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Emmi Increases Interim Sales But Net Profit Falls

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Emmi Increases Interim Sales But Net Profit Falls

Emmi Increases Interim Sales But Net Profit Falls
August 29
11:47 2013

Swiss dairy group Emmi has posted net sales of SFr1.57 billion in the first half of 2013 – an increase of 17.0% year-on-year. Adjusted earnings before interest and taxes (EBIT) increased by 5.3% to SFr65.0 million (Eur53 million), but adjusted net profits declined by 0.8% to SFr39.0 million, resulting in an adjusted EBIT margin of 4.2% against 4.6% in the prior year,  and an adjusted net profit margin of 2.5% (prior year 2.9%).

The result reflects strong pressure on prices in Switzerland and various European markets. Emmi has confirmed its forecast for 2013 as a whole of group-wide sales growth of 8 to 10%, EBIT of SFr140 to 155 million and a net profit margin of around 3 %.

Urs Riedener, chief executive of Emmi.

Urs Riedener, chief executive of Emmi, comments: “The sales trend in our core business is on track. Income has been affected, not entirely unexpectedly, by strong competition, particularly in the Swiss market. Nonetheless, we will achieve our sales and earnings targets for 2013.”

In Switzerland, net sales fell by 1.6 % to SFr 890.5 million. Declines in Switzerland were lower than expected and Emmi was able to slightly expand its market share in the core retail trade business. This is an impressive development, particularly given the falling retail sales of dairy products in Switzerland, which declined 2.7% on a value basis in the first half of 2013 (source: Nielsen). Adjusted for divestment effects, sales in dairy products (+0.4%), fresh products (+2.1%) and powder/concentrates (+13.8%) all increased, while those in cheese (-1.0%), fresh cheese (-3.1%) and other products and services (-27.8%) declined.

Factors driving growth in the Swiss business were Emmi Caffè Latte, Mix-it Müesli, Jogurtpur and good day in fresh products, as well as the Kaltbach cheeses, raclette cheese and Le Gruyere AOC.

In the international business, Emmi achieved sales growth of 55.8% to SFr676.1 million. Adjusted for acquisitions and currency effects, this results in an organic decline in sales of 1.5%. Emmi’s core business performed well and according to the planning in key markets and product groups, while the sharp decline in butter and milk exports led to a drop in sales of SFr32 million. Excluding these export effects, international organic growth was 6.5%.

Emmi expects the market situation to change little in financial year 2013. In Switzerland, high import pressure, retail tourism, declines in the food service sector and competitive prices will continue to shape the business. The average milk price will be higher in the second half of 2013 compared to the previous year period, while other raw material prices are likely to remain close to their current level.

In the international business, Emmi continues to expect positive consumer sentiment in the US and other markets outside of Europe. In Europe, the southern European markets will continue to contract, while consumption in the other European markets relevant to Emmi is likely to remain stable.

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