Hochdorf offloads Lithuanian milk protein plant

20 Jun 2018 --- Following a significant company review which showed it was no longer viable to operate a plant in Lithuania, the Hochdorf Group is parting company with Hochdorf Baltic Milk UAB, a milk protein plant in Medeikiai which is being taken over by an investment group.

Spurred by the current low protein prices on the international market alongside high milk prices caused by agricultural policies in Lithuania, Hochdorf carried out a thorough reappraisal of the Lithuanian plant recently.

The company concluded that the “strategic benefit” of the Lithuanian plant has “significantly diminished” since it was first taken over in stages from 2010 at a time when there was a need for a production site in the European Union and to create synergies in the area of milk proteins. 

However, because of the growth of the Hochdorf Group in recent years, including various additional acquisitions and shareholdings in the EU area, the company decided to sell the plant to a Lithuanian investment group, signaling a parting of ways for Hochdorf Holding Ltd and Hochdorf Baltic Milk UAB. 

The majority shareholding in Uckermärker Milch GmbH in Prenzlau (Germany) by the end of 2014 meant that Hochdorf had a holding in a second milk processing plant in the EU, which is on an entirely different level in terms of technology and volume.

The sale will take place retroactively to the end of May 2018 and is the first step towards reorganizing and strengthening Hochdorf’s Dairy Ingredients Division, according to the Swiss Group. 

This transaction involves an EBIT liability of around CHF 3.2 million (US$3.2million) and a total of around CHF 6.2 million (US$6.2 million) net profits.

The acquisition price has not been disclosed. 

“There are two main reasons for the sale of Hochdorf Baltic Milk UAB to a group of Lithuanian Investors, the first being the strategic benefit of the factory is now much less as a result of the development of the Hochdorf Group,” a Hochdorf spokesperson tells FoodIngredientsFirst. 

“Hochdorf’s two main strategic changes: Majority shareholding in Uckermärker Milch GmbH and a stronger focus on infant milk formulas (Baby Care Division). There are high milk prices due to agricultural policies in Lithuania. This is a problem if you want to export milk products.”

“As far as we know, there should be no job losses.”

The sale also comes just a month after the group signed an agreement to acquire Bimbosan AG in Welschenrohr, Switzerland. With the takeover of this long-established Swiss infant nutrition company, Hochdorf claims it is moving another step closer to the end consumer in the area of baby care. The takeover will take place retroactively to 30 April 2018.

The Hochdorf Group has produced infant formula since 1908, manufacturing products mainly for the Swiss market until 2006, operating essentially as a private-label producer until the end of 2016, when it acquired a 51 percent share in the Pharmalys Group in its first step towards the end consumer. 

The 100 percent acquisition of traditional Swiss company Bimbosan AG is another important move in this direction, according to the company.