Emmi is on track and focussing on strategic acquisitions

• Sales -4.1%, organic growth 0.0%, acquisition effect -2.2%, currency effect -1.9%
• Organic growth in the divisions Americas and Europe of +0.1% and +2.0% respectively, organic decline in the division Switzerland of -0.2%
• EBIT of CHF 140.3 million (PY: CHF 138.5 million), EBIT margin of 7.0% (PY: 6.6%)
• Net profit CHF 104.4 million (PY: CHF 97.8 million), net profit margin of 5.2% (PY: 4.6%)
• Continuous portfolio transformation: strategic acquisition of Verde Campo in Brazil completed to expand functional premium brand business and the announced acquisition of Hochstrasser AG to strengthen coffee expertise for Emmi Caffè Latte
• Contemplated acquisition of the French Mademoiselle Desserts Group to strengthen the strategic niche of premium desserts announced after the balance sheet date
• Progress in sustainability: positive interim results for “KlimaStaR Milk”, circular economy with milk in PET bottles, Quillayes Surlat as the first South American company with milk certified with the animal welfare label AENOR
• Continuity in Group Management: New CFO Oliver Wasem promoted from within the company’s own ranks as of 1 July 2024
• Outlook for 2024 confirmed (excluding possible effects from the acquisition of Mademoiselle Desserts): organic sales growth of 1% to 2%, EBIT of CHF 295 million to 315 million, net profit margin of 5.0% to 5.5%
• Unchanged medium-term guidance

“Through the acquisition of Verde Campo and the planned takeover of Hochstrasser, the Emmi Group has consistently driven forward its portfolio transformation in the first half of 2024. We also intend to acquire the French Mademoiselle Desserts Group to further strengthen our strategic niche in premium desserts. This would enable us to offer our customers an innovative and comprehensive range of products in the form of Emmi “Desserts Powerhouse” in the future. Thank you very much to all our teams around the world who have worked so hard and with enormous commitment to ensure that we can offer ’heartfelt indulgence’,” said Ricarda Demarmels, CEO of the Emmi Group.

Key figures

in CHF million

1HY 2024

1HY 2023

Net sales

2,017

2,103

   of which division Switzerland

855

857

   of which division Americas

820

848

   of which division Europe

286

338

   of which division Global Trade

56

60

Sales development in %

-4.1

4.3

   of which organic growth in %

0.0

6.5

   of which acquisition effect in %

-2.2

-

   of which currency effect in %

-1.9

-2.2

EBIT

140.3

138.5

   as % of net sales

7.0

6.6

Net profit

104.4

97.8

   as % of net sales

5.2

4.6

Sales declined as expected due to negative acquisition and currency effects

Emmi generated sales of CHF 2,017.2 million in the first half of 2024, representing a decline of 4.1% compared to the same period of the previous year. This decline was due to the disposal of Gläserne Molkerei and negative currency effects as a result of the devaluation of the Chilean peso, the euro and the US dollar against the Swiss franc. The acquisition of Verde Campo in Brazil, on the other hand, had a slightly positive effect. Despite a return to broad-based volume growth, sales at group level remained flat (0.0%) in organic terms, due to slightly declining price effects driven primarily by milk prices. Lower exports of surplus Swiss milk and milk shortages in Tunisia had an overall negative impact on organic growth of -0.8%.

Emmi achieved encouraging results in its strategic niches: Ready-to-drink coffee experienced very strong growth with Emmi Caffè Latte, primarily in the UK and Spain, thanks also to successful marketing campaigns to mark the 20th anniversary of the iconic brand. In Italy, premium desserts, with the companies Emmi Dessert Italia and Pasticceria Quadrifoglio, performed well in both the retail and food service sectors. In the speciality cheese sector, cheese exports from Switzerland increased overall despite the continued restrained consumer sentiment and a strong Swiss franc. Encouragingly, this applied in particular to the Kaltbach premium cheese specialities, which again displayed strong growth, particularly in Germany and the Netherlands.

Sales development by division

Division Switzerland

in CHF million

Sales
1HY 2024

Sales
1HY 2023

Difference
2024/2023

Acquisition
effect

Currency
effect

Organic
growth

Dairy products

334.1

337.7

-1.1%

-

-

-1.1%

Fresh products

191.4

190.9

0.3%

-

-

0.3%

Cheese

188.4

190.4

-1.0%

-

-

-1.0%

Cream cheese

56.1

59.1

-5.1%

-

-

-5.1%

Powder/concentrates

46.9

41.1

14.2%

-

-

14.2%

Other products/services

37.9

37.6

0.9%

-

-

0.9%

Total

854.8

856.8

-0.2%

-

-

-0.2%

Division Switzerland posted sales of CHF 854.8 million (PY: CHF 856.8 million) and an organic decline in sales of 0.2%, which is attributable to the milk price reduction by the dairy industry organisation (Branchenorganisation Milch). The increase in milk prices in the second half of the year agreed by the dairy industry organisation and already implemented by Emmi should give the division Switzerland a positive growth dynamic overall. In addition to the industrial customer business in milk powder, the innovative brands Emmi Caffè Latte, Emmi Energy Milk, Aktifit and Luzerner Rahmkäse performed particularly well. By contrast, organic sales were down in the dairy products segments due to the reduction in milk prices and in the cheese segment, in part due to a renewed increase in cheese imports.

Division Americas

in CHF million

Sales
1HY 2024

Sales
1HY 2023

Difference
2024/2023

Acquisition
effect

Currency
effect

Organic
growth

Cheese

300.2

310.5

-3.3%

0.4%

-3.1%

-0.6%

Dairy products

208.0

223.6

-7.0%

0.2%

-6.8%

-0.4%

Fresh products

180.3

187.0

-3.5%

1.2%

-3.6%

-1.1%

Cream cheese

49.7

47.9

3.8%

1.0%

-1.5%

4.3%

Powder/concentrates

24.0

22.6

6.3%

-

-3.3%

9.6%

Other products/services

58.3

56.9

2.6%

0.3%

-1.1%

3.4%

Total

820.5

848.5

-3.3%

0.5%

-3.9%

0.1%

Division Americas generated sales of CHF 820.5 million (PY: CHF 848.5 million), representing a modest organic increase in sales of 0.1%. The growth drivers were the key markets of Brazil and Chile, the strategic niche of ready-to-drink coffee with Emmi Caffè Latte in Spain, the Californian Darey Brands and the Mexideli trading business. Although overall sales in the cheese segment were slightly down, exports of Swiss cheese specialities and Athenos, the number one in the US feta market, continued to grow. However, the slightly negative price effects, primarily driven by milk prices, a decline in sales in Tunisia due to a milk shortage, and the expected decline in volume in the US dessert business in the first half of the year slowed down the division’s sales growth.

Division Europe

in CHF million

Sales
1HY 2024

Sales
1HY 2023

Difference
2024/2023

Acquisition
effect

Currency
effect

Organic
growth

Fresh products

171.6

178.0

-3.6%

-3.4%

-2.0%

1.8%

Cheese

52.7

54.2

-2.9%

-1.4%

-2.3%

0.8%

Cream cheese

24.3

23.6

3.4%

-0.6%

-2.5%

6.5%

Powder/concentrates

18.6

16.2

14.5%

-0.4%

-2.9%

17.8%

Dairy products

3.2

47.2

-93.3%

-92.1%

-0.2%

-1.0%

Other products/services

15.7

18.5

-15.5%

-8.8%

-2.1%

-4.6%

Total

286.1

337.7

-15.3%

-15.4%

-1.9%

2.0%

Net sales in the Europe division totalled CHF 286.1 million (PY: CHF 337.7 million) and organic growth of 2.0% exceeded the company’s own expectations for the year as a whole. The strategic niches of ready-to-drink coffee with Emmi Caffè Latte in the UK, premium desserts from Italy and the goat’s milk powder business in the Netherlands performed particularly well. The export business with cheese from Switzerland and, in particular, Kaltbach in Germany and the Netherlands, also developed positively.

Division Global Trade

in CHF million

Sales
1HY 2024

Sales
1HY 2023

Difference
2024/2023

Acquisition
effect

Currency
effect

Organic
growth

Cheese

26.8

28.2

-5.1%

-

-

-5.1%

Fresh products

20.3

17.5

15.6%

4.8%

-

10.8%

Powder/concentrates

7.6

13.9

-45.3%

-

-

-45.3%

Dairy products

0.4

0.5

-28.5%

9.6%

-

-38.1%

Cream cheese

0.2

-

n/a

n/a

n/a

n/a

Other products/services

0.5

0.3

109.7%

382.5%

-

-272.8%

Total

55.8

60.4

-7.7%

3.3%

-

-11.0%

Division Global Trade posted sales of CHF 55.8 million (PY: CHF 60.4 million). The organic decline of 11.0% was due in particular to lower exports of surpluses of skimmed-milk powder. The growth in fresh products was the result of the positive trend in yoghurt drinks in Northern Europe and yoghurts in Asia.

Improved result thanks to ongoing portfolio transformation and operational progress in foreign markets

The market environment in which the Emmi Group is operating remains challenging. While consumer sentiment is showing signs of recovery in many European markets, albeit from a low level, it remains subdued in the US. Despite this, Emmi’s foreign companies are making operational progress – this is particularly the case in the dessert companies, at Darey Brands in California and the companies in the UK, Spain, Chile, Tunisia and Brazil. In addition to the ongoing portfolio transformation, measures to increase productivity, efficiency programmes, a strategically forward-looking purchasing policy and strict cost discipline are also having a positive impact. Despite declining sales, Emmi thus increased its gross profit to CHF 784.2 million (PY: CHF 775.4 million) and its gross profit margin to 38.9% (PY: 36.9%). While the positive change in the gross profit margin was reduced by higher operating expenses, in particular personnel expenses due to inflation-related wage increases (secondary effects), as well as marketing and sales costs and maintenance and repairs costs, it nonetheless resulted in encouraging margin improvements at the EBIT and net profit levels.

Emmi posted an EBIT of CHF 140.3 million, a result that was slightly higher than the strong previous year (CHF 138.5 million). The EBIT margin rose to 7.0% (PY: 6.6%). The net profit, which also increased to CHF 104.4 million (PY: CHF 97.8 million), was also driven by the improved financial result and lower tax expenses. As a result, the net profit margin was positive at 5.2% (PY: 4.6%).

Cash flow also developed positively in the first half of 2024. Cash inflow from operating activities amounted to CHF 179.3 million, CHF 11.5 million higher than the previous year’s figure of CHF 167.8 million. Cash conversion (cash flow from operating activities in relation to EBITDA) increased from an already high 86% in the previous year to 91%.

Focused strategy implementation

The Emmi Group has implemented its strategy in a focused manner and consistently developed its portfolio. While last year's focus was on the sale of Gläserne Molkerei, Emmi made one acquisition this year and announced two more, all with a view to expanding its strategic markets and niches. In May 2024, Laticínios Porto Alegre, Emmi’s Brazilian subsidiary, acquired a majority stake in the Verde Campo dairy in the state of Minas Gerais. This acquisition strengthens Emmi’s existing market position in the key market of Brazil with functional premium dairy products made from high-quality proteins under the innovative Verde Campo brand. The Emmi Group has also announced the acquisition of the long-established and highly-regarded coffee roaster Hochstrasser AG in Lucerne, which will strengthen its coffee expertise and the innovative development of its iconic Emmi Caffè Latte brand in the long term. Finally, Emmi announced the contemplated acquisition of the leading French Mademoiselle Desserts Group, which specialises in premium patisserie, after the balance sheet date. The acquisition would enable Emmi to offer its customers a highly innovative product range and, as an Emmi “Desserts Powerhouse”, to double its sales in the strategic niche of premium desserts.

Responsible action for generations

Responsible action has been firmly anchored in the business model of the Emmi Group for generations. Emmi made significant progress in implementing its sustainability strategy in the first half of the year. Emmi has been working with other players for many years to make sustainable milk production the norm through standards and industry initiatives. As a pioneer of the “Sustainable Swiss Milk” industry standard, Emmi helped to ensure the introduction of this standard in 2019, which all milk suppliers have been obliged to implement since 2024. The industry initiative “KlimaStaR Milk”, initiated by Emmi, Nestlé, ZMP, aaremilch AG and AgroCleanTech, presented a positive interim balance in May 2024 with regard to its objectives of reducing the climate footprint of the dairy industry and simultaneously reducing the competition for food and land. It should be noted that it is the combination of these objectives that makes the pilot project unique, and that the participating milk suppliers are well aware of this challenge. The calculation of the greenhouse gas emissions of the companies was significantly lower than expected and the most important levers to further reduce them were identified. As a result, the 230 pilot companies reduced their greenhouse gas emissions per kilogram of milk by an average of 4.9% and food competition by 19.7% in the first two years. In collaboration with Coop, Emmi also launched the environmentally friendly PET bottle for milk and dairy products, a packaging innovation in Switzerland. As a founding member of RecyPac, Emmi is taking another step forwards in its quest to achieve its sustainability goals with regard to the circular economy. PET bottles are currently the only plastic food packaging in Switzerland that can be recycled and reused in a closed loop. In addition, 80% of the milk volume purchased by the subsidiary Quillayes Surlat in Chile is certified with the AENOR animal welfare label, which makes Quillayes Surlat the first South American company to buy milk certified with this animal welfare label.

Confirmation of sales and earnings outlook for 2024 without acquisition effects from Mademoiselle Desserts

Emmi is maintaining its sales and earnings outlook, excluding the potential effects of its contemplated acquisition of the Mademoiselle Desserts Group. Emmi expects sales growth to be slightly higher in the second half of the year than in the first, despite the persistence of volatile market conditions. Emmi therefore continues to expect organic growth of 1% to 2% for the Group for 2024 as a whole. In terms of earnings, it continues to expect EBIT of between CHF 295 million and CHF 315 million and a net profit margin of between 5.0% and 5.5% for full year 2024. At present, it is not possible to reliably assess the potential impact of Mademoiselle Desserts on 2024 as a whole due to the impending closing date and purchase price allocation.

Outlook for financial year 2024

• Organic sales growth for the Group: 1% to 2% (unchanged)
• Organic sales growth division Switzerland: 0% to 1% (unchanged)
• Organic sales growth division Americas: 1% to 3% (previously: 2% to 4%)
• Organic sales growth division Europe: 2% to 3% (previously: 0% to 1%)
• EBIT: CHF 295 to 315 million (unchanged)
• Net profit margin: 5.0% to 5.5% (unchanged)

Emmi will publish its 2024 annual sales at 7:00 am on 24 January 2025 and its 2024 annual results and outlook for financial year 2025 at 7:00 am on 26 February 2025.