SWITZ: Swiss franc hits Emmi H1 profits
- First half sales reach CHF1,310.1m
- EBIT falls 6%
- Company hails second best performance ever
Emmi CEO Urs Riedener said results were "pleasing" in spite of impact of Swiss franc
Emmi's first-half profits have been hit by the strength of the Swiss franc despite the company posting an increase in sales.
The Swiss dairy company said net sales were up 2.7% to CHF1.31bn (US$1.62bn) and rose in line with forecasts domestically and abroad. However, earnings before interest and taxes (EBIT) fell by 6% to CHF57m and Emmi's net profit declined 11.6% to CHF35.2m.
"This is the second best result in Emmi's history - and a good result in light of the currency environment. The expected sales growth of 2 to 3% and EBIT of CHF120 to 130m for 2011 remain realistic," the company said. "The target range for net profit margin has been expanded to between 2.5 and 3%"
However, Emmi said currency fluctuations has "posed a major challenge for companies exporting from Switzerland in recent months", particularly the strength of the Swiss franc against the euro and the US dollar. The company also said the Swiss food industry had seen "increased import pressure".
Nevertheless, CEO Urs Riedener was upbeat about the company's performance. "Emmi remains in a strong position in its domestic market. At the same time, acquisitions in recent years have had a positive effect on our international business. Both of these factors contributed to our achievement of a pleasing result, in spite of currency turbulence."
Looking ahead, Emmi said it expects the Swiss franc to remain strong against the euro, US dollar and sterling, resulting in rising import pressures and making exports of Swiss products more difficult. However, Emmi said that it anticipates that its sales will be towards the lower end of the target scale published in the first quarter of 2011.
"If the euro and US dollar remain at the levels of the second half of August, net sales at group level are forecast to increase by 2 to 3%, assuming growth of between 0 and 2% in Switzerland and between 8 and 12% in the international business. Emmi also expects - based on further cost management efforts - an EBIT of CHF 120-130m. The target range for the net profit margin has been expanded somewhat: it is expected to be between 2.5 and 3%.
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