Emmi generated net sales of CHF 3,404 million in 2014, which corresponds to an increase of +3.2 % (organic +3.0 %) and is in line with the target of +3 % to +4 %.
With EBIT of CHF 136.2 million, net profit of CHF 78.9 million and a net profit margin of 2.3 %, the 2014 result is slightly above our targets of August 2014, which in part reflects a very good fourth quarter. Forecasts issued in August 2014 were CHF 117 million to CHF 132 million for EBIT and approximately 2 % for the net profit margin. This forecast, which revised that of spring 2014, included non-recurring effects, in particular the impairment charge for Trentinalatte. The non-recurring effects totalled CHF -34.5 million (EBIT) and CHF -30.5 million (net profit).
Statements about the effective business trend reflect the figures adjusted for these non-recurring effects. The adjusted EBIT of CHF 170.7 million, the adjusted net profit of CHF 109.4 million and the adjusted net profit margin of 3.2 % clearly show that Emmi’s value creation strategy is bearing fruit – all three are in excess of the original spring 2014 forecasts.
Urs Riedener, Emmi CEO: “One of our strategic priorities is to systematically improve our product portfolio and strengthen brand concepts with high potential. The 2014 results show that we are heading in the right direction.”
Sales trend in Switzerland*: Encouraging growth in a saturated market
As communicated in February, sales increased by +1.3 % to CHF 1,888.1 million (2013: CHF 1,863.1 million) in Switzerland. In organic terms, i.e. excluding acquisition effects, this amounts to growth of +1.2 %. The acquisition of Käserei Studer AG with effect from 1 July 2013 gave rise to a positive acquisition effect, while a negative effect resulted from the disposal of the Nutrifrais holding with effect from 1 April 2013. The business division Switzerland accounted for 55 % of Group sales (2013: 56 %).
Sales trend in the Americas*: growth in major non-European markets
The business division Americas includes the US, Canada, Chile, Spain, France and Tunisia and generated sales of CHF 840.0 million in 2014 (2013: CHF 817.6 million). This represents an increase of +2.7 %, or, adjusted for currency effects, +7.1 %. This growth is primarily attributable to the positive performance in North America, Tunisia and Spain. The negative currency effects primarily reflect the developments of the Canadian dollar, the Chilean peso and the Tunisian dinar against the Swiss franc. The business division Americas accounted for 25 % of Group sales (2013: 25 %).
Sales trend in Europe*: Lower sales accepted in order to raise margins
Sales in the business division Europe rose by +8.3 % to CHF 508.8 million (2013: CHF 469.9 million). Adjusted for acquisition and currency effects, sales remained stable. The acquisition effect is attributable to the purchase of the dessert manufacturer Rachelli (with effect from 1 August 2013), the increase in the stake in Gläserne Molkerei (with effect from 1 October 2014), and the sale of Trentinalatte (with effect from 31 October 2014). The business division Europe accounted for 15 % of Group sales (2013: 14 %).
Sales trend in Global Trade*: Milk volume as a sales driver
The business division Global Trade covers direct sales from Switzerland to customers in international markets in which Emmi has no companies. These include the countries of Asia, Eastern Europe, South America and the Arabian Peninsula. Business division Global Trade sales amounted to CHF 167.1 million, representing an increase of +13.2 % (2013: CHF 147.6 million). This growth is in part a consequence of higher milk volumes and the associated increase in milk powder and excess butter exports.
*Details on sales developments in 2014 can be found in the media release of 5 February 2015.
Positive earnings performance on an adjusted basis
Gross profit rose by +3.7 % to CHF 1,129.1 million in 2014 (2013: CHF 1,089.2 million). The gross profit margin stood at 33.2 % (2013: 33.0 %). The business division Europe made a substantial contribution to the margin improvement, as for profitability reasons there was a conscious discontinuation of business with insufficient margins. In Switzerland it was possible to counter the margin pressure with rationalisations and productivity enhancements.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by +4.6 % to CHF 293.1 million (2013: CHF 280.1 million). The EBITDA margin rose from 8.5 % to 8.6 %, adjusted for one-off effects from 8.2 % to 8.6 %.
Depreciation and amortisation increased by CHF +45.0 million to CHF 157.4 million. Excluding the impairment charge on property, plant and equipment in our Italian subsidiary Trentinalatte, which was sold in October 2014, the increase would have been CHF +9.4 million.
Gross earnings (EBITDA) were impacted by non-recurring effects amounting to CHF 34.5 million. These effects were attributable to the previously mentioned impairments at Trentinalatte and the extraordinary gains on the sale of entities, businesses and property, plant and equipment. In 2013 non-recurring effects increased EBITDA by CHF +8.5 million.
Earnings before interest and taxes (EBIT) amounted to CHF 136.2 million (2013: CHF 168.5 million). As a result, the EBIT margin decreased from 5.1 % to 4.0 %. Adjusted for the aforementioned non-recurring effects, the picture is very different: At the adjusted EBIT level, an improvement from CHF 160.0 million in the previous year to CHF 170.7 million was achieved (+6.7 %), representing an adjusted EBIT margin of 5.0 % (previous year: 4.9 %).
Compared with the previous year, net financial expenditure decreased by CHF -4.7 million to CHF 11.0 million. This was primarily attributable to the improved interest result, which was up by CHF +2.2 million, and a better currency result, up by CHF +2.4 million on the previous year.
Income taxes were down by CHF -1.3 million to CHF 29.0 million. The tax rate rose from 19.7 % to 23.0 %, adjusted for non-recurring effects from 19.8 % to 20.5 %.
This results in a net profit amounting to CHF 78.9 million and a net profit margin of 2.3 % for the 2014 financial year, which corresponds to a decline of -24.6 % (2013: CHF 104.6 million). It is encouraging that it was possible to increase net profit adjusted for non-recurring effects by +12.1 %. It stood at CHF 109.4 million, up from CHF 97.6 million the previous year. In consequence, the net profit margin adjusted for non-recurring effects improved from 3.0 % to 3.2 %.
CEO Urs Riedener commented: “The adjustment has a substantial negative impact on our income statement, but the adjusted figures clearly show that Emmi is on the right path in terms of profitability.”
It is Emmi’s strategy to strengthen its position in Switzerland and grow further in the international business. In addition to its established markets in North America and Europe, Emmi is also focusing on viable markets outside Europe, in particular on Tunisia and Chile.
Like other exporting companies in Switzerland, Emmi is affected by the strength of the Swiss franc. To counter the negative effects, Emmi increased the prices of its export products abroad in the first quarter of 2015. The company also intensified its operational excellence and cost-cutting programmes in all the Swiss facilities and negotiated price cuts with international suppliers and milk producers.
Emmi expects slightly lower international raw material, energy and packaging prices in 2015. In Switzerland, retail tourism to neighbouring countries will increase. In addition, declining revenues in the domestic catering sector are to be expected due to tourists staying away. Outside the eurozone, consumer behaviour in the US is expected to remain stable, while significant growth is anticipated in Tunisia. The upward trend in Spain is likely to continue for locally produced products, although sales of products exported from Switzerland are expected to be lower, which is also the case for the other European markets.
Emmi is doing everything in its power to ensure that Swiss dairy products continue to have sufficient sales potential in international markets. Nevertheless, currency effects will have a negative impact on Emmi’s performance in 2015. Emmi expects a markedly negative currency translation effect and an additional organic decline in sales. Emmi also expects a decline in income.
Forecasts for 2015: Organic sales growth, income:
- Group: -3 % to -2 %
- Business division Switzerland: -3 % to -2 %
- Business division Americas: 3 % to 5 %
- Business division Europe: -6 % to -4 %
- EBIT: CHF 150 million to CHF 160 million
- Net profit margin: just below 3 %
Emmi is maintaining its medium-term sales forecasts (annual average):
- Group: 2 % to 3 %
- Business division Switzerland: approx. 1 %
- Business division Americas: 8 % to 10 %
- Business division Europe: 1 % to 3 %
Due to the business division Global Trade's low weighting, Emmi does not issue forecasts for it.
Emmi Group key figures
Amounts in CHF million
Acquisition effects in %
Currency effects in %
Organic sales growth in local currency in %
Earnings before interest, taxes, depreciation and amortisation (EBITDA)
as % of net sales
Earnings before interest and taxes (EBIT)
as % of net sales
as % of net sales
Investment in fixed assets (excl. acquisitions)
as % of net sales
Headcount (full-time equivalents ) as at 31.12
Net sales per employee in CHF 000s (average value)
Volume of milk and cream processed in millions of kg
Balance sheet total
of which shareholders’ equity incl. minority shareholders
As a % of the balance sheet total
* Adjusted for non-recurring effects of CHF -34.5 mio for EBIT and CHF -30.5 mio for net profit (2013: CHF 8.5 mio and CHF 7.0 mio). In 2014 these were attributable to impairments in Italy and extraordinary income generated from the disposal of companies, businesses and fixed assets. One-time effects in 2013 were attributable only to income from the disposal of fixed assets.