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Emmi Improves Earnings Despite Sales Drop

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Emmi Improves Earnings Despite Sales Drop

Emmi Improves Earnings Despite Sales Drop
March 29
15:53 2016

Although sales declined by 5.6% or 3.0% in organic terms to SFr3.214 billion (Eur2.949 billion) in 2015, Swiss dairy group Emmi was able to improve its profit levels with earnings before interest and taxes (EBIT) increasing by 10.7% over the prior year to SFr188.9 million. Net profit amounted to SFr120.2 million, 9.9% higher than in 2014. Emmi expects conditions to remain challenging in 2016, especially in Switzerland, but nevertheless anticipates sales to remain stable overall and income to be slightly higher than in 2015.

Sales in Emmi’s Switzerland business division, which accounts for 56% of group turnover, decreased by 5.0% to SFr1.793  billion with volume effects of -3.3 % and price effects of -1.7 %. The Americas division generated sales of SFr798.1 million, which corresponds to a decline of 5.0% but in organic terms, adjusted for currency and acquisition effects, growth was 2.8%.

In the Europe business division sales decreased by 4.2 % to SFr487.3 million and declined by 0.8% in organic terms. According to Emmi, this is a remarkable result given the weakness of the euro, the low milk prices and the rigorously implemented price increases for Swiss export products. Europe accounted for 15% of group sales.

Urs Riedener, chief executive of Emmi.

Urs Riedener, chief executive of Emmi.

Sales in the business division Global Trade business division dropped by 19.1% to SFr135.2 million, largely due to a reduction in butter and milk powder exports.

Urs Riedener, chief executive of Emmi Group, comments: “The pleasing results are attributable to a marked increase in our earnings abroad. We sold two companies in 2014 that were weak in terms of earnings, we intensified the Operational Excellence programmes in our subsidiaries and we diligently implemented the necessary price increases in eurozone countries. In addition, our established, high-margin brand concepts prevailed, even in challenging conditions. I am very pleased that we were able to achieve this increase in profits without outsourcing production abroad.”

Emmi expects organic group sales in 2016 to remain roughly on a par with 2015, despite the difficult situation in the home market of Switzerland. Emmi is targeting more efficiency improvements in 2016, especially in its foreign subsidiaries. Combined with a strict cost management, this should strengthen the earnings performance. Given the improvement in earnings outside Switzerland, the group’s profitability is likely to improve in 2016 and slightly exceed the 2015 figure.

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