Emmi results suffer from milk price decline

First half year results from Swiss dairy giant Emmi have shown that while it suffered from a domestic 3% decline in sales due to fierce price competition, bright spots were seen with its Emmi Caffè Latte brand, as well as its new protein-rich YoQua yogurt. Fresh cheese remained stable in the country for Emmi, but high import pressures remained.

Internationally, the company has seen good organic growth in the US and Tunisia for its cheeses, with 2.8% organic growth reported for the Americas.  Fresh products posted organic growth thanks to Emmi Caffè Latte in the UK, Austria and Benelux, and the dessert business in Italy. However, the cheese business in Europe, largely concentrated on Swiss cheese exports, suffered as a result of the weak euro, particularly exports to Italy. Dairy products and cheese included Gläserne Molkerei sales for the first time.

Global trade (where Emmi has no subsidiaries) in cheese saw a 21.6% drop, and powder and concetrates also suffered, falling by 31.3%. Emmi notes that the decreases reflected the economics slowdown in the markets served, such as the BRICs countries.

Emmi expects the market situation to remain challenging for the rest of 2015. In Switzerland, higher retail tourism and import pressures, the fierce price competition in the industrial business, and declining consumption in the food service sector will be noticeable. The company anticipates that the negative effects of the weak euro on sales in Switzerland might be even greater in the second half of the year.
In the business division Americas, good organic growth is anticipated, especially in Tunisia, while development in Chile and France is likely to remain muted.
In the business division Europe, the northern European markets will be more stable than those in southern Europe. The pressure will be greatest in economically stricken Italy and price-sensitive Germany, while the UK will benefit as a non-member of the eurozone.
At group level, Emmi is adhering to its sales target and still expects an organic decrease in sales of -3% to -2%. Emmi anticipates an EBIT of between CHF170 million and CHF180 million (previously CHF150 million to CHF160 million). The net profit margin is expected to be slightly over 3%.