Emmi made good progress in the first half of 2019 thanks to the consistent implementation of its strategy. The business was further strengthened with a special focus on growth markets and the expansion of the strategic niche areas of desserts, organic products and goat’s milk. At operational level, Emmi held up well despite the difficult environment thanks to strong innovation and the Emmi Operational Excellence cost-saving programme. Organic sales growth of 1.6 % was slightly below expectations, but Emmi is still on track to meet its earnings targets. Compared with (adjusted) prior-year figures, EBIT was slightly down in the first six months of the year, while net profit was slightly up.
In the first six months of financial year 2019, Emmi achieved modest organic growth of 1.6 % overall. While organic growth in Switzerland was solid at 0.5 % and in the business division Americas on target at 4.3 %, in the business division Europe it fell short of expectations – amounting to 0.7 % overall – due to lower sales at Gläserne Molkerei in Germany. Sales of Emmi Caffè Latte performed very well in all business divisions. Encouraging growth was also posted in strategically relevant niche markets such as Italian dessert specialities and goat’s milk products. Other growth drivers in the first half of 2019 included the growth markets of Chile, Mexico and Tunisia.
Emmi generated EBIT of CHF 93.5 million, a decrease of 1.6 % compared with the previous year (CHF 95 million). Although the gross profit margin rose from 36.1 % to 36.4 % thanks to the consistent focus on the portfolio, the EBIT margin dipped slightly from 5.7 % to 5.6 % due to high cost pressure. This is a remarkable result, given the difficult environment in the sector. Urs Riedener, CEO of Emmi, commented: “We’re seeing once again the importance of the cost-saving programme which Emmi has been constantly expanding for over ten years.” In the end, net profit amounted to CHF 72.9 million – an increase of 1.1 % compared with the (adjusted) prior-year figure of CHF 72.1 million. The net profit margin was 4.4 % (previous year, adjusted: 4.3 %).
Based on the half-year results, Emmi confirms its earnings targets for full-year 2019 (EBIT of CHF 215 million to CHF 220 million and a net profit margin of 4.7 % to 5.2 %), but is slightly lowering its sales forecast for the business division Europe (now: -1.0 % to 1.0 % instead of 1 % to 3 %) and for the Group (now: 1.5 % to 2.5 % instead of 2 % to 3 %).
The systematic implementation of the strategy includes further solidifying the company’s positions in growth markets outside of Europe and investing in strategic niche areas. Emmi took various measures to further this goal in the first half of 2019. In June 2019, Emmi announced its plan to increase its stake in Laticínios Porto Alegre Indústria e Comércio S.A., based in Ponte Nova, Brazil, from 40 % to 70 %.
Another area of focus was the expansion of the international goat’s milk network following the announced purchase of a 66 % stake in Austrian organic goat’s milk and sheep’s milk processer Leeb Biomilch GmbH. The strategic Italian dessert business will be further boosted by the purchase of Pasticceria Quadrifoglio S.r.l. The acquisition of the blue cheese production site in the US and the sale of Emmi Frisch-Service AG in Switzerland are also important steps in the implementation of the strategy. For more visit emmi.com
Source: EmmiAuthor: COX