Emmi issues first-half 2021 results
Emmi said the performance is being driven by renewed momentum in the international business, brand concepts such as Emmi Caffè Latte and Kaltbach, and growth in strategic niches such as desserts.
In the Swiss domestic market, sales declined as expected following a record first six months in 2020 due to the pandemic.
Despite continued uncertainties and rising input costs worldwide, Emmi said it is adjusting its sales forecast for the full year upwards slightly and confirming its guidance for EBIT and net profit margin.
Total sales growth was 6.2% or 3.7% in organic terms, with an acquisition effect of 3.2%, and currency effect of -0.7%.
The overall positive acquisition effect of 3.2% was due to the acquisitions of Chäs Hütte Zollikon GmbH (Switzerland, July 2020) and Emmi Dessert USA (formerly Indulge Desserts Group, US, October 2020), with the sale of Lácteos Caprinos S.A. (Spain, December 2020) having a negative impact.
All business divisions except Switzerland (-3.3%) showed organic sales growth (Americas 11.9%, Europe 4.9%, Global Trade 14.3%), and there was an improvement in gross profit margin (36.1% to 37.2%) due to organic growth and the acquisition of Emmi Dessert USA (formerly Indulge Desserts Group).
EBIT grew 15.5% to CHF 129.4m ($141.2m), and the EBIT margin improved from 6.3% to 6.9%, while net profit rose 21.4% to CHF 98.7m ($107.7m). Net profit margin grew from 4.6% to 5.2%.
With net sales of CHF 801.8m/$875m (previous year: CHF 828.8m/$904.5m), the Swiss business saw an organic decline of 3.3%, primarily due to high organic growth in the same period of 2020 (3.8%). This is mainly attributable to the retail business, which suffered significant setbacks compared to the exceptional previous year driven by pantry loading and border closures.
The resurgence of old patterns of consumer behavior, including shopping tourism, combined with further restaurant closures in some areas and the slow recovery of business with industrial customers, left their mark, Emmi said, adding the negative effects are particularly visible in the dairy products and cheese segments, which account for the majority of sales. However, brand and speciality concepts – in particular Emmi Caffè Latte and Kaltbach cheese – continued to perform well. The general milk price increase in the current year also propped up sales.
Urs Riedener, CEO of the Emmi Group, said, "Our proven strategy, which is geared towards sustainable and profitable growth, coupled with the consistent development of our company and product portfolio with strong brand concepts, continues to bear fruit. Overall, we succeeded in growing profitably on a broad basis in a difficult and still volatile environment.
“While we were able to outperform expectations and post strong growth internationally, as expected business in Switzerland settled at pre-crisis levels following the record first half of 2020, with continued significant losses in the food service and industrial customer businesses. At the same time and against the backdrop of the recent floods and heat waves, our recently revised and expanded sustainability plans – which outline how we intend to develop our business over the long term with respect for nature and future generations – have further gained in importance.
“For the full year, I am confident that we will achieve our annual targets, which have been adjusted slightly upwards in terms of sales, despite the continuing uncertainties with regard to economic developments and the further course of the pandemic."
Emmi said its outlook for the full-year 2021 for organic sales performance is, for the Group, 2% to 3% (previously 1% to 2%).
For the business division Switzerland, this translates to -2.5% to -3.5% (previously -1% to -2%), while its business division Americas is expected to see an increase of 7% to 9% (previously 4% to 6%). The Europe business division is projected at 3% to 5% growth (previously 1% to 3%), while EBIT is predicted at CHF 275m to CHF 290m ($300m to $316m). The net profit margin is forecast between 5.2% and 5.7%.