Emmi profit comes from international sales

The EBIT margin increased from 5.9% to 6.2%.

Net profit amounted to CHF 140.3m ($141.3m), 16.7 % higher than in the previous year.

Emmi generated net sales of CHF 3.3bn ($3.3bn) in 2016, an increase of 1.4%.

In organic terms, i.e. adjusted for currency and acquisition effects, the result was a decline of 1.0%.

Urs Riedener, CEO of Emmi Group, said the company’s success was driven by progress outside Switzerland.

Regional variation

Sales in the business division Switzerland, which accounts for 53% of its sales (compared to 56% in 2015) fell by 2.9% to CHF 1.74bn ($1.75bn).

This was the result of a price effect of -1.3% and a volume effect of -1.6%.

Sales in the business division Americas rose from CHF 798.1m ($804m) to CHF 865.6m ($872m). The business division Americas accounted for 27% of group sales (2015: 25%).

In the business division Europe, sales increased by 6.5% to CHF 519m ($523m) (2015: CHF 487.3m/$491m). In organic terms, however, the result was a decline of 0.2%.

Emmi said this was primarily a consequence of the weaker pound sterling, which made it more difficult to export A-27 desserts from Italy to the UK.

The business division Europe accounted for 16% of group sales, an increase of 1% on the previous year.

Sales in the business division Global Trade fell by 1.7% (a decline in organic terms of 1.0%) to CHF 132.9m ($133.9m).   The company attributed this to the economic slowdown and weak currencies in various emerging markets.

Efficiency gains and improved product portfolio

Emmi’s gross profit rose by CHF 61.8m ($62.3m) to CHF 1.18bn ($1.19bn) in 2016. This resulted in a gross profit margin of 36.2% versus 34.8% in 2015.

The company said this was the result of increases in productivity, while branded products also gained in importance in the product portfolio.

Operating expenses increased by CHF 46.7m ($47m) to CHF 856.1m ($862m) in 2016.

Emmi said this is due to 5.5% higher personnel expenses because of personnel-intensive new group companies as well as the inability of companies whose sales figures were lower than in the previous year to reduce their personnel expenses proportionately.

Outlook

Emmi said it expects conditions in the dairy industry will continue to be challenging and that competition will remain intense.

It expects that the business division Americas will continue to perform well in the US and Tunisia, while the markets in Spain and France are likely to remain challenging.

In the business division Europe, the weak pound sterling is making imports from Italy (desserts), Germany (Onken yogurt), and Switzerland (Caffè Latte and cheese) more expensive, which Emmi said will hamper sales in 2017.

Overall, the international business will have a beneficial effect on sales development, mainly because of the acquisitions already made and the good momentum built up in the business division Americas.

The company said that it therefore anticipates increased organic group sales of between 1% and 2% in 2017.