Emmi inches up sales performance with better than expected 2017

The company increased its sales by 3.2 percent to CHF3.3bn (US$3.5bn) in 2017, while earnings before interest and taxes (EBIT) rose by 1.6 percent to CHF 206 million (US$220 million).

Net profit amounted to CHF162 million (US$173 million), 15.1 percent higher than in the previous year. This significant increase in net profit is primarily attributable to the reduction in minority interests.

Distribution of a gross dividend of CHF10.00 per registered share (2016: CHF5.90) will be proposed to the General Meeting. This distribution will include a special dividend of CHF3.00 (US$3.21), enabling shareholders to participate in the non-recurring gain from the sale of the stake in Siggi’s.

Despite the competitive environment, a growth of 1.5 percent to 3 percent is realistic for 2018, and Emmi has slightly raised its medium-term forecast for the net profit margin.

Sales and earnings slightly exceeded Emmi’s expectations. EBIT increased by 1.6 percent from CHF 202.7 million (US$216 million) to CHF 205.8 million (US$219 million), resulting in an EBIT margin of 6.1 percent (2016: 6.2 percent).

Net profit was CHF 161.6 million (US$172.7 million), compared with CHF 140.3 million (US$149 million) in the previous year, resulting in a net profit margin of 4.8 percent (2016: 4.3 percent).

Emmi says that acquisition effects relating to sales are accounted for by the following factors:
- 60  percent stake in Bettinehoeve (the Netherlands, February 2, 2016)
- Increased stake in SDA Chile (Chile, May 19, 2016)
- Acquisition of Cowgirl Creamery (the US, May 31, 2016)
- Acquisition of Jackson Mitchell (the US, January 4, 2017)
- 80 percent stake in Lácteos Caprinos (Spain, January 12, 2017)
- Acquisition of Italian Fresh Foods (Italy, March 1, 2017)
- Sale of stake in Venchiaredo (Italy, July 31, 2017)
- Increased stake in Mexideli (Mexico, October 8, 2017)

 
“Emmi made up a good deal of ground in the second half of the year, boosted by the good sales performance in the US and Tunisia, a well-functioning cheese business and more favorable economic conditions,” said Urs Riedener, CEO Emmi Group.

“Our earnings were also supported by the efficiency program currently running in Switzerland and several international subsidiaries.”

 
Outlook
The global economy has accelerated, which will benefit the growth markets of Emmi’s business division Americas in particular and the company expects a continued increase in demand in Tunisia and the US, while the Chilean market should also confirm signs of a recovery.

Foreign currency effects in countries such as Chile, Mexico and Tunisia will continue to be an issue, however. Also, the European markets in this division (Spain and France) will once again inhibit growth this year, according to Emmi.

 
Although the economy in the eurozone is expected to grow in 2018, Emmi’s forecast for the business division Europe takes account of several inhibiting factors such as continued competition, the consequences of Brexit and the performance of the British pound.

This will affect the performance of Emmi’s UK business (Onken yogurts, exports from Switzerland and dessert exports from Italy). Combined with the recent appreciation of the euro, this business division should make a positive contribution to sales performance overall, taking into account all markets.

 
Given favorable conditions, sales growth may also be possible in the company’s home market of Switzerland in 2018. This is supported by the outlook for Swiss retailers, which ranges from stable to at best slightly increasing sales in the food sector, as well as by the higher milk price (price increase on October 1, 2017) and strong brand concepts.

There is still massive import pressure, however, and retail tourism remains at a stable, high level.

“There are therefore considerable challenges to be overcome if we are to achieve sales growth,” says the company statement.

 
Overall, Emmi expects organic sales growth almost in line with the medium-term forecast in 2018.

 
To support earnings, Emmi will also continue its efficiency and cost-saving program and step this up at its international production sites and expects operating profit to be higher year-on-year in 2018.