Following disappointing sales for the first half of the year, Emmi is cutting its forecast as Brexit and a weak pound bites into the Swiss cheesemakers profits. The depreciation of sterling has been unsettling for many European companies who trade in the UK as European-produced goods are less competitive in Britain – and this is the case for the Onken yogurt manufacturer too.
Emmi has posted “stable earnings”, but admit sales have been disappointing.
The company generated sales of CHF1.6bn (US$1.65bn) which was only slightly up (+0.4 percent) during the same period as last year. But on an organic basis adjusted for acquisitions and currency effects, sales fell 1.3 percent.
This was mainly due to declining retail sales in Switzerland, lower cheese exports and losses in the dessert business of A-27. The latter is, among other things, a result of the weak pound sterling, related to Brexit, admits Emmi.
“The half-year sales reflect the challenging economic environment, including a contracting retail business and increasing cheese imports in the business division Switzerland, while Brexit and modest cheese exports impacted on the business division in Europe. However, many markets outside Europe performed reasonably well,” says Urs Riedener, CEO of Emmi.
Emmi believes that it is on target for earnings for full-year 2017. However, growth forecasts for Group sales and the business division Europe are to be revised downward.
Acquisition effects are accounted for by the following factors: Stake in Bettinehoeve (Netherlands, February 2, 2016); increased stake in SDA Chile (Chile, May 19, 2016); the acquisition of Cowgirl Creamery (USA, May 31, 2016); the acquisition of Jackson Mitchell (USA, January 4, 2017); stake in Lácteos Caprinos (Spain, January 12, 2017) and the acquisition of Italian Fresh Foods (Italy, March 1, 2017).
In March of this year, organic growth of 1 percent to 2 percent was forecasted for full-year 2017. The decline in sales in the first six months is therefore not satisfactory, says the company. Nevertheless, profitability was kept nearly stable and in line with forecasts.
