continued on its path of profitable growth and accelerated the performance of its core categories,” said Hero Group CEO Rob Versloot.

“The positive development in 2016 was driven by a strong performance of our European core markets,” Hero Group CFO Karsten Boyens said. Europe remained the Group’s main market with 64% of total sales and increased profits by 8.6% versus prior year. The overall sales growth for this region was 1.9% adjusted for negative effects from non-strategic non-branded business. Certain European core markets such as Germany, the Nordics, the UK, and the Czech Republic contributed over-proportionately to this growth.

Boyens remarked that in Emerging Markets, the Hero Group managed organic sales growth of 4% despite the volatile economic circumstances in many countries and regulatory uncertainty regarding baby milks in China. In North America, sales declined by 2.9% organically, mainly due to lower sales in non-core specialties and the co-packing business.

In 2016 the Hero Group successfully completed the refinancing of the hybrid bond that reached the first call date on October 28, 2016. “With the issuance of a CHF 200 million hybrid bond with a coupon of 2.125% and a CHF 135 million 10-year 1.0% straight bond, Hero was able to substantially lower the cost of capital for the Group. This provides a sound financial ground for us to support our long-term profitable growth strategy,” Boyens said.

Looking forward to the current year, Versloot said that he expects continuous volatility in emerging markets, as well as a potential decrease in consumer confidence in both the USA and Europe.

“Despite this, we remain cautiously optimistic that we will continue on our path of profitable growth and we expect to once again deliver positive organic growth in our core categories,” Versloot added.

The Hero Annual Report 2016 can be viewed here.

About Hero Group
The Hero Group is an international food company focused on branded nutritional food products. The company was founded in 1886 in Lenzburg, Switzerland, where its headquarters are still located today. Hero's main core product categories of Baby and Toddler Food and Milks, Jams, and Cereal Bars are complemented by its activities in the Decoration and Gluten-free product segments. The Group, which lives by its mission to Delight consumers by conserving the goodness of nature, boasts a global footprint and its portfolio consists of many well-known international and local brands. In 2016, the Group generated revenues of CHF 1.27 billion.