Earnings before interest and taxes were SFr102.1m; the EBIT margin increased from 2.5% to 3.8%. This clear improvement in earnings against the backdrop of a disappointing prior year can be attributed to a solid market performance and rigorous cost management. Emmi expects to maintain sales in the current financial year and that the net profit margin will exceed 2%.
For the General Meeting on 20 May 2009, the board of directors proposes, as in the previous year, the distribution of a gross dividend of SFr2.60 per registered share.
All product groups contributed to the 7.7% growth in sales, 4.6% of which stemmed from price increases. Overall, organic growth amounted to 6.6%. Brands such as Emmi Caffè Latte, Emmi Kaltbach and, increasingly, the Emmi Swiss line continued to perform well, as did concepts with added health benefits, such as Benecol and Aktifit.
In Switzerland, net sales rose by 8.1% to SFr2,068.3m (prior year SFr1,914.1m), with all product groups contributing to the increase, roughly half of which was inflation-related.
In the international markets, Emmi increased sales by 6.5% to SFr625.3m (prior year SFr587.0m), a figure that equates to a full 7.6% in local currency terms. While positive developments in brand concepts and specialities for fresh products and cheese played a strong role, the greatest contribution to growth came from price increases.
Gross operating profit rose by 7.8% to SFr818.3m (prior year SFr759.4m). At 30.4%, the gross margin remained stable at the prior-year level as a result of value adjustments on milk powder stocks that became necessary following a dramatic slump in prices on the global market, and the high milk production in Switzerland. This development was compounded by negative currency effects.
Rigorous cost management in the 2008 financial year led to an increase of only 2.0% in operating expenses to SFr637.2m (prior year SFr624.4m). Personnel expenses rose 1.3% to SFr314.4m (prior year SFr310.5m) and other operating expenses went up by 2.8% to SFr322.8m (prior year SFr313.9m). Investments in marketing and advertising went up in line with the increase in sales, amounting to SFr108.3m for full-year 2008 (prior year SFr99.5m). As at the end of the year under review, head count had risen only marginally to 3,373 employees from the prior-year figure of 3,350.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) recorded a clear improvement to SFr184.4m (prior year SFr140.1m), with the Ebitda margin increasing by 1.2% to 6.8% as a result.
At SFr88.9m, depreciation and amortisation were on a par with 2007, while write-backs of negative goodwill declined as a result of the progress made with the integration of Mittelland Molkerei AG. Earnings before interest and taxes amounted to SFr102.1m in the year under review, which corresponds to an increase of SFr39.8m, or 63.8%. This led to a clear improvement in the Ebit margin to 3.8% (prior year 2.5%).
The strong Swiss franc had a negative impact on the financial result of SFr-26.0m (prior year SFr-12.0m). At the same time, interest expense increased due to a higher average level of credit drawdowns despite more favourable credit conditions. Taxes were considerably higher than the prior year at SFr9.0m (prior year SFr3.2m), but this was due to the special one-off effects that had had a positive impact on the tax amount in 2007. Minority interests increased by 61.4% to SFr10.6m.
Net profit for the 2008 financial year amounted to SFr58.7m (prior year SFr41.3m), corresponding to an increase of 42.3% and a net profit margin of 2.2% (prior year 1.6%).
Following the massive increase in milk prices in 2007, international prices for milk and skimmed milk powder fell sharply in 2008, primarily because of high milk volumes. In Switzerland, the price for the raw material milk registered a substantial increase at the end of 2007. These price increases were largely passed on to the market with little impact on margins. A further price increase in industrial milk on 1 July 2008 was also passed on to the retail trade in Switzerland.
High milk production in Switzerland (up 5.0% versus the prior year) subsequently led to a rapid stockpiling of milk powder and butter. Proceeds from the support funds of the Swiss Milk Producers were deployed to utilise butter stocks. In contrast, the costs of processing stocks of milk powder had to be borne by processors and individual producer organisations. As at end-2008, Emmi held stocks of approximately 6,000 tonnes (prior year 2,000 tonnes) of milk powder. Substantial value adjustments were made on the stocks.
The year is off to a promising start for Emmi. The company expects consumption to remain stable in Switzerland in 2009 amid a backdrop of falling prices due to lower raw materials prices. As a result, it expects to see a contraction in sales of 5%. With regard to foreign sales, Emmi expects slower organic growth due to decreasing consumer sentiment and the anticipated negative currency effects. These effects should be balanced out by the acquisition of Roth Käse USA Ltd, and Emmi anticipates international growth of about 15%.
As a result, Emmi expects to maintain sales in the 2009 financial year, yet again securing a net profit margin over the 2% mark.
Source: Emmi
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