Assets, financing and cash flow

Total assets as at 31 December 2021 increased by 5.7% or CHF 134.3 million compared with 31 December 2020 to CHF 2,471.4 million (previous year: CHF 2,337.1 million). This increase is primarily attributable to an acquisition-related increase in non-current assets and to higher net working capital. On the other hand, negative currency effects and the decrease in cash and cash equivalents as a result of acquisition activity and the related offsetting of goodwill against equity had a negative impact on total assets.

Operating net working capital (consisting of inventories as well as trade receivables and payables) amounted to CHF 589.4 million. Compared to the previous year (CHF 542.0 million), it increased by 8.7% or CHF 47.4 million, largely due to the pandemic and despite negative currency effects. As a percentage of sales, net working capital was 15.1% overall, compared with 14.6% in the previous year, representing a slightly disproportionate increase compared with sales growth.

Non-current assets increased by CHF 109.2 million or 10.0% from CHF 1,088.3 million in the previous year to CHF 1,197.5 million. Intangible assets accounted for the majority of the increase at CHF 79.2 million, mainly due to the trademark rights acquired as part of the acquisition of the Athenos business. Property, plant and equipment, which account for the major portion of non-current assets, rose year on year from CHF 985.7 million to CHF 1,015.4 million. This increase reflects the higher level of investment activity compared with the previous year and in relation to depreciation. Once again, significantly negative currency effects reduced this increase.

Liabilities as at 31 December 2021 totalled CHF 1,289.7 million, compared to CHF 1,104.1 million at the end of the previous year. The increase of CHF 185.6 million primarily reflects the CHF 200.0 million bond issued in December 2021 to finance the acquisition of the Athenos business in the US. The rise in current bank debt is due to the reclassification of a financing facility due in 2022 from non-current bank debt. The equity ratio fell in particular as a result of acquisition activities and the associated offsetting of goodwill against shareholders’ equity, from 52.8% as at 31 December 2020 to 47.8%. Also mainly due to the acquisition activity and the associated increase in financial liabilities, net debt increased from a low CHF 163.1 million in the previous year to CHF 389.4 million as at 31 December 2021. The ratio of net debt to EBITDA also rose accordingly from 0.43 in the previous year to 0.99 at the end of the reporting year.

Cash inflow from operating activities amounted to CHF 259.9 million in the period under review, a significant reduction of CHF 82.7 million on the previous year of CHF 342.6 million. While net income including minority interests – even after taking into account the loss on the sale of Lácteos Caprinos S.A. – was still higher than in the previous year, cash flow before changes in net working capital, interest and taxes was CHF 374.1 million, a downturn of CHF 29.5 million compared to the previous year (CHF 403.6 million). The majority of this negative variance is attributable to the change in other non-cash items, where non-cash currency losses and gains are reflected accordingly. The change in net working capital had an overall negative impact of CHF 60.0 million on cash flow from operating activities in the period under review. In the previous year, this negative impact was significantly lower at CHF 15.7 million, which had a corresponding negative effect on cash flow from operating activities compared to the previous year. The main driver of this negative variance are inventories, which were exceptionally low in the previous year due to the pandemic and have now returned to normal. The impact of paid interest and taxes on cash flow from operating activities was CHF 8.9 million greater than in the previous year.

Cash outflow from investing activities amounted to a record high of CHF 428.7 million in the period under review, compared with an already high figure of CHF 326.8 million in the previous year. This corresponds to an additional cash outflow of CHF 101.9 million. The main reason for this development were the investments in acquisition activities amounting to CHF 276.8 million. Compared to the previous year (CHF 198.8 million), this represents an additional cash outflow of CHF 78.0 million. Net investments in property, plant and equipment were CHF 147.0 million, up significantly compared to the previous year (CHF 121.3 million net).

Not including cash flow from acquisition activities, the level of free cash flow generated in the year under review amounted to CHF 108.1 million. This translates into a significant decrease of CHF 106.5 million compared to the previous year (CHF 214.6 million), primarily due to the lower cash flow from operating activities.

In the reporting period, the issuance of a bond in the amount of CHF 200.0 million resulted in a cash inflow from financing activities totalling CHF 121.3 million. The previous year’s cash outflow from financing activities amounted to CHF 91.9 million. Additional cash outflows resulted in the year under review from the higher dividend paid to the shareholders of Emmi AG as well as to minority shareholders.

As a consequence of the cash flows described above, cash and cash equivalents decreased by CHF 47.4 million in financial year 2021 from CHF 294.7 million in the previous year to CHF 247.3 million as at 31 December 2021.

Outlook 2022

In the past two years, Emmi has managed to defy the pandemic largely unscathed from an economic perspective and achieve both its strategic and financial targets. In recent months, however, the macroeconomic conditions in many of the markets relevant to Emmi have started to deteriorate significantly. The sharp uptick in inflation rates in many countries does not appear to be short term in nature, as originally hoped, but is likely to persist over a longer period of time and lead to steep increases in input costs worldwide. This not only affects a wide range of raw materials and packaging materials relevant to Emmi, but also the costs of energy, logistics and other operating expenses. In addition, a wage-price spiral already seems to be taking hold in some countries. At the very least, Emmi is observing that in some key countries – the US in particular – employee wage demands are rising sharply in the face of high inflation rates and low unemployment, and notes that it is now virtually impossible to find qualified workers without accepting significant increases in personnel costs.

Emmi is responding to the marked rise in input costs across the board with sales price increases. This is challenging, of course, because experience shows that our retail customers in particular try to avoid increasing prices for consumers as far as possible. This results in challenging negotiations, which in many cases lead at least to a delay in the price increases being passed on. The pandemic will likewise leave its mark on Emmi’s business in 2022. While retail sales are expected largely to stabilise again at pre-pandemic levels, we anticipate continued impairment of the food service business and subdued sales to industry customers in the current year. However, our sales and profit forecasts are based on the assumption that the pandemic situation will calm down in those markets that are important for Emmi from the second half of 2022.

Financially, Emmi expects good organic sales growth in 2022, which should even be slightly above our medium-term forecast due to inflation. On the other hand, Emmi anticipates significant pressure on margins due to the sharp rise in input costs and wage expenses. Emmi will do everything in its power to compensate for this pressure on margins by further improving its product portfolio and also by realising additional rationalisation and efficiency gains, although it is uncertain at present that this will be fully achieved.


In the business division Switzerland, conditions remain challenging for Emmi. The environment in which it operates is as competitive as ever, and like in the previous year Emmi expects an increasing proportion of retail sales to be attributable to imports in 2022. High Swiss milk prices and the limited supply of milk will give imports a further competitive edge. In addition, new production capacities have been built in Switzerland in recent years, which need to be fully utilised and create further price pressure. Sales prices will be increased, but it is uncertain whether these higher prices will be sufficient to compensate for the rising input costs in Switzerland. Although Emmi expects business in the food service sector and with industry customers to pick up slightly in Switzerland, it is still at a lower level than before the pandemic. The resurgence of shopping tourism is also likely to have a negative impact on sales. Emmi will continue to counter these overall negative developments with its strong brand concepts, trend-led innovations and a strong focus on customers and consumers, as well as robust production output.

Italian speciality desserts, established brands such as Emmi Caffè Latte and Kaltbach, as well as trending concepts – for example, vegan food – are major success factors for the business division Europe that should also yield organic growth in the current year. However, Emmi also anticipates weaker growth in retail sales in many European countries and a food service business that is likely to remain below pre-pandemic levels. This makes it extremely important for Emmi to further reinforce its strong position in interesting niches such as Italian speciality desserts alongside brand and trend concepts. Sales should also be supported by the powder business in the Netherlands, which was impacted by challenges in overseas logistics in 2021.

For the business division Americas, Emmi anticipates a further recovery in the food service business and an associated resurgence in business in the US. The speciality desserts from Emmi Dessert USA and new sales from the Athenos feta cheese business should likewise prop up this trend. However, the latter will not contribute to organic growth in the current year until the month of December, and will represent acquisitive growth in the first eleven months. In addition to the existing US business, the division’s organic growth drivers in the current year are therefore likely to be primarily the growth markets in Brazil, Chile, Mexico and Tunisia. While inflation will support organic growth, Emmi also sees growth risks with foreseeable purchasing power devaluations, which will continue to stoke volatility in these markets.

Sales and profit growth

Organic sales growth at Group level is expected to level off at 2.5% to 3.5% in 2022, slightly above medium-term expectations (2% to 3%) supported by inflation. However, Emmi still expects a slight decline in sales in its home market of Switzerland. With the return to previous consumption patterns, a decline in sales of between -1% and 0% in organic terms must be expected. In our international business, on the other hand, we expect good organic sales growth, which should even exceed the corresponding mid-term expectations due to inflation. We therefore forecast growth of 3% to 5% for Europe and 6% to 8% for the Americas.

In order to bolster earnings and counter rising input costs and wage expenses, Emmi will in addition to sales price increases continue its efficiency enhancement programme and step up targeted measures in certain areas. Nevertheless, we expect considerable pressure on margins in the current year. The acquisition of the Athenos feta cheese business unlocks further earnings potential, but integration costs will also be incurred in the short term. Emmi expects earnings before interest and taxes (EBIT) to rise overall in 2022 (CHF 290 million to CHF 305 million), with a slightly reduced net profit margin (5.0% to 5.5%). Emmi also confirms the medium-term targets for organic growth and the net profit margin.