Lucerne, 25 Sept. - Emmi succeeded in holding its own in a challenging market in the first half of 2007; the group achieved net sales of CHF 1.2 billion, corresponding to growth of 10.3%. Net profit was CHF 22.7 million, up 10.6% on the first half of 2006. Overall, despite severe pressure on prices due to the full-scale liberalisation of the cheese market, Emmi maintained its profitability at the prior-year level of 1.9%. Emmi is anticipating positive market developments in the second half of the year and is still confident of achieving its growth and profitability targets for 2007.
Emmi successfully defended its excellent market position in Switzerland in the first half of 2007 and continued to strengthen its position abroad. Organic growth was achieved primarily through brand concepts and specialities. By making further targeted investments such as the partnership with Italian cheese specialist Ambrosi S.p.A. and the US-company CASP LLC and the expansion of its own sales organisations, Emmi will reinforce its international position.
Positive performance of international businessIn the first half of 2007, Emmi posted growth of 10.3% in a challenging market environment. Net sales increased to CHF 1.2 billion (prior year CHF 1.1 billion). Growth in Switzerland is fully attributable to the integration of Mittelland Molkerei into the Emmi Group with effect from 1 April 2006. Brand concepts and specialities, together with the acquisition of northern Italian yoghurt producer Trentinalatte effective 1 July 2006, were roughly equal contributors to the growth abroad of over 25%. Adjusted for acquisitions and consolidation effects, Emmi posted total organic growth of 2.2% in the period under review. Organic growth was achieved primarily through brand concepts such as Emmi Caffè Latte and the Kaltbach line, as well as specialities.
Gross profit was up 12.0% on the first half of 2006 to CHF 374.3 million (prior year CHF 334.1 million), which is primarily attributable to the integration of Mittelland Molkerei and Trentinalatte. The gross profit margin improved to 31.2% (prior year 30.7%) as a result. Operating expenses showed a slightly disproportionate increase of 12.9% to CHF 308.5 million (prior year CHF 273.3 million) due to acquisitions and the company’s international expansion.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) were up 11.3% to CHF 68.2 million (prior year CHF 61.2 million), while the EBITDA margin remained flat at 5.7% (prior year 5.6%).
Earnings before interest and taxes (EBIT) increased by 14.0% to CHF 32.0 million, with the EBIT margin slightly increased to 2.7% (prior year 2.6%). Net profit for the first half of 2007 rose to CHF 22.7 million (prior year CHF 20.5 million), an increase of 10.6% on the first half of 2006. A net profit margin of 1.9% puts Emmi’s profitability for the first half of 2007 at prior-year level, which means it is well on track.
The headcount was up 6.1% to 3,337 (prior year 3,146) to the end of June 2007, as a result of acquisitions and further international expansion.
Investments in competitiveness and market positionEmmi continually seeks to improve its competitiveness and invests in international expansion on an ongoing basis. On 1 February 2007, Emmi acquired a minority stake in CASP (Contract Aseptic & Speciality Packaging) LLC in Penn Yan (New York). The plan is to start producing Emmi Caffè Latte for selected test regions in the USA in October 2007.
In June 2007, Emmi acquired a 25% stake in Italian cheese specialist Ambrosi S.p.A. Emmi and Ambrosi intend to offer their customers a comprehensive, high-quality range of traditional Swiss and Italian cheeses and drive their international growth forward. The two companies have decided to merge their existing subsidiaries in France into Ambrosi Emmi France SA with effect from 1 January 2008, thereby significantly strengthening their market position.
Dairy products: Growth with Mittelland MolkereiSales of dairy products rose by 14.4% to CHF 362.8 million (prior year: CHF 317.1 million) in the first half of the year. Given the pressure on prices of generic products (consumer milk, butter, cream), reported growth is entirely due to the integration of Mittelland Molkerei. The production of butter will be relocated from Lucerne to Suhr by the end of 2007. As of 2008, we will be able to make full use of the synergy effects from the merger.
Fresh products: Caffè Latte und Trentinalatte are growth driversThe 26.6% increase in sales of fresh products to CHF 275.3 million is attributable in approximately equal measure to organic growth and acquisition effects, particularly with respect to Italybased Trentinalatte S.p.A. acquired on 1 July 2006. Adjusted for acquisition effects, growth in the fresh products segment was a healthy 12.4% in the first half of 2007. The growth in demand for Emmi Caffè Latte continues undiminished in virtually all markets. Sales of desserts and ice cream also performed well. The summer launch of Swiss Müesli in Germany got off to a promising start.
Cheese: Mild winter and successful brand conceptsThe mild winter and sharp contraction in the market for fondue und raclette, together with the pressure on prices from the full-scale liberalisation of the cheese market with the European Union caused sales to dip in Switzerland. This was more than compensated for by the success of brand concepts and traditional Swiss cheeses in the international markets. The Kaltbach line performed extremely well with double-digit growth rates. Overall, Emmi increased its cheese sales by a marginal 0.6% to CHF 370.0 million (prior year CHF 367.8 million).
Fresh cheese: Good position maintainedThe prospect of market liberalisation brought massive pressure to bear on the price of cheese, particularly in the Fresh Cheese division. However, thanks in large part to measures worked out in cooperation with the milk producers, Emmi maintained its position well. The lower prices resulted in a 1.0% drop in sales to CHF 64.5 million (prior year CHF 65.1 million) in the Fresh Cheese division.
Powder/concentrates at prior-year levelSales of powder/concentrates remained flat at CHF 40.0 million, down –0.1%, since there was significantly less milk than planned available in the month of July for powder production. Based on longer-term supply contracts with our industrial customers, the massive price hikes for milk powder are slowly beginning to have a positive effect.
Business performance in the second half of 2007 and outlook for the year as a wholeThe Emmi Group expects the market environment to remain challenging, even though the second half of the year is usually stronger due to seasonal circumstances. It also anticipates ongoing pressure on margins in Switzerland, especially for standard products, due to rising prices of raw materials. At the same time, however, Emmi expects its brand concepts and specialities to perform well. It continues to anticipate growth of 5% for the year as a whole and a profit margin of 2-2.5%. Emmi forecasts above-average growth of 12-15% in international markets over the course of the year, due not least to the effect of the Trentinalatte acquisition.
Emmi Group Key Figures Half-year 2007
| January - June in CHF millions |
2007
|
20061)
|
Change in %
|
| Net sales (operating income) |
1'199.0
|
1'087.2
|
10.3
|
| Earnings before interest, taxes, depreciation and amortization (EBITDA) |
68.2
|
61.2
|
11.3
|
| as % of net sales |
5.7
|
5.6
|
|
| Earnings before interest and taxes (EBIT) |
32.0
|
28.1
|
14.0
|
| as % of net sales |
2.7
|
2.6
|
|
| Net profit |
22.7
|
20.5
|
10.6
|
| as % of net sales |
1.9
|
1.9
|
|
| Headcount (full-time equivalents) as at 30 June |
3'337
|
3'146
|
6.1
|
| |
|
|
|
| in CHF millions |
30.06.2007
|
31.12.2006
|
|
| Total assets |
1'503.0
|
1'530.7
|
-1.8
|
| there of shareholder's equity incl. minority interests and convertible bond |
763.4
|
754.3
|
1.2
|
| as % of net sales |
50.8
|
49.3
|
|
1) Effective 1 January 2007, various new Swiss GAAP FER standards entered into force. For the purposes of comparison, the figures for the prior-year period 2006 have been adjusted.