Emmi with lower sales – but more profit in the first half of the year
Published: Wednesday, Aug 14th 2024, 07:50
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Emmi performed well in the first half of 2024 in a challenging environment. Volume and price effects balanced each other out, but the bottom line was still more profit. The company is sticking to its guidance for the outlook.
In the first half of 2024, the Group generated 4.1% lower sales of CHF 2.0 billion. This was mainly due to currency effects (-1.9%) and the sale of business units (-2.2%). Organically, i.e. organically, sales would have remained stable, as Emmi announced on Wednesday.
Meanwhile, the milk processor performed better in terms of earnings. The operating result rose by 1.3 percent to 140.3 million Swiss francs, with the corresponding margin at 7.0 percent after 6.6 percent in the same period of the previous year. The bottom line was a 6.7 percent higher net profit of 104.4 million. According to Emmi, this was due to broad-based profitable volume growth, a better financial result and lower tax expenses. The net profit margin was 5.2 percent (previous year: 4.6 percent).
According to the AWP consensus, Emmi's figures fell short of analysts' expectations in terms of sales and, above all, organic growth, but exceeded them in terms of EBIT, margin and net profit.
Regions with declining sales
All regions had to contend with a more or less sharp decline in sales. In Switzerland, sales remained virtually stable at CHF 854.8 million. The slight decline was due to the reduction in milk prices. However, the price increase decided by the milk industry organization and implemented by Emmi should have a positive effect in the second half of the year. The Emmi Caffè Latte brand, among others, had a positive impact.
In the Americas division, negative currency effects (-3.9%) were particularly noticeable, resulting in a 3.3% drop in sales to CHF 820.5 million. Growth was driven by the key markets of Brazil and Chile.
Sales in the European market fell by a significant 15.3% to CHF 286.1 million, which is almost entirely due to a negative acquisition effect (the sale of the Gläserne Molkerei). In organic terms, the division grew by 2.0%.
Outlook confirmed
Emmi is sticking to its previous targets for the outlook - excluding possible effects from the acquisition of Mademoiselle Desserts, which has not yet been completed. This is still expected in the fourth quarter of 2024. Accordingly, organic growth of 1 to 2 percent is targeted. EBIT is expected to rise to between CHF 295 and 315 million, while the net profit margin should be between 5 and 5.5 percent.
The medium-term forecast of organic sales growth of 2% to 3% also remains valid. The net profit margin should then be between 5.5% and 6.0%.
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