Income statement

Operating section

Emmi generated net sales of CHF 3,911.9 million in 2021 (previous year: CHF 3,706.1 million) and growth of 5.6%. This is comprised of organic growth of 3.6%, a positive acquisition effect of 2.3% and a negative foreign currency effect of 0.3%. The organic growth of 3.6%, which slightly exceeded Emmi’s expectations (2% to 3%), can be viewed as a strong performance given the ongoing uncertainties due to the pandemic. Once again, the balanced product and country portfolio, focus on interesting niche and strong brand concepts, combined with a high level of innovative strength, an agile organisation and a locally anchored supply chain, proved to be a winning formula.

In line with expectations, the Swiss home market recorded a year-on-year decline in sales, with organic sales down 2.2%. After organic growth of 1.4% in the previous year, in 2021 the retail sector experienced a general return to old consumer habits, including cross-border shopping. In addition, business in the food service sector and with industrial customers continued to be heavily impacted by the pandemic, and sales remained well below pre-crisis levels. On the other hand, a broad-based recovery took hold in the international business. In particular, companies with a higher proportion of food service business were largely able to post organic growth again following the decline in the previous year. Important growth markets such as Brazil, Mexico and Tunisia also made a strong contribution to the organic growth of the business division Americas (9.6%). The pleasing organic growth of the business division Europe (5.2%) was driven in particular by the pleasing growth in sales of innovative Italian speciality desserts and brand concepts such as Emmi Caffè Latte and Kaltbach cheese.

As a strategic niche, the dessert business also performed especially well from a Group perspective. The Italian companies along with Emmi Dessert USA (formerly Indulge Desserts Group), which was acquired in the previous year, posted a strong increase in sales. In the case of our international brands, Emmi Caffè Latte kept up its positive momentum. In the home market of Switzerland and in all foreign markets, significant growth was achieved with differentiating brand concepts and strong innovations. The cave-aged Kaltbach cheese specialties continue to enjoy growing popularity, with equally strong growth in most markets.

Acquisition effects are accounted for by the following factors:

Positive factors:

• Acquisition of Chäs Hütte Zollikon GmbH (Switzerland, 29 July 2020)
• Acquisition of Emmi Dessert USA (formerly Indulge Desserts Group, USA, 6 October 2020)
• Acquisition of the Athenos business (USA, 1 December 2021)

Negative factors:

• Sale of Lácteos Caprinos S.A. (Spain, 18 December 2020)

Internal shifts in the distribution channels of certain customers also resulted in acquisition or divestment effects in the business divisions Americas, Europe and Global Trade. However, these shifts between individual business divisions did not have any impact on the organic growth sales at Group level.

Sales development Switzerland

Net sales by product group: Switzerland

The business division Switzerland generated sales of CHF 1,649.8 million in 2021 (previous year: CHF 1,686.2 million), corresponding to a decline of 2.2%, slightly lower than expected at the end of the first half (-2.5% to -3.5%). The sales situation was therefore better than in first half of the year, which recorded an organic decline in sales of 3.3%. The main driver of the negative sales performance over the year as a whole was the retail business. As expected, this segment lost sales compared with the atypical previous year characterised by pantry loading and border closures. The ongoing restrictions in the food service sector, combined with the continued subdued growth of business with industrial customers, likewise had a hampering effect on sales. On the other hand, Emmi Caffè Latte once again had a positive impact. Other brand concepts, such as Emmi Jogurt PUR, also performed well. In addition, the higher milk price benefiting producers supported the sales development. The business division Switzerland accounted for 42.2% of Group sales (previous year: 45.5%).

The largest segment, dairy products (milk, cream and butter), recorded an organic drop in sales of 2.1%. Although the negative trend levelled off in the second half of the year, the negative effects had the upper hand over the year as a whole. The primary factors here were the normalisation of demand in the retail trade and the ongoing restrictions in the food service business.

The cheese segment also posted a considerable organic decline of 4.1%. This fall chiefly related to traditional variety cheeses in the retail business, which had posted exceptionally high growth in the previous year due to the pandemic. The further increase in cheese imports also limited sales growth in this segment. On the other hand, it is pleasing to note that Emmi speciality cheeses such as Kaltbach and Luzerner Rahmkäse continued to grow even under these difficult conditions.

In the fresh products segment, there was a comparatively small organic decline in sales of 0.6%. The decline in sales of yogurts (private label products of retailers) and ice cream in particular was partially offset by the continued positive performance of Emmi Caffè Latte, Emmi Energy Milk and Emmi Jogurt PUR.

While the organic decline (4.6%) in the fresh cheese segment was again chiefly attributable to the retail business, the main reason for the decline (3.8%) in the powder/concentrates segment was the sluggish business with industrial customers, primarily as a result of the pandemic. The other products/services segment was the only segment to record organic growth (8.5%). This pleasing result was thanks to the positive momentum in the vegan products business, where the products of the vegan brand Beleaf, among others, posted gains.

Sales development Americas

Net sales by product group: Americas

The business division Americas includes the Emmi Group companies in the US, Spain (excluding Lácteos Caprinos), Tunisia, Brazil, Chile, France, Mexico and Canada.

Sales in the business division Americas improved from CHF 1,281.8 million in the previous year to CHF 1,478.7 million. The overall growth of 15.4% was due to the acquisition of Emmi Dessert USA and the Athenos feta cheese business, coupled with high organic growth of 9.6%. The negative currency effects resulted primarily from the devaluation of the Brazilian real and the US dollar. However, the slightly flatter growth compared with the first half of the year exceeded our own expectations (7% to 9%). In addition to the growth markets of Brazil, Mexico and Tunisia, the US companies in particular – and especially Emmi Dessert USA, which was acquired in the previous year – achieved significant growth. The business division Americas accounted for 37.8% of Group sales (previous year: 34.6%).

In the cheese segment, an organic growth of 9.1% was generated, primarily reflecting the recovery in the food service business following the pandemic-related decline in sales in the previous year. A large part of this growth derives from the US, with an increase in both locally produced and imported cheese from Switzerland, such as Kaltbach. Growth was additionally recorded in Canada (including Kaltbach), Mexico, France and Brazil.

In dairy products, Tunisia was the major driver behind the organic growth of 9.7% thanks to easing milk shortages and a positive price trend. But Brazil also made a significant positive contribution, where the start-up of a new factory for UHT milk helped boost sales.

Organic growth of 7.1% was achieved in the fresh products segment. Positive contributions were made in particular by Emmi Dessert USA, acquired in the previous year, by Brazil with yogurts and by France with Italian speciality desserts. The further growth of Emmi Caffè Latte in Spain and France is also pleasing.

In the fresh cheese segment, growth (organic: 23.3%) was driven by Brazil and the recovery in Mexideli's trading business. The high organic growth of 63.6% in the powder/concentrates segment was due to the start-up of a new factory for milk powder in Brazil. In the other products/services segment, the organic decline of 2.7% primarily resulted from the business with import licences in the US, while Mexideli’s trading goods business recorded significant growth as a result of the recovery in the food service sector.

Sales development Europe

Net sales by product group: Europe

The business division Europe includes the Emmi Group companies in Germany, Italy, the Netherlands, the UK, Austria and Lácteos Caprinos in Spain (sold on 18 December 2020).

The business division Europe generated sales of CHF 662.0 million, up 5.0% on the previous year’s figure of CHF 630.7 million. Adjusted for acquisition and currency effects, this resulted in strong organic growth of 5.2%. The pace of growth picked up again in the second half of the year, slightly exceeding our own forecast for the year as a whole (3% to 5%), which had been adjusted at the end of the first half. The growth drivers in the business division Europe continue to be innovative Italian speciality desserts and Emmi Caffè Latte, which translated into strong growth in the fresh products segment. In addition to the sale of Lácteos Caprinos in Spain in December 2020, the negative acquisition effects originated from shifts in the distribution channels of certain customers to the business divisions Americas and Global Trade. The business division Europe accounted for 16.9% of Group sales (previous year: 17.0%).

The largest segment in terms of sales, fresh products, achieved very pleasing organic growth of 12.6%. The growth drivers were Italian speciality desserts and Emmi Caffè Latte, with significant growth across all European markets.

Lower sales of Swiss cheese varieties and fondue, particularly in the Netherlands, the UK and Italy, led to a small drop in organic sales of 0.3% in the cheese segment. By contrast, Kaltbach cheese turned in a positive performance, growing in all European markets.

The organic decline in sales of 2.6% in the dairy products segment was primarily the result of the drop in sales at Gläserne Molkerei in Germany. In the previous year, demand for these products had increased sharply due to the pandemic, but this trend returned to normal in the year under review.

The fresh cheese segment recorded organic growth of 1.9%, which reflects a partial recovery in sales of fresh goat’s cheese at Bettinehoeve in the Netherlands following the slump in the previous year (high share of sales in the food service sector). Sales generated with powder/concentrates decreased organically by a significant 16.8%, mainly due to the goat’s milk powder business in the Netherlands, where challenges in overseas logistics had a negative impact on sales. The organic growth of 23.0% in the other products/services segment came primarily from rising sales of vegan products. In addition to encouraging growth in the existing vegan product businesses in Austria and Germany, the launch of the vegan brand Beleaf also propped up organic growth.

Sales development Global Trade

Net sales by product group: Global Trade

The business division Global Trade primarily comprises direct sales from Switzerland to customers in countries where Emmi has no subsidiaries. These include the Asian and Eastern European markets, most South American countries and the Arabian Peninsula. Global Trade accounted for 3.1% of Group sales (previous year: 2.9%).

Sales of the business division Global Trade amounted to CHF 121.4 million compared with CHF 107.4 million in the previous year, representing growth of 13.1% (11.5% in organic terms). The cheese segment recorded organic growth of 9.6%, driven in particular by pleasing performance by Kaltbach. Ongoing travel restrictions hampered sales growth in the fresh products segment, resulting in an organic decline in sales of 3.0%. The growth in the powder/concentrates segment reflects the rise in exports of surpluses of skimmed-milk powder.

Gross profit

Gross profit increased by CHF 80.2 million or 5.9% to CHF 1,429.9 million in the year under review (previous year: CHF 1,349.7 million). With a slightly negative currency effect overall, the increase is primarily attributable to the acquisition of Emmi Dessert USA. Organic growth also made a significant contribution to the increase in gross profit. The gross profit margin also developed positively, rising from 36.4% in the previous year to 36.6%. This improvement particularly reflects the consistent work done on the company and product portfolio, with a focus on high-margin businesses. In addition, measures to increase productivity and in procurement were ramped up to counteract the sharp rise in prices for raw and packaging materials.

Non-recurring effects in the consolidated financial statements

No significant non-recurring effects were recorded in the period under review.

In the previous year, the sale of the majority interest in Lácteos Caprinos S.A. had a significant impact on the income statement. The sale resulted in a pre-tax loss of CHF 14.6 million or CHF 14.2 million after taxes. The loss from this sale is included under “Other operating expenses”. Adjusted for this non-recurring effect, EBITDA, EBIT and EBT increased in the previous year by CHF 14.6 million, while profit including minority interests and net profit increased by CHF 14.2 million.

Operating result

Operating expenses rose by CHF 66.4 million or 6.8% in 2021 to CHF 1,044.3 million, compared with CHF 977.9 million in the previous year. In addition to this absolute increase, operating expenses rose as a percentage of sales from 26.3% to 26.7%. The absolute and relative increase is again partly explained by significant acquisition contributions. However, taking into account the loss on the sale of Lácteos Caprinos S.A. in the previous year, there was also an organic increase in operating expenses.

Personnel expenses were CHF 534.8 million in the period under review, compared with CHF 493.8 million in the previous year. The increase of CHF 41.0 million represents a disproportionate increase in relation to sales (from 13.3% in the previous year to 13.7%). This increase is attributable alongside another significant acquisition-related contributions to higher labour costs as a result of the inflationary trend in many countries.

Other operating expenses increased from CHF 484.0 million in the previous year to CHF 509.5 million in the period under review, up CHF 25.5 million or 5.3%. In relation to sales, this equates to a practically stable ratio of 13.0%. However, adjusted for the loss in the previous year from the sale of Lácteos Caprinos S.A. (CHF 14.6 million), the increase amounts to CHF 40.1 million or 8.5%, which is disproportionately high compared to sales. In addition to another significant contribution from acquisitions, the majority of the increase resulted from organic growth. Accumulated marketing and sales-related expenses amounted to CHF 139.1 million, compared with CHF 127.0 million in the previous year. This significant increase of CHF 12.1 million is due to the shifted timing of marketing activities in the previous year, but also and in particular to deliberately pushed expenditure on established brand concepts such as Emmi Caffè Latte. Another significant cost factor were logistics expenses, which rose by CHF 14.8 million or 12.8%. Longer and unstable supply chains, together with higher prices due to inflation, were the main drivers of the significant increase in logistics expenses. The other cost types included in other operating expenses also showed a stable to slightly rising trend due to higher prices.

Other operating income increased by CHF 4.7 million on the previous year to CHF 9.2 million, primarily due to higher gains from the sale of fixed assets.

As a consequence of this development, the operating result before interest, taxes, depreciation and amortisation (EBITDA) amounted to CHF 394.7 million in the period under review. Compared to the adjusted previous year (CHF 390.9 million), this represents an increase of CHF 3.8 million. The adjusted EBITDA margin therefore decreased from 10.5% in the previous year to 10.1%.

Depreciation and amortisation fell by CHF 9.0 million in the period under review, from CHF 119.7 million to CHF 110.7 million. The decrease is primarily due to higher unplanned depreciation in the previous year.

Earnings before interest and taxes (EBIT) amounted to CHF 284.1 million in the period under review, up CHF 12.9 million on the adjusted previous year. The resulting EBIT margin of 7.3% for 2021 is therefore in line with the adjusted prior-year figure.

Income from associates, financial result and income taxes

Following a loss of CHF 1.0 million in the previous year, mainly as a result of the pandemic, income from associates and joint ventures this year recorded a profit of CHF 3.7 million.

The financial result (net financial expenses) was CHF 11.9 million, compared with CHF 13.4 million in the previous year. A better interest result due to internal replacements of local debt financing, as well as a better currency result due to lower hedging costs, are the main reasons for this expected development.

Income taxes amounted to CHF 45.2 million, compared with CHF 40.6 million in the previous year. The tax rate of 16.4% increased slightly compared to the adjusted prior year (16.0%) due to the growing international share in earnings.

Net profit

Profit including minority interests was CHF 230.7 million. Compared to CHF 201.6 million in the previous year, this represents an increase of CHF 29.1 million. The increase on the basis of adjusted previous-year figures was CHF 14.9 million.

The share of minority interests in net profit recorded a slight increase from CHF 13.2 million in the previous year to CHF 13.9 million in the year under review.

The resulting net profit of CHF 216.7 million exceeded the previous year (CHF 188.4 million) by CHF 28.3 million. Adjusted for the loss from the sale of Lácteos Caprinos S.A. in the previous year, the increase in net profit was CHF 14.1 million. On an adjusted basis, the net profit margin thus remained constant at 5.5%.