Emmi is preparing to make more international acquisitions as it looks to generate 50% of its sales from overseas, the Swiss dairy group told just-food today (27 March).
According to Emmi’s annual results, announced this morning, international markets accounted for 38% of Emmi’s sales in 2012. Sales outside its domestic market grew over 40% to reach CHF1.14bn (US$1.19bn), the first time overseas revenue had surpassed CHF1bn.
In 2012, Emmi made a series of deals, including adding to its stakes in France’s Diprola and Spain’s Kaiku. It also snapped up a 24% share of German organic dairy Gläserne Molkerei.
Speaking to just-food after the results were announced, Matthias Kunz, the head of Emmi’s international business, said more acquisitions were “necessary” to ensure international markets accounted for 50% of sales.
Kunz hinted the company believed it could push international sales to 50% of its revenue by the end of 2016.
However, he insisted Emmi wanted to develop in the “right” way, rather than hit a target by a certain date.
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“We expect to be there within the next three years more or less, give and take, because you can tell from the figures, anticipating that the acquisitions of Kaiku and Diprola will further strengthen our international growth in the first half of 2013, that we will develop nicely now,” Kunz said. However, he added: “It’s not per se the timing which is important to us – if it’s two or three or four years – it’s much more important we find the right match, target company, with the right product range and right development.”
Already in 2013, Emmi has made another acquisition, snapping up 70% of Dutch goat’s and sheep’s milk products firm AVH Dairy Trade.
Kunz was coy about further targets. “What we look for is well-established, well-differentiated companies which add opportunities to the knowhow base we have. It’s also about finding companies who look for partners like Emmi in terms of what we have to offer in growth, in innovation concepts and platforms.”
In recent years, Emmi has invested in a number of dairy and chilled food categories. Kunz again refused to be drawn on Emmi’s future plans. “That depends very much on the market. In the past, we invested in fresh dairy, dairy desserts and in cheese. It really depends on the market situation,” he said.
Emmi said today it expects “profitability” to be “at a similar level to that in 2012”. It forecast EBIT of between CHF140m (US$147.2m) to CHF155m and a net profit margin of 3%.
In 2012, Emmi’s adjusted EBIT, which excluded gains from the sale of fixed assets, was up 12.2% at CHF146.3m. Adjusted net profit increased 8.8% to CHF90.3m, with a net profit margin of 3%.
Sales growth is expected to slow slightly in 2013. In 2012, revenue grew 9.6% to CHF2.98bn thanks to better sales abroad, which were boosted in part by acquisitions. This year, Emmi sees sales increasing 6-8%. Sales in Switzerland, which fell 3.6% in 2012, are forecast to slide 2-3% this year, indicating Emmi expects international sales to increase 8-11%. Kunz refused to be drawn on whether Emmi could make more acquisitions this year than last. “Usually, we like to be busy but I couldn’t give you any predictions,” he said.
Emmi’s broad strategy in 2013 will be to protect its business in Switzerland and build its international operations.
In 2012, Emmi’s sales in Switzerland fell as it discontinued some “unprofitable” non-retail business. The company said it also faced “price pressure” and competition from imported mozzarella and cheese spread. Emmi said, however, it had “held on to market share” in its “core business” despite a fall in dairy sales in Switzerland.
Looking at Emmi’s international business, Kunz said the company wanted to build on its current brands and look for M&A.
“Our international priorities are to continue our organic growth with our brands Caffe Latte and Kaltbacher and our cheese exports. We also want to give a lot of attention to the recent acquisitions, continue with their organic growth and realise synergies. We will continue to try to identify targets for possible acquisitions in the future, so we achieve the fifty-fifty over the short term,” Kunz said.
Shares in Emmi closed up 1.3% at CHF273.5 today.