Emmi expects dairy turnaround in 2008

By Neil Merrett

- Last updated on GMT

Related tags Cheese Emmi

Dairy group Emmi says it remains in line to achieve its full-year
objectives despite falling short of earnings targets and expects
greater stability in both milk prices and it owns operations in the
year ahead.

The company, which is an international producer of Swiss emmentaler cheese, said that net profit margins were likely to be down by 0.6 percentage points for the year to about 1.7 per cent, though improvements were expected next year. A number of European cheese processors are having to amend their operations to better deal with increased milk costs over the last year. However, Emmi's optimistic outlook for 2008 suggests difficulties facing manufacturers may be easing slightly. In Emmi's own operations, the company said it expected the international prices for its core emmentaler cheeses to stabilise at a higher level in 2008, despite a number of problems this year, ensuring net profit margins would rise. The group said that large volumes of emmentaler available for exporting, particularly in key markets like Italy, along with an increase in raw material costs had compounded profitability during 2007. When combined with the high level of investment spent by the company on expansion, and a cold wet summer in Europe, Emmi said annual earnings were likely to be below expectations. With upcoming volume restrictions to be imposed by the organisation responsible for emmentaler, as well as a high yet stable milk price, the company added that it was expecting net profit margins to rise above two per cent during 2008. "Emmi is currently working on measures to ensure long-term profitability in the international business, with the aim of strengthening earnings power and lowering costs,"​ the group stated. Rival cheese manufacturers have had to drastically overhaul their operations during the year on account of difficulties relating to cheese production. Early last month, Campina said it had offloaded its Chevagne goat's cheese brand to ensure improved profitability from it supply chain. Moreover, in September Arla Foods said it was cutting cheese production by 6,200 tonnes until the New Year in a drive to better deal with a dwindling global supply of milk. The group announced that production of edam, danbo, fontal, havarti and rindless cheese will all be reduced as part of the focus.

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