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First half of 2013Results presentation
Telephone conference for analysts and investors
Lucerne, 28 August 2013
Overview of the first half of 2013
Results for the first half of 2013
The success factors
Focus on the second half of 2013 and outlook
First half of 2013, Results presentation, 28 August 2013 Page 3
Key figures for the first half of 2013
Sales in line with expectations, earnings marked by price pressure
§ Net sales CHF 1,567 million− Growth of 17.0 %
§ EBIT CHF 65.0 million*− Growth of 5.3 %− EBIT margin 4.2 % (2012: 4.6 %)
§ Net profit CHF 39.0 million*− Decline of 0.8 %− Net profit margin 2.5 % (2012: 2.9 %)
* EBIT and net profit have been adjusted for one-time effects of CHF 18.9 millionand CHF 15.4 million in 2012 as well as CHF 2.4 million and CHF 2.0 million in2013, which resulted from extraordinary income generated from the disposal offixed assets.
First half of 2013, Results presentation, 28 August 2013 Page 4
Sales split: Switzerland and international
Continued growth abroad – slight fall in Switzerland
Switzerland§ Net sales CHF 891 million
− Decline of 1.6 %− Market share in core business improved slightly− Declines primarily in the trading and catering
businesses, and due to divestments
International§ Sales CHF 676 million
− Increase of 55.8 %− The acquisitions of Kaiku and Diprola, cheese
exports and local products/brands were important drivers
First half of 2013, Results presentation, 28 August 2013 Page 5
Key performance drivers
New product launches and established brands support performance
§ Launched in the spring, Jogurtpur and good day got off to a promising start in the Swiss market
§ Continued import pressure, price competition
§ Sales decline due to the disposal of the stake in Nutrifrais and the termination of the frozen food logistics business
§ Growth of Emmi Caffè Latte in Switzerland and abroad despite unfavourable weather
− Additional volume thanks to new “Mr Big”− Influence of new competitors negligible
§ Sales growth generated through Swiss cheese specialties in Switzerland and abroad, as well as internationally through locally produced cheese
§ Growth of A-27 and of Kaiku in Chile in Tunisia
First half of 2013, Results presentation, 28 August 2013 Page 6
Overview of key figures for the first half of 2013
Sales growth according to plan, earnings marked by price pressure
Amounts in CHF million 1HY13 1HY12 1HY11 1HY10 1HY09Net sales 1,567 1,339 1,310 1,275 1,281Earnings before interest, taxes, depreciationand amortisation (EBITDA) as % of net sales
119.3*
7.6
109.3*
8.2
101.0
7.7
104.2
8.2
84.6
6.6
Earnings before interest and taxes (EBIT)as % of net sales
65.0*4.2
61.7*4.6
57.04.4
60.74.8
44.73.5
Net profitas % of net sales
39.0*2.5
39.3*2.9
35.22.7
39.93.1
32.82.6
Headcount (FTEs) 5,112 3,820 3,614 3,542 3,504
* Adjusted for one-time effects of CHF 2.4 million (previous year CHF 18.9 million) on EBITDA and EBIT, and CHF 2.0 million (previous year CHF 15.4 million on net profit. These effects resulted from extraordinary income generated from the disposal of fixed assets.
First half of 2013, Results presentation, 28 August 2013 Page 7
Development of net sales in the first half of 2013: Group
Growth at Group level 17.0 %
1,339.2 1,566.6
+17.9%
+0.3% -1.9% +0.7%
Group salesin CHF million Extraordinary factors:
§ Decline in butter and milkpowder exports:CHF 32 million§ Disposal of stake in Nutrifrais:
CHF 4.5 million*§ Disposal of frozen food business:
CHF 3.3 million**
* Disposal completed on 1 April 2013** Disposal completed on 1 March 2013
2012 Acq. FC Vol. Price 2013
Acq: acquisition effects; FC: currency effects; Vol.: volume effects; Price: price effects
First half of 2013, Results presentation, 28 August 2013 Page 8
Development of net sales in the first half of 2013: Switzerland, international
Slight decline in Switzerland, international growth driven by acquisitions
Sales Switzerland Sales internationalin CHF million in CHF million
905.3 890.5
-0.5% -0.4% -0.7%
organic -1.1%
433.9 676.1
+56.4%
+0.9% -5.0% +3.5%
organic -1.5%
2012 Acq. FC Vol. Price 20132012 Acq. Vol. Price 2013
Acq: acquisition effects; FC: currency effects; Vol.: volume effects; Price: price effects
First half of 2013, Results presentation, 28 August 2013 Page 9
Development of net sales in the first half of 2013: Switzerland
Positive development of brand concepts, solid core business
Sales of cheese Sales of fresh products Sales of dairy productsin CHF million in CHF million in CHF million
245.8 243.4
- +0.3% -1.3%
organic -1.0%
174.6 174.1
-2.4% +2.4% -0.3%
organic+2.1%
337.2 338.6
- +0.9% -0.5%
organic+0.4%
2012 Acq. Vol. Price 20132012 Acq. Vol. Price 20132012 Acq. Vol. Price 2013
Acq: acquisition effects; Vol.: volume effects; Price: price effects
Decline of 0.3%: - Adjusted for disposal of Nutrifrais stake(CHF 4.5 million), the area posted growth
- Growth of Caffè Latte & Mix-it Müesli- Promising start for Jogurtpur and
good day- Decline in trading business
Decline of 1.0%:- Growth of Raclette, Kaltbach, Gruyère- Positive development for Chäs Schiibe- Fall in price and volume for Emmentaler
and generic volumes
Growth of 0.4%: - Slightly positive development in volumes
First half of 2013, Results presentation, 28 August 2013 Page 10
Development of net sales in the first half of 2013: international
27.0
143.0+465.2%
+0.4% -47.2% +12.2%
188.1 241.4
+22.9%
+1.0% +1.3% +3.1%
157.9 223.3
+38.0%
+0.7% -0.8% +3.5%
Sales of cheese Sales of fresh products Sales of dairy productsin CHF million in CHF million in CHF million
Growth 28.3 %:- Growth for Gruyère, Kaltbach, Appenzeller - Positive exports in D, UK, USA- Growth in local US production- Acquisition effect: Diprola and Kaiku
Growth 430.6 %:- Decline due to reduced butter exports related to lower milk quantities (decline ofCHF 19 million compared with H1 2012)
- Acquisition effect: Kaiku
Acq.: acquisition effects; FC: currency effects; Vol.: volume effects; Price: price effects
Growth 41.4 %:- Strong growth for Caffè Latte
in Spain, UK, Austria- Positive performance by A-27- Onken: slight decline in UK- Acquisition effect: Kaiku
Cheese, Caffè Latte, A-27 and Emmi Roth USA as important sales drivers
organic+4.4%
organic +2.7% organic
-35.0%
2012 Acq. FC Vol. Price 2013 2012 Acq. FC Vol. Price 2013 2012 Acq. FC Vol. Price 2013
Overview of the first half of 2013
Results for the first half of 2013
The success factors
Focus on the second half of 2013 and outlook
First half of 2013, Results presentation, 28 August 2013 Page 12
The following factors contributed to the lower margin: § Price pressure in Switzerland§ Milk price-related price increases
not yet fully realised§ Slight dilution effect due to the
acquisition of Kaiku
+12.0465.2
34.7
521.1
33.3
Gross operating profitas % of net sales
+17.01,339.21,566.6Net sales∆ in %1HY121HY13in CHF million
Net sales to gross profit
Gross profit increased, gross profit margin slightly lower
First half of 2013, Results presentation, 28 August 2013 Page 13
§ Strict cost management with positive influence on operating expenses
§ EBIT reduced from 4.6 % to 4.2 %
Gross profit to EBIT
Higher productivity leads to disproportionally low increase in operating expenses
* Adjusted for one-time effects of CHF 18.9 million in 2012 and CHF 2.4 million in 2013, which resulted from extraordinary income generated fromthe disposal of fixed assets.
+5.361.74.6
65.04.2
EBIT*as % of net sales
-0.40.4Write-back neg. goodwill
+13.748.054.7Depreciation and amortisation
+9.1109.38.2
119.37.6
EBITDA*as % of net sales
+12.9356.226.5
402.225.7
Total operating exp.as % of net sales
+12.0465.234.7
521.133.3
Gross operating profitas % of net sales
+17.01,339.21,566.6Net sales1HY13
+24.80.30.4Company-produced additions to plant/equipment
∆ in %1HY12in CHF million
First half of 2013, Results presentation, 28 August 2013 Page 14
Extraordinary income and expenses for the first half of 2013
Extraordinary effect from the sale of property
Gains on disposal of fixed assets2012: The sale of the former Butterzentralein Lucerne generated extraordinary income of CHF 18.9 million (up to EBIT), or CHF 15.4 million after tax.
2013: The sale of the frozen food logistics site in Kriens generated extraordinary income of CHF 2.4 million (up to EBIT), or CHF 2.0 million after tax.
in CHF million 1HY13 1HY12EBIT, as published 67.4 80.6Gains on disposal of fixed assets
2.4 18.9
Adjusted EBIT 65.0 61.7
in CHF million 1HY13 1HY12Net profit, as published
41.0 54.7
Gain on disposal of fixed assets
2.4 18.9
Additional tax expenses -0.4 -3.5
Adjusted net profit 39.0 39.3
First half of 2013, Results presentation, 28 August 2013 Page 15
All positions with disproportionally low increase
§ Rise in personnel expenditure and maintenance due to acquisitions
§ Slightly higher marketing/sales-related expenses due to launch of Jogurtpur and good day
§ Energy: price increases§ Logistic expenses: increase in
volumes abroad
Detailed overview of operating expenses
in CHF million 1HY13 1HY12 ∆ in %Personnel expensesas % of net sales
198.912.7
178.613.3
+11.4
Marketing and sales-related expensesas % of net sales
61.5
3.9
59.5
4.4
+3.4
Occupancy expenses, URE, leasing
34.4 33.7 +2.1
Energy, operating materials and supplies
32.2 28.0 +15.0
Logistics expenses 45.6 34.5 +32.2Other operating expenses 29.6 21.9 +35.2Total operating expensesas % of net sales
402.2
25.7
356.2
26.5
+12.9
First half of 2013, Results presentation, 28 August 2013 Page 16
Net profit margin remains in line with medium-term target range
EBIT to net profit
* Adjusted for one-time effects of CHF 2.4 million (previous year CHF 18.9 million) on EBITDA and EBIT, and CHF 2.0 million (previous yearCHF 15.4 million on net profit. These effects resulted from extraordinary income generated from the disposal of fixed assets.
-13.741.02.6
Net profitas % of net sales
-2.310.2Minority interests
+2.611.318.0
TaxesAverage tax rate in %
-14.062.5Earnings before taxes (EBT)
-1.2-6.4Financial result
+0.41.5Gains from associated companies
-13.267.4EBIT∆ 1HY121HY13in CHF million
39.02.5
10.2
10.918.1
60.1-6.4
1.565.0
∆ 1HY13
unadjusted adjusted*
-0.3
+3.3
-2.3
-1.2
+0.4
1HY12
39.32.9
7.9
10.418.1
57.6-5.2
1.161.7
54.74.1
7.9
13.918.1
76.5-5.2
1.180.6
-0.5
+2.5
First half of 2013, Results presentation, 28 August 2013 Page 17
§ Equity ratio slightly up despite acquisitions, remains significantly higher than the target ratio
§ Means for further financing secured
Equity ratio in the first half of 2013
Improved equity ratio
Balance sheet dates: 2008 – 2012: 31.12.; 2013: 30.6.
1683 1655 1729 1949 2323 2329
49.6
56.5 52.450.2 51.2
0
10
20
30
40
50
60
70
0
500
1000
1500
2000
2500
2008 2009 2010 2011 2012 2013
Total assets Equity ratio
in CHF million in %
Target equity ratio in %
First half of 2013, Results presentation, 28 August 2013 Page 18
0
50
100
2008 2009 2010 2011 2012 1HY2013
Produced locally Export from CH
Major acquisitions
2006: Trentinalatte, yogurt,fresh cheese (Italy)
2009: Roth Käse (USA)
2010: Cypress Grove Chèvre (USA)Fromalp, cheese (CH)
2011: Onken, yogurt (UK)A-27, desserts (Italy)Rutz Käse (CH)
2012: Kaiku, fresh products and regional specialities (ES)Diprola, cheese packaging (F)
2013: Käserei Studer (CH, 2HY)Rachelli, desserts (Italy, 2HY)
Percentage shares of export business out of Switzerlandand locally produced foreign business 2008 – 2013
Wide-ranging local production supplements exports from Switzerland
40%
60%
67%
33%
53%
47%
64%
36%
75%
25%
in %
30%
70%
Overview of the first half of 2013
Results for the first half of 2013
The success factors
Focus on the second half of 2013 and outlook
First half of 2013, Results presentation, 28 August 2013 Page 20
Taste
Health/natural goodness
Convenience
Sustainability
Key trends for Emmi
Trend analysis as the basis for innovation
First half of 2013, Results presentation, 28 August 2013 Page 21
Success drivers:Established brands ...
§ Good growth in key markets, including double-digit growth in the UK, Spain and Austria
§ Launch of Mr Big and Caramel Limited Edition
§ Growth of Gruyère in CH, A, D, UK, NL, USA (AOC and Kaltbach)
§ Consistent training of counter staff is proving successful internationally
§ Additional stimulus from 1HY13 thanks to Käserei Studer
§ Double-digit growth § New product packaging§ Increased capacity utilisable
from Q4
§ Solid single-digit growth§ Additional capacities and the
acquisition of Rachelli will provide further impetus for 2014
Trend: convenience, sustainability Trend: taste
Trend: taste, convenience Trend: taste
First half of 2013, Results presentation, 28 August 2013 Page 22
0
10
20
30
40
50
60
70
80
90
100
110
2007 2008 2009 2010 2011 2012 2013
CH Export
Even after ten years, there is further potential
§ Sales growth more than 10 % in the first half of 2013 both in Switzerland and international markets
Established brands: Development of Caffè Latte
Million cups (from our plants)
First half of 2013, Results presentation, 28 August 2013 Page 23
Success drivers:... and new concepts
§ Excellent first quarter§ High distribution coverage,
good placement in retail § Excellent consumer feedback§ Three new flavours to be
introduced in Q4
§ Very well established within one year
§ Pleasing growth on Swiss market
§ Positive result after launch§ High distribution coverage,
good placement in retail § Very positive initial consumer
feedback§ Additions to the range under
evaluation
Trend: convenience Trend: natural food Trend: healthy eating
First half of 2013, Results presentation, 28 August 2013 Page 24
360° marketing activities for Chäs Schiibe (cheese slices)
Poster campaign
Offers 1+1, +2 slices and duo
TV campaign and online TV
Internet/social media
National leaflet mailshot with discount vouchers
Sampling
Image and campaign adverts
Trade fair
Umbrella brand promotion via Leporello
The perfect fit
First half of 2013, Results presentation, 28 August 2013 Page 25
360° marketing activities Emmi Jogurtpur
TV campaign
Posters and print
Internet/social media
PR activation/FIS sponsorship
National mass mailshot
Multi-pack promotions Sampling
2nd POS
Megaposters in train stations
A yogurt with no hidden surprises
First half of 2013, Results presentation, 28 August 2013 Page 26
360°marketing activities good day
TV campaign
Promotion formats
In-store promotions
good day by Emmi.
Tasty and healthy.TM
FlyerSocial media and interactive website
2nd POS
Sampling
Overview of the first half of 2013
Results for the first half of 2013
The success factors
Focus on the second half of 2013 and outlook
First half of 2013, Results presentation, 28 August 2013 Page 28
Vision § Long-term success as an independent company in open markets
Market positioning § No. 1 among Swiss milk processors
§ The top company for Swiss cheese, both in Switzerland and abroad
§ A leading company in Europe for premium dairy products
Growth § 2 – 3 % (innovations, acquisitions and gains in market share)
Profitability § 2.5 – 3.5 % net profit margin
Shareholders’ equity § Equity ratio of at least 40 %
Independent and successful in open markets
Strategy and vision
First half of 2013, Results presentation, 28 August 2013 Page 29
Emmi’s strategic pillars
Defence of position within Switzerland
International growth
Cost management
Emmi is becoming more international and increasing more competitive
First half of 2013, Results presentation, 28 August 2013 Page 30
International Switzerland
in CHF million
1147 1479
260
435 447
587
18261482 1583
444
509
0
500
1,000
1,500
2,000
2,500
2002 2003 2004 2005 2006 2007
1407
1917 19262027
23352501
2008
3,000
1914
2671 2619
626
2045
2009
675
1944
50%
50%
in two years
732
1952
2684
2010
2721
811
1,9091910
2011
Net sales 2002 to 2013 and medium-term target
Approaching the target of a 50/50 share between Switzerland and International
3,500
2013** EstimateInternational Switzerland
in CHF million
1147 1479
260
435 447
587
18261482 1583
444
509
0
500
1,000
1,500
2,000
2,500
2002 2003 2004 2005 2006 2007
1407
1917 19262027
23352501
2008
3,000
1914
2671 2619
626
2045
2009
675
1944
50%
50%
in two years
732
1952
2684
2010
2721
811
1,9091910
2011 2012
2981
1139
1842
First half of 2013, Results presentation, 28 August 2013 Page 31
The market environment in 2013
Factors affecting sales in the second half of the year
Stimulating
§ Successful launch of new products§ Good performance of established
product concepts§ Stagnating retail tourism§ Milk price increase
§ Organic growth (Caffè Latte, A-27, Cypress Grove Chèvre, Roth)§ Markets: USA, Tunisia, Chile§ Additional production capacities in
the US§ Expansion of existing channels§ Price increases
Limiting
§ Strong price pressures§ Import pressure§Weak catering, trading and industrial
business§ Fall in immigration
§ Lower level of exports to decrease pressure on the Swiss market as a resultof lower milk volumes§ Decline in consumption in southern
Europe§ Currency development of GBP to EUR
Switzerland
International
Figures assume constant exchange rates and raw milk prices, and a stable economy
First half of 2013, Results presentation, 28 August 2013 Page 32
Measures in Switzerland for the second half of 2013
Reinforcing established concepts and innovations, cost management
Brand reinforcement§ Wide-ranging Kaltbach campaign including print, TV,
sampling and point-of-sale measures§ Promotion of seasonal cheese specialties (fondue, raclette)§ Continuation of Jogurtpur and good day campaigns§ Launch of three new varieties of Jogurtpur
Acquisitions§ Utilisation of the potential of Käserei Studer in Switzerland
and abroad (cheese specialties, from 1 July 2013)
Sponsorship§ Use of sponsorship of skiing events to reinforce the Emmi
brand
Cost management§ Further tapping of potential to increase productivity
First half of 2013, Results presentation, 28 August 2013 Page 33
Brand reinforcement§ Additional activities for Roth Käse: focus on food service and
point-of-sale measures§ Promotion of cheese specialties in the US and major European
markets (incl. Käserei Studer)§ iPad promotion for Emmi Caffè Latte (focus: Germany, UK,
Austria and France)§ Relaunch of the Onken brand in Germany, launch of winter
editions in UK and Germany
Acquisitions§ Strengthening of leadership position for desserts (A-27, Rachelli)
Investments § Start of operations at new production capacities in the US (Q4)§ Completion of expansion of dessert production in Italy (start of
operations in Q1 2014)
Introduction of Operational Excellence in Spain and ItalyEvaluation of opportunities in new markets
International measures for the second half of 2013
Focus on key markets and products
First half of 2013, Results presentation, 28 August 2013 Page 34
Significant growth abroad, net profit margin on a par with 2012
Outlook for 2013 as a whole
Growth including 2013 acquisitions, profit
New outlook Outlook as ofend-March 2013
§ Group sales 8 – 10 % 6 – 8 %
§ Sales in Switzerland -1 – -2 % -2 – -3 %
§ International sales 25 – 30 % 20 – 25 %
§ EBIT, CHF 140 – 155 million 140 – 155 million
§ Net profit margin approx. 3 % approx. 3 %
(Figures assume constant exchange rates and raw milk prices; they include acquisitions in 2013 but exclude extraordinary factors)
First half of 2013, Results presentation, 28 August 2013 Page 35
(Figures assume constant exchange rates and raw milk prices; organic)
Growth excluding acquisitions, profit§ Group sales 2 – 3 %
§ Sales in Switzerland stable
§ International sales 6 – 8 %
§ Net profit margin 2.5 – 3.5 %
Medium-term objectives
2 – 3 % organic growth per year for the Group
AppendixAdditional information
First half of 2013, Results presentation, 28 August 2013 Page 37
Dairy products31 % (CHF 482 million)
Other products/services5 % (CHF 75 million)
Powder/concentrates3 % (CHF 42 million)
Cheese31 % (CHF 485 million)
Fresh cheese5 % (CHF 85 million)
Fresh products25 % (CHF 398 million)
Product groups (net sales in first half of 2013)
Well-balanced product portfolio
Net sales in first half of 2013: CHF 1,567 million: total for 2012: CHF 2,981 million
First half of 2013, Results presentation, 28 August 2013 Page 38
Expansion through subsidiaries and cooperations
International base
Canada
France
Switzerland
Spain, Pamplona,Kaiku
United Kingdom
Germany
Austria
Benelux
Italy, Rovere della Luna,Trentinalatte
USA, Monroe, WI Emmi Roth Inc.
USA,PennYan, NYCASP
USA, Arcata, CACypress Grove Ch.
Italy, Rancio Valcuvia, A-27
Chile, Pitrufquén,Kaiku – Surlat
Tunisia, Mahdia,Kaiku – VitalaitFrance,
Toulouse,Kaiku – Yéo
Chile, Loncoche,Kaiku – Chilesur
France,Avignon,Diprola
First half of 2013, Results presentation, 28 August 2013 Page 39
Price increases initiated in late spring 2013
Development of milk prices
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
EU Switzerland, industry milk Switzerland, milk for cheese productionSources: BLW, LTO