Emmi Reports Growth in 2016 Performance Despite Decline in Switzerland

02 Feb 2017 --- Swiss milk processor and dairy products company Emmi AG has published its group sales for 2016 which increased 1.4% to CHF 3,258.8 million. In organic terms, (excluding currency and acquisition effects) this means a decline of 1.0 % and reflects “considerable lower sales in the business division Switzerland (-2.9 %), a decline of 0.2 % in the business division Europe and growth of 2.8 % in the business division Americas.

Emmi says economic uncertainties, including Brexit, as well as increased imports to Switzerland and internationally low milk prices, played a significant part and is in contrast to the growth shown by brands like Emmi Caffè Latte, Kaltbach and Yoqua.

The acquisition effect is attributable to the purchase of cheese business of J.L. Freeman (Canada, 15 April 2015), the acquisition of Redwood Hill (USA, 31 December 2015), the 60% stake in Bettinehoeve (Netherlands, 2 February 2016), the increased stake in SDA Chile (Chile, 19 May 2016) and the acquisition of Cowgirl Creamery (USA, 31 May 2016).

“Emmi generated Group sales of CHF 3,258.8 million in 2016, an increase of 1.4 % compared with the previous year (CHF 3,213.9 million). In organic terms, i.e. adjusted for currency and acquisition effects, sales declined by 1.0 %. Sales performance in the business division Switzerland and business division Americas was in line with expectations, while sales in the business division Europe were below expectations,” says a statement.

Emmi’s CEO Urs Riedener added: “Import and price pressure in Switzerland were challenges that characterized 2016. With the organic growth in the business division Americas, we were able to offset the drop in sales in Switzerland only to a certain extent.”

“The development of niche markets such as organic and goat’s milk products, the support for our brand platforms and various recent acquisitions should have a positive effect on our sales in future.”

In the business division Switzerland, sales fell by 2.9 % from CHF 1,793.3 million to CHF 1,741.3 million, and the price effect came to -1.3 % (-0.9 % milk price, -0.4 % remaining price difference). Emmi had forecasted a decline in sales of between -4 % and -2 %. Sales in the home market Switzerland were therefore in line with expectations.

The development was due, among other factors, to Swiss retailers, which saw their sales decline by 1 % in 2016. Other negative factors included the pressure on prices and imports, which took its toll on Emmi’s cheese and fresh cheese segments in particular. As a result, 4.9 % more cheese was imported in 2016 than in the previous year.

In dairy products (milk, cream, butter), the lower milk prices and slightly lower volumes had an unfavorable effect. In cheese, sales of AOP cheese fell, Kaltbach remained largely stable, and Luzerner Rahmkäse and Le Petit Chevrier achieved gains. In fresh products, Emmi Caffè Latte and the protein-rich YoQua yogurt registered an increase in sales, while sales of private labels were down.

The business division Americas includes not only the US, Canada and Chile, but also Spain, France and Tunisia and sales increased 8.5 %, from CHF 798.1 million to CHF 865.6 million. In organic terms. This resulted in an increase of 2.8 %, which is in line with the 2 % to 4 % forecast, according to Emmi.

Above all, the positive organic sales performance is because of the growth in Tunisia where yogurts, desserts and milk marketed under the Vitalait brand reported considerably higher sales, with corresponding positive effects on the dairy products and fresh products segments.

And in the US, both cheese exports from Switzerland (particularly Kaltbach) and the locally produced cow’s and goat’s milk cheeses enjoyed fresh impetus.

In Europe, sales rose by 6.5 % from CHF 487.3 million to CHF 519.0 million. In organic terms, this resulted in a decline of 0.2 %, below Emmi’s growth expectations.

Decisive factors were the decline in AOP cheese and the weaker British pound which put extra pressure on dessert sales in the fresh products segment.

In fresh products, Emmi Caffè Latte and Onken in the UK and the Italian speciality desserts from Rachelli showed growth. In cheese, the Kaltbach specialities and Der Scharfe Maxx performed well, particularly in Germany and Austria. In the area of AOP cheese, the cheese business suffered as a result of the declining volumes.

The fresh cheese segment was positively affected by the acquisitional growth from Bettinehoeve and negatively affected by a decline in volumes and prices in Italy. Growth in the powder/concentrates segment is attributable to an increase in sales of goat’s milk powder (AVH dairy), according to Emmi.

Emmi will announce its forecast for sales and net profit for 2017 when the figures for financial year 2016 are published.

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