Challenging Italian Yogurt Market Impacts Emmi’s First Half Profits
Swiss dairy group Emmi has increased sales by 3.1% to SFr1.63 billion (Eur1.35 billion) in the first half of 2014 but net profit after exceptional items decreased by 76.1% to SFr9.8 million with EBIT down 41% to SFr39.8 million. The drop in profitability was due to the difficult economic situation in Italy and the challenging conditions in the yogurt market, which necessitated an impairment charge on Emmi’s Trentinalatte business of SFr38.5 million. Adjusted for non-recurring items, EBIT rose by 14.3% to SFr74.3 million and net profit by 15.9 % to SFr45.2 million in the first half.
Emmi is continuing to pursue its international strategy and grow both organically and through targeted acquisitions. One example of this is its increased stake in Gläserne Molkerei in Germany, which has risen from 24% to 76%.
Emmi achieved sound growth in its home market of Switzerland, as well as in the US, Spain, Chile and Tunisia. In organic terms (adjusted for acquisitions and in local currency) this resulted in group-wide sales growth of 4.1%. International sales increased by 7.1% (organically by 8.4%) to SFr724.0 million, with sales performance in line with the plan announced in the spring. The acquisition effects are attributable to the acquisitions of Käserei Studer (Switzerland) and Rachelli (Italy) and also to the sale of the stake in Nutrifrais (Switzerland).
Urs Riedener, CEO of Emmi, says: “The difficult situation in Italy made the impairment unavoidable. It’s regrettable, but it does reflect Emmi’s intention to take action rather than simply sit and wait for disagreeable situations to go away. The increases in sales, adjusted EBIT and net profit are encouraging. They are evidence that our strategy has put us on the right track and we will continue to pursue it with determination.”
Emmi has confirmed its sales forecast for 2014 of 3% to 4 % group growth and has adjusted its EBIT and net profit forecasts as a consequence of the impairment in Italy.
