News Annual figures
Dairy trader Hoogwegt is still just in the black
For the Arnhemse Hoogwegt Group, the largest dairy trader in the Netherlands in terms of turnover, the broken financial year that ended last September was certainly not a high-flyer. Turnover fell considerably, but profit was much lower in proportion. Solvency improved somewhat, as did cash flow.
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This is evident from the recently filed annual report with the Chamber of Commerce. Hoogwegt saw turnover fall by just under 10% last year to €3,46 billion. A decline in turnover was also in the offing, as 2022 was a year with extremely high dairy prices. Hoogwegt does not make any statements about volumes.
The bottom line is a measly €15 million. This is a decrease of no less than 63% compared to the previous financial year and also lower than the dividend paid to shareholders of €20,3 million. In addition, a net profit margin of 0,43% cannot be called generous for a trading house. Last year this figure was just above 1%. This put Hoogwegt between competitors Numidia and Interfood.
Although profits fell sharply, solvency increased from 21,7% to 29,2%. This means that Hoogwegt is no longer just above the danger zone. The operational cash flow, which is not entirely unimportant for a trading company, also shows a significant improvement. This increases from €86 million negative to €232 million and that also explains the reduced need for working capital, which in turn has a positive effect on solvency.
Margins under pressure
The management attributes the lower result to the pressure on margins. This points to the role of dairy producers who increased milk prices to their suppliers in the fourth quarter of 2022, while selling prices were already under considerable pressure. This also had negative consequences for Hoogwegt's margins. Reference is also made to the reduced demand for dairy and higher interest rates, although the negative impact of this could partly be offset by hedge positions. All in all, the interest component has a considerable impact on the result, as it consumes almost half of the gross profit.
When it comes to market expectations, CEO Sander Hulsebos is cautious. He notes reduced demand in Asia, for example, which is an important sales market for milk powders. He points to the troubled geopolitical developments that influence the macroeconomy.
New factory in Denmark
The Arnhem family business is mainly active in the dairy trade, but is also partly active in production. Including through a joint venture with the American Lone Star Dairy, for the production and marketing of high-quality dairy products. Another joint venture for production is that of Hoogwegt subsidiary Meelunie with the Danish Sacca-Dana for the production of (fava) bean protein. This company is building a new factory.