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August 26, 2020

Swiss dairy group Emmi lowers organic growth outlook

Swiss dairy company Emmi, which has just reported first-half results, has cut its organic growth forecast for sales.

By Dean Best

Emmi has cut its organic growth forecast for sales as the Swiss dairy company anticipates “a continued volatile and highly competitive environment” for the rest of the year amid the uncertainty presented by the coronavirus pandemic.

While the Zurich-listed business posted group organic growth of 2% over the first six months, it has lowered its forecast to a range of 0.5-1.5%, from a previous estimate of 2-3%. Emmi “remains cautiously optimistic about the result for the full year,” it said this morning (26 August). 

However, for its Swiss division, Emmi has increased its outlook to 1-2%, from flat to up 1%. That division recorded first-half organic growth of 3.8%, when adjusted for the impact of its disposal of the “non-strategic” hospitality business Emmi Frisch-Service instigated last year.

And the group also lowered its guidance for the Americas division (H1 organic sales down 1%) to a range of flat to minus 2%, from a previously expected increase of 4-6%, while the outlook for Europe remains unchanged at 1-3%.

Commenting on the first-half performance, chief executive Urs Riedener said: “Our business model has proven itself even under difficult conditions, backed by a diversified product and country portfolio, strong brands and an agile organisation. I am particularly pleased that we maintained supply at all times, not least thanks to the tireless commitment of our employees, and were thus able to deliver growth despite the extremely difficult environment.” 

Looking at the reported numbers for the first six months, group net sales rose 6.6% to CHF1.77bn (US$1.94bn), while EBIT climbed 6.4% to CHF112m. But net profit was down 6.5% at CHF81.3m.

In terms of EBIT, Emmi said: “We consider the EBIT forecast of CHF255m to CHF265m for full-year 2020 to be extremely ambitious, but still within grasp if the recovery remains intact. Accordingly, from today’s perspective, EBIT is expected to be at the lower end of the range.”

Emmi said in the results statement: “Given the persistent uncertainties surrounding the future course of the coronavirus pandemic and the associated macroeconomic developments, the outlook for the second half of the year remains uncertain. Moreover, there are currently no signs of recovery in those markets that have been severely affected by the pandemic and are important for Emmi, such as the US, Brazil, Mexico and Chile.

“Worldwide, consumer confidence is languishing at a low level and recessionary economic trends are already a fact in most countries. Added to this, the positive non-recurring effects in the first half of the year will no longer apply in the second half, and it will likely take several years for certain sales channels to stage a sustained recovery.”

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