Notes to the consolidated financial statements

in CHF 000s

1 Segment reporting

1.Segment reporting

Net sales by product groups and divisions

 

 

 

 

 

 

 

 

 

 

Switzerland

Americas

Europe

Global Trade

Group

2022

2021

2022

2021 (restated) 1)

2022

2021 (restated) 1)

2022

2021

2022

2021

Natural cheese

357,572

362,902

626,354

502,066

123,573

153,958

61,576

49,592

1,169,075

1,068,518

Processed cheese

53,838

53,340

36,665

29,199

14,934

16,552

6,586

5,622

112,023

104,713

Cheese

411,410

416,242

663,019

531,265

138,507

170,510

68,162

55,214

1,281,098

1,173,231

as % of net sales

24.2

25.2

39.6

38.1

19.0

22.8

53.4

45.5

30.3

30.0

 

 

 

 

 

 

 

 

 

 

 

Milk

227,354

251,478

342,777

316,347

66,601

64,086

1,376

2,489

638,108

634,400

Butter and margarine

257,399

249,224

39,837

39,553

27,223

27,747

324,459

316,524

Cream

176,372

167,901

31,464

25,923

3,017

2,927

2

18

210,855

196,769

Dairy products

661,125

668,603

414,078

381,823

96,841

94,760

1,378

2,507

1,173,422

1,147,693

as % of net sales

38.9

40.5

24.7

27.4

13.3

12.7

1.1

2.0

27.7

29.3

 

 

 

 

 

 

 

 

 

 

 

Fresh products

362,288

339,173

342,686

288,839

371,753

369,523

35,354

34,805

1,112,081

1,032,340

as % of net sales

21.3

20.6

20.5

20.7

50.9

49.5

27.7

28.7

26.3

26.4

 

 

 

 

 

 

 

 

 

 

 

Fresh cheese

106,031

101,399

96,904

71,674

43,144

38,414

246,079

211,487

as % of net sales

6.3

6.1

5.8

5.1

5.9

5.2

5.8

5.4

 

 

 

 

 

 

 

 

 

 

 

Powder/ concentrates

86,360

60,821

40,233

32,180

39,851

37,298

20,753

26,572

187,197

156,871

as % of net sales

5.1

3.7

2.4

2.3

5.4

5.0

16.3

21.9

4.4

4.0

 

 

 

 

 

 

 

 

 

 

 

Other products

46,392

41,060

111,745

84,060

39,169

34,600

1,529

1,859

198,835

161,579

Sales of services

24,504

22,515

5,257

4,383

1,130

1,322

406

440

31,297

28,660

Other products and services

70,896

63,575

117,002

88,443

40,299

35,922

1,935

2,299

230,132

190,239

as % of net sales

4.2

3.9

7.0

6.4

5.5

4.8

1.5

1.9

5.5

4.9

 

 

 

 

 

 

 

 

 

 

 

Net sales

1,698,110

1,649,813

1,673,922

1,394,224

730,395

746,427

127,582

121,397

4,230,009

3,911,861

as % of Group

40.1

42.2

39.6

35.6

17.3

19.1

3.0

3.1

100.0

100.0

1) The companies in France have been part of division Europe since 1 January 2022 (previously division Americas). For better comparability, the prior-year figures have been restated accordingly.

Net sales by country group

2022

in %

2021

in %

 

 

 

 

 

 

Switzerland

1,698,110

40.1

1,649,813

42.2

 

 

 

 

 

 

North and South America

1,360,611

32.2

1,068,796

27.3

 

 

 

 

 

 

Europe excl. Switzerland

930,457

22.0

948,157

24.2

 

 

 

 

 

 

Africa

163,549

3.9

177,400

4.6

 

 

 

 

 

 

Asia/Pacific

77,282

1.8

67,695

1.7

 

 

 

 

 

 

Total

4,230,009

100.0

3,911,861

100.0

 

 

 

 

 

 

Emmi does not publish segment results since this would cause significant competitive disadvantages towards customers as well as non-listed and larger listed competitors both in Switzerland and abroad.

The divisions are not defined strictly according to geographical considerations. The division Americas includes the Emmi Group companies in the USA, Brazil, Spain, Chile, Tunisia, Mexico and Canada. The division Europe comprises those in Italy, Germany, the Netherlands, France, the UK and Austria. The 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.

2 Other operating income

2.Other operating income

 

2022

2021

Company-produced additions

72

295

Gain on disposal of fixed assets

980

3,469

Miscellaneous operating income

7,970

5,414

Total

9,022

9,178

3 Other operating expenses

3.Other operating expenses

 

2022

2021

Marketing and sales-related expenses

130,116

139,056

Occupancy expense, maintenance and repair, leasing

87,758

81,362

Insurance, fees and HGV road tax

19,459

18,699

Energy, operating material and supplies

95,045

81,556

Administrative expenses

44,639

42,901

Logistic expenses

161,493

130,260

Other operating expenses

17,816

15,661

Total

556,326

509,495

4 Depreciation and amortisation

4.Depreciation and amortisation

 

2022

2021

Depreciation of property, plant and equipment

98,477

99,218

Impairment of property, plant and equipment

14,937

1,903

Amortisation of intangible assets

12,796

9,538

Impairment of intangible assets

173

Total

126,383

110,659

Of the impairment on property, plant and equipment, CHF 13.0 million are related to Gläserne Molkerei.

5 Financial result

5.Financial result

 

2022

2021

Interest income

2,155

675

Other financial income

499

275

Total financial income

2,654

950

Interest expense

-16,227

-7,074

Other financial expenses

-1,316

-2,717

Total financial expenses

-17,543

-9,791

Total excl. currency result

-14,889

-8,841

Currency result

-8,379

-3,079

Financial result

-23,268

-11,920

6 Income taxes

6.Income taxes

 

2022

2021

Current income taxes

38,048

41,084

Deferred income taxes

893

4,118

Total

38,941

45,202

Average tax rate

17.0%

16.4%

Net accruals for current income taxes decreased from CHF 21.3 million in 2021 to CHF 19.5 million in 2022. Deferred income taxes are calculated for every company using the effective applicable tax rate. As at 31 December 2022, the resulting weighted average tax rate was 18.8% (previous year: 17.9%). Adjusted for the non-recurring effect related to an impairment of non-current assets at Gläserne Molkerei, the weighted average tax rate was 18.4%. Deferred income taxes include recognised tax claims from tax loss carryforwards amounting to CHF 2.6 million (previous year: CHF 1.1. million).

The effective average tax rate adjusted for the tax effect on the impairment of non-current assets at Gläserne Molkerei amounted to 16.6% in the reporting year.

Details on change of tax claims from tax loss carryforwards

2022

2021

Recognised tax claims from tax loss carryforwards

2,575

1,059

Unrecognised tax claims from tax loss carryforwards

25,913

11,439

Total tax claims from tax loss carryforwards

28,488

12,498

 

 

 

Recognised tax claims from tax loss carryforwards at 1.1.

1,059

3,474

Additions

1,949

151

Utilisation

-363

-2,465

Reassessment

127

100

Other adjustments

-197

-201

Recognised tax claims from tax loss carryforwards at 31.12.

2,575

1,059

The net change of recognised tax claims from tax loss carryforwards decreased the income tax expenses of the reporting year by CHF 1.5 million (previous year: increase of CHF 2.4 million).

7 Earnings per share

7.Earnings per share

 

2022

2021

Number of shares at 1.1.

5,349,810

5,349,810

Number of shares at 31.12.

5,349,810

5,349,810

Average number of shares

5,349,810

5,349,810

Net profit in CHF 000s

182,546

216,738

Earnings per share (in CHF)

34.12

40.51

Earnings per share is calculated by dividing the net profit attributable to the shareholders of Emmi AG by the average number of shares outstanding. There are no treasury shares that need to be considered in the calculation of the average number of shares outstanding.

Earnings per share of CHF 34.12 include the impairment of non-current assets at Gläserne Molkerei. Excluding this non-recurring effect, earnings per share amounted to CHF 36.31.

8 Trade receivables

8.Trade receivables

 

2022

2021

Third parties

539,313

478,866

Associates

7,603

7,628

Shareholders

619

502

Allowance for doubtful accounts

-13,951

-11,912

Total

533,584

475,084

9 Other receivables

9.Other receivables

 

2022

2021

Value-added tax

17,941

28,380

Income taxes

3,770

2,666

Other – third parties

36,866

30,070

Other – associates

34

19

Total

58,611

61,135

10 Inventories

10.Inventories

 

2022

2021

Finished products

143,273

133,911

Merchandise

42,214

28,945

Raw materials, semi-finished products and packaging material

332,483

287,282

Other inventories

4,080

4,533

Allowances for inventories

-13,810

-19,827

Total

508,240

434,844

11 Prepayments and accrued income

11.Prepayments and accrued income

 

2022

2021

Value-added tax

21,712

18,647

Income taxes

7,934

7,851

Social insurance

434

1,292

Other – third parties

27,691

23,510

Other – associates

78

201

Other – shareholders

32

16

Total

57,881

51,517

Thereof current prepayments and accrued income

52,872

46,212

Thereof non-current prepayments and accrued income

5,009

5,305

Other prepayments and accrued income of the year under review and the previous year consist mainly of prepayments, various refunds, as well as accrued income for advertising costs and milk invoices.

12 Loans and other receivables

12.Loans and other receivables

 

2022

2021

Third parties

13,047

9,243

Associates

3,542

3,232

Total

16,589

12,475

The carrying amount of loans and other receivables from third parties includes impaired loans in the amount of CHF 1.5 million (unchanged from previous year).

13 Property, plant and equipment

13.Property, plant and equipment

2022

Undeveloped land

Properties/ buildings

Machinery/ equipment

Tangible fixed assets under construction

Other tangible assets

Total

Purchase value at 1.1.2022

11,679

772,742

1,672,315

128,166

81,277

2,666,179

Additions

504

8,469

190,856

2,417

202,246

Disposals

-133

-4,505

-73,984

-3,304

-81,926

Reclassification

9,417

93,949

73,892

-185,563

8,086

-219

Currency translation differences

-152

-2,395

-7,371

-1,834

-580

-12,332

As at 31 December 2022

20,811

860,295

1,673,321

131,625

87,896

2,773,948

 

 

 

 

 

 

 

Accumulated depreciation at 1.1.2022

1,056

382,051

1,213,269

54,385

1,650,761

Depreciation

18,106

72,928

7,443

98,477

Impairment charges

6,136

8,801

14,937

Disposals

-4,391

-73,209

-3,267

-80,867

Reclassification

3,490

-4,713

1,223

Currency translation differences

-2

-2,094

-7,009

-498

-9,603

As at 31 December 2022

1,054

403,298

1,210,067

59,286

1,673,705

Net book value at 31 December 2022

19,757

456,997

463,254

131,625

28,610

1,100,243

Thereof finance leases

1,841

1,841

Of the impairment on property, plant and equipment, CHF 13.0 million are related to Gläserne Molkerei.

2021

Undeveloped land

Properties/ buildings

Machinery/ equipment

Tangible fixed assets under construction

Other tangible assets

Total

Purchase value at 1.1.2021

10,854

777,726

1,648,140

95,456

79,918

2,612,094

Additions

1,558

15,465

129,222

1,063

147,308

Disposals

-4,934

-54,527

-3,433

-62,894

Reclassification

950

6,513

79,540

-93,692

4,556

-2,133

Currency translation differences

-125

-8,121

-16,303

-2,820

-827

-28,196

As at 31 December 2021

11,679

772,742

1,672,315

128,166

81,277

2,666,179

 

 

 

 

 

 

 

Accumulated depreciation at 1.1.2021

1,058

373,171

1,201,496

50,706

1,626,431

Depreciation

18,079

73,607

7,532

99,218

Impairment charges

601

1,199

103

1,903

Disposals

-4,390

-53,509

-3,249

-61,148

Reclassification

-2,541

380

28

-2,133

Currency translation differences

-2

-2,869

-9,904

-735

-13,510

As at 31 December 2021

1,056

382,051

1,213,269

54,385

1,650,761

Net book value at 31 December 2021

10,623

390,691

459,046

128,166

26,892

1,015,418

Thereof finance leases

1,573

1,573

14 Intangible assets

14.Intangible assets

2022

Trademarks

Software

Other intangible assets

Total

Purchase value at 1.1.2022

157,782

85,418

12,073

255,273

Additions

3,903

12

3,915

Disposals

-5,490

-5,490

Reclassification

219

212

431

Currency translation differences

-3,238

-476

-173

-3,887

As at 31 December 2022

154,544

83,574

12,124

250,242

 

 

 

 

 

Accumulated amortisation at 1.1.2022

37,444

74,224

10,044

121,712

Amortisation

8,106

4,452

238

12,796

Impairment charges

173

173

Disposals

-5,488

-5,488

Reclassification

212

212

Currency translation differences

-2,357

-279

-128

-2,764

As at 31 December 2022

43,193

73,082

10,366

126,641

Net book value at 31 December 2022

111,351

10,492

1,758

123,601

2021

Trademarks

Software

Other intangible assets

Total

Purchase value at 1.1.2021

75,541

81,431

12,855

169,827

Change in scope of consolidation

85,032

85,032

Additions

5,264

5,264

Disposals

-789

-789

Reclassification

102

-779

-677

Currency translation differences

-2,791

-590

-3

-3,384

As at 31 December 2021

157,782

85,418

12,073

255,273

 

 

 

 

 

Accumulated amortisation at 1.1.2021

34,570

70,260

10,646

115,476

Amortisation

4,239

5,043

256

9,538

Disposals

-789

-789

Reclassification

102

-779

-677

Currency translation differences

-1,365

-392

-79

-1,836

As at 31 December 2021

37,444

74,224

10,044

121,712

Net book value at 31 December 2021

120,338

11,194

2,029

133,561

All intangible assets were acquired.

Goodwill from acquisitions

The goodwill from the acquisition of companies and businesses or the purchase of interests in associates or joint ventures is offset against retained earnings at the date of acquisition. The theoretical capitalisation of goodwill and its amortisation over the expected useful life of usually 20 years would have the following effects on the consolidated financial statements as at 31 December 2022.

Theoretical movement schedule for goodwill

 

Goodwill Group companies

Goodwill associated companies

Total

At cost 1.1.2022

965,649

18,693

984,342

Additions

12,982

12,982

Currency translation differences

-4,640

-677

-5,317

At cost 31.12.2022

973,991

18,016

992,007

 

 

 

 

Theoretical accumulated amortisation 1.1.2022

252,451

15,027

267,478

Amortisation

47,363

644

48,007

Impairment

9,090

9,090

Currency translation differences

-6,278

-503

-6,781

Theoretical accumulated amortisation 31.12.2022

302,626

15,168

317,794

Theoretical net book value 31.12.2022

671,365

2,848

674,213

The impairment in the year under review relates to Gläserne Molkerei.

 

Goodwill Group companies

Goodwill associated companies

Total

At cost 1.1.2021

791,631

19,255

810,886

Additions

182,382

182,382

Currency translation differences

-8,364

-562

-8,926

At cost 31.12.2021

965,649

18,693

984,342

 

 

 

 

Theoretical accumulated amortisation 1.1.2021

217,228

14,741

231,969

Amortisation

38,202

693

38,895

Currency translation differences

-2,979

-407

-3,386

Theoretical accumulated amortisation 31.12.2021

252,451

15,027

267,478

Theoretical net book value 31.12.2021

713,198

3,666

716,864

Theoretical impact on shareholders’ equity incl. minority interests

 

31.12.2022

31.12.2021

Shareholders’ equity as per balance sheet

1,283,906

1,181,676

Theoretical capitalisation of net book value of goodwill

672,749

722,404

Currency translation differences

1,464

-5,540

Theoretical shareholders’ equity incl. net book value of goodwill

1,958,119

1,898,540

Theoretical shareholders’ equity ratio

59.2%

59.5%

Theoretical impact on earnings before interest and taxes (EBIT)

 

2022

2021

Earnings before interest and taxes (EBIT) as per income statement

252,961

284,090

Theoretical amortisation of goodwill

-47,363

-38,202

Theoretical impairment of goodwill

-9,090

Theoretical earnings before interest and taxes (EBIT) after goodwill amortisation and impairment

196,508

245,888

Theoretical impact on net profit

 

2022

2021

Net profit as per income statement

182,546

216,738

Theoretical amortisation of goodwill

-48,007

-38,895

Theoretical impairment of goodwill

-9,090

Theoretical net profit after goodwill amortisation and impairment

125,449

177,843

15 Trade payables

15.Trade payables

 

2022

2021

Third parties

325,699

298,506

Associates

6,795

4,036

Shareholders

22,437

18,036

Total

354,931

320,578

16 Other payables

16.Other payables

 

2022

2021

Value-added tax

2,573

2,113

Social insurance

7,493

7,438

Other – third parties

17,417

11,808

Other – related parties

3,237

1,448

Total

30,720

22,807

17 Accrued liabilities and deferred income

17.Accrued liabilities and deferred income

 

2022

2021

Contractual discounts

47,465

49,325

Vacation, overtime, bonuses

37,322

39,690

Income taxes

27,405

29,200

Interest

3,484

2,820

Social insurance

2,191

1,932

Other – third parties

70,043

83,936

Other – associates

860

941

Total

188,770

207,844

Thereof current accrued liabilities and deferred income

183,407

199,314

Thereof non-current accrued liabilities and deferred income

5,363

8,530

Other accrued liabilities and deferred income of the year under review and the previous year comprise in particular contributions to brand organisations, expected earn-out payments for acquisitions, energy costs, advertising costs, HGV road tax and various services.

18 Financial liabilities

18.Financial liabilities

18.1Bonds

 

 

Bond type

Bond with reopening option

Nominal amount

CHF 200 million

Securities number

21492608 / ISIN CH021492608

Interest rate

1.625%

Term

12 July 2013 to 12 July 2023

Maturity

12 July 2023 at par value

The CHF 2.1 million expenses incurred in connection with the issuance of the bond were capitalised under prepayments and accrued income on 12 July 2013. This accrual will be released over the term of the bond. The actual interest rate on the bond is thereby increased from 1.625% to 1.72% per year.

 

 

Bond type

Bond with reopening option

Nominal amount

CHF 100 million

Securities number

36869775 / ISIN CH0368697758

Interest rate

0.5%

Term

21 June 2017 to 21 June 2029

Maturity

21 June 2029 at par value

The CHF 0.4 million expenses incurred in connection with the issuance of the bond were capitalised under prepayments and accrued income on 21 June 2017. This accrual will be released over the term of the bond. The issue price at 100.4% led to premium income of CHF 0.4 million. The actual interest rate on the bond is thereby increased from 0.50% to 0.51% per year.

In 2020, securities with a nominal value of CHF 0.5 million were repurchased from the stock exchange for investment purposes.

 

 

Bond type

Bond with reopening option

Nominal amount

CHF 200 million

Securities number

114638248 / ISIN CH1146382481

Interest rate

0.375%

Term

1 December 2021 to 1 December 2031

Maturity

1 December 2031 at par value

The CHF 0.7 million expenses incurred in connection with the issuance of the bond were capitalised under prepayments and accrued income on 1 December 2021. This accrual will be released over the term of the bond. The issue price at 100.54% led to premium income of CHF 1.1 million. The actual interest rate on the bond was thereby reduced from 0.375% to 0.37% per year.

The proceeds from the bond were used to fund the acquisition of the Athenos business in the USA. Emmi has entered into a cross currency swap to hedge currency and interest rate risks over the long term. Taking this hedge into account, the net interest rate on the USD nominal value of USD 215.6 million is 2.30% instead of 0.375% on the CHF nominal value of CHF 200.0 million.

18.2Maturing structure of financial liabilities

2022

Residual terms up to 1 year

Residual terms 1 to 5 years

Residual terms over 5 years

Total

Thereof secured by real estate liens

Interest rate in %

Bank overdrafts

45,424

96,472

49,334

191,230

20,070

0.1 – 21.2

Finance lease liabilities

677

434

1,111

9.8 – 13.8

Loans from third parties

26

2,019

9

2,054

0.0 – 8.0

Bonds

200,000

299,520

499,520

0.5 – 2.3

Total

246,127

98,925

348,863

693,915

20,070

All bonds and the vast majority of bank loans are set at fixed interest rates. For the bond issued in December 2021, the interest rate was applied after including cash flows from the cross currency swap. There are no financing arrangements in place linked to financial covenants.

In the year under review, financial liabilities increased by CHF 35.5 million, mainly due to an increase of EUR 30.0 million in promissory notes. On 21 July 2022, promissory notes from 2017 in the amount of EUR 70.0 million became due for repayment. On the same date, new promissory notes totalling EUR 100.0 million were paid. Of this amount, EUR 50.0 million are subject to a term of five years, EUR 40.0 million of seven years and the remaining EUR 10.0 million of ten years. Around three quarters of the new promissory notes bear interest at fixed rates over the entire term and one quarter at variable rates with adjustments every six months. A margin surcharge of 0.60% to 0.90% is added to the mid-swap or Euribor base interest rate, depending on the term. In addition, local financing was raised in Chilean pesos and Tunisian dinars. At the end of the year under review, the share of financing in Swiss francs was 72.3% (previous year: 76.2%), mainly relating to the three bond issues. 20.1% (previous year: 17.8%) of the financial liabilities are denominated in euros. CHF 52.8 million or 7.6% (previous year: 6.0%) of the financing is denominated locally in emerging market currencies such as the Tunisian dinar, Chilean and Mexican peso and Brazilian real.

2021

Residual terms up to 1 year

Residual terms 1 to 5 years

Residual terms over 5 years

Total

Thereof secured by real estate liens

Interest rate in %

Bank overdrafts

104,623

50,753

505

155,881

15,156

0.5 – 10.6

Finance lease liabilities

550

387

937

4.0 – 12.5

Loans from third parties

1,217

874

14

2,105

0.0 – 8.0

Bonds

200,000

299,520

499,520

0.5 – 2.3

Total

106,390

252,014

300,039

658,443

15,156

19 Provisions

19.Provisions

 

Ongoing restructuring

Other provisions

Deferred income taxes

Total provisions

As at 1 January 2022

5,450

20,141

54,448

80,039

Additions

4,050

8,569

2,449

15,068

Utilisation

-4,500

-3,729

-8,229

Release

-2,289

-2,289

Currency translation differences

-503

-889

-1,392

As at 31 December 2022

5,000

22,189

56,008

83,197

Thereof current provisions

2,500

3,457

5,957

Thereof non-current provisions

2,500

18,732

56,008

77,240

The restructuring provisions relate to anticipated costs in connection with the decision to reorganise business activities.

Other provisions include among other things liabilities for staff expenses in foreign countries as required by law (year under review: CHF 6.2 million, unchanged from previous year) and provisions for pending legal matters and business disputes (year under review: CHF 1.6 million, previous year: CHF 1.7 million). In all cases, the likelihood of such events occurring has been assessed at above 50%.

 

Ongoing restructuring

Other provisions

Deferred income taxes

Total provisions

As at 1 January 2021

2,000

31,471

53,562

87,033

Additions

4,000

4,768

1,318

10,086

Utilisation

-500

-7,659

-8,159

Release

-50

-8,013

-396

-8,459

Currency translation differences

-426

-36

-462

As at 31 December 2021

5,450

20,141

54,448

80,039

Thereof current provisions

3,950

6,092

10,042

Thereof non-current provisions

1,500

14,049

54,448

69,997

20 Employee benefit schemes

20.Employee benefit schemes

Employer contribution reserve (ECR)

Nominal value ECR

Waiver of usage

Other value adjustments

Balance sheet

Balance sheet

Result from ECR in personnel expenses

31.12.2022

31.12.2022

31.12.2022

31.12.2022

31.12.2021

2022

2021

Pension schemes without excess/ insufficient cover (domestic)

2,048

-380

1,668

380

Pension schemes with excess cover (domestic)

2,048

Total

2,048

-380

1,668

2,048

380

Economic benefit/ economic obligation and pension expenses

Excess/ insufficient cover as per Swiss GAAP FER 26

Economic benefit/obligation for the company

Change vs. previous year or taken to the income statement in the FY

Contributions limitedto the period 1)

Pension expenses in personnel expenses

31.12.2022

31.12.2022

31.12.2021

 

 

2022

2021

Welfare funds

29,000

Pension schemes without excess/insufficient cover (domestic)

21,385

21,765

Pension schemes without excess/insufficient cover (abroad)

3,096

3,096

3,546

Pension schemes with excess cover (domestic)

21,005

Total

29,000

24,481

24,861

24,551

1) Including result from employer contribution reserves or comparable items in connection with pension schemes abroad.

Breakdown of pension expenses 2022

Domestic

Abroad

Total

Contributions to pension plans at cost to the companies

21,385

3,096

24,481

Contributions to pension plans from employer contribution reserves

Total contributions

21,385

3,096

24,481

Change in ECR due to asset performance, value adjustments, etc.

380

380

Contributions and change to employer contribution reserves

21,765

3,096

24,861

Increase in economic benefit to the company due to excess cover

Reduction in economic obligations of the company due to insufficient cover

Total change in economic impact arising from excess/insufficient cover

Pension expenses in personnel expenses for the period

21,765

3,096

24,861

Breakdown of pension expenses 2021

Domestic

Abroad

Total

Contributions to pension plans at cost to the companies

21,005

3,546

24,551

Contributions to pension plans from employer contribution reserves

Total contributions

21,005

3,546

24,551

Change in ECR due to asset performance, value adjustments, etc.

Contributions and change to employer contribution reserves

21,005

3,546

24,551

Increase in economic benefit to the company due to excess cover

Reduction in economic obligations of the company due to insufficient cover

Total change in economic impact arising from excess/insufficient cover

Pension expenses in personnel expenses for the period

21,005

3,546

24,551

21 Acquisitions

21.Acquisitions

No companies were taken over in the year under review. The Athenos business acquired in the previous year reported the following main balance sheet items at the date of acquisition:

 

Athenos Business

 

2022

2021

Cash and securities

Trade receivables

Inventories

Other current assets

Non-current assets

85,032

Trade payables

Other current liabilities

Non-current liabilities

Net assets

85,032

As at 1 December 2021, Emmi acquired the Athenos business in the USA, which is operated within Emmi Roth USA, Inc. This acquisition makes Emmi number one in the US feta cheese business.

22 Unsettled derivative financial instruments

22.Unsettled derivative financial instruments

 

Positive value

Negative value

Purpose

Positive value

Negative value

Purpose

 

 

31.12.2022

 

 

31.12.2021

 

Forward currency transactions

3,234

1,886

Hedging

9,900

620

Hedging

Interest rate swaps

1,039

Hedging

5,254

Hedging

Other forward transactions

49

Hedging

Total forward transactions

3,234

2,925

9,949

5,874

Thereof to hedge future cash flows

1,162

1,172

858

5,335

Total recognised in the balance sheet

2,072

1,753

9,091

539

Similar to the underlying transactions, currency forwards, interest rate swaps and other forward transactions used to hedge future cash flows are not recognised in the balance sheet. The result of these derivative instruments is recognised in the income statement upon occurrence of the transaction hedged. Derivative financial instruments used to hedge balance sheet positions in foreign currencies are recognised as securities in the current assets or other payables in the current liabilities, respectively. Corresponding changes in value are recognised in the financial result.

In connection with the CHF 200 million bond issued in December 2021 to fund the USD acquisition of the Athenos business in the USA, Emmi entered into a cross-currency swap. This hedges currency and interest rate risks in USD over the entire term of the bond. While the fair value of the currency portion serves as a hedge of balance sheet items and is therefore accounted for in the same way as the hedged item, the fair value of the interest portion is a hedge of future cash flows. Accordingly, the fair value of the interest portion is not recognised.

Emmi also has options to acquire additional shares in a number of Group companies with minority interests. At the same time, put options have been granted in general to the counterparties. These options are not recognised in the balance sheet as they represent derivatives on equity instruments of the own organisation, which are explicitly excluded from the scope of Swiss GAAP FER 27. The strike price of these options is generally based on the corresponding enterprise value at the exercise date and cannot currently be reliably measured. The exercise date varies depending on the agreement. The maturities range from short-term to unlimited options.

23 Contingent assets and liabilities

23.Contingent assets and liabilities

Emmi is involved in legal disputes in connection with ordinary operating activities. Although the outcome of the lawsuits currently cannot be predicted with certainty, Emmi assumes that none of the disputes will have any significant negative impact on operating activities or on the Group’s financial situation. Expected outgoing payments are provided for accordingly. As at the date of the financial statements, the Group had no major contingent assets.

24 Pledged assets and off-balance sheet leasing/rental obligations

24.Pledged assets and off-balance sheet leasing/rental obligations

Pledged assets

31.12.2022

31.12.2021

Pledges on property, nominal values

250,478

240,029

Pledges on other assets

698

1,202

Thereof used as security for own liabilities

20,431

15,925

 

 

 

Off-balance sheet leasing/rental obligations

 

 

up to 2 years

23,072

22,627

3 to 5 years

19,094

19,611

over 5 years

17,336

25,732

Total

59,502

67,970

25 Investment obligations and other off-balance sheet liabilities

25.Investment obligations and other off-balance sheet liabilities

 

31.12.2022

31.12.2021

Investment obligations in connection with previously concluded agreements

17,307

36,118

Long-term commodity contracts

2,686

2,950

Cooperation agreements with suppliers/customers

p.m.

p.m.

Furthermore, there are milk purchase agreements which are not quantifiable.

The long-term commodity contracts are purchase agreements for coffee which will be settled at the market price valid in the period of delivery.

26 Transactions with related parties

26.Transactions with related parties

Business transactions with related parties are based on arm’s length conditions. All transactions are reported in the consolidated financial statements for 2022 and 2021, and consist of deliveries of products and raw materials, loans, and services to and from related parties. The corresponding receivable and payable balances are reported separately in these financial statements (see notes 8, 9, 11, 12, 15, 16 and 17).

Transactions with associates

2022

2021

Net sales

28,130

31,675

Cost of materials and services

57,348

48,525

Other expenses

2,384

2,632

Financial income

785

645

Transactions with shareholders

2022

2021

Net sales

6,424

6,494

Cost of materials and services

253,253

218,608

Other expenses

11

12

Transactions with other related parties

2022

2021

Net sales

41

35

Other expenses

157

102

Milk purchases from the main shareholder are included in cost of materials under transactions with shareholders. These are made at arm’s length conditions. Emmi Group is jointly and severally liable within the scope of VAT group taxation for the associated liabilities ot the Central Switzerland Milk Producers Cooperative (ZMP) and ZMP Invest AG.

Other transactions

The compensation paid to members of the Board of Directors and Group Management is disclosed in the Compensation report of Emmi AG.

27 Shareholders

27.Shareholders

Nominal capital

31.12.2022

%

31.12.2021

%

ZMP Invest AG, Lucerne 1)

28,488

53.2

28,488

53.2

Zentralschweizer Käsermeister Genossenschaft, Sursee 1)

2,150

4.0

2,150

4.0

MIBA Genossenschaft, Aesch (BL) 1)

1,727

3.3

1,740

3.3

Other

21,133

39.5

21,120

39.5

Total

53,498

100.0

53,498

100.0

1) ZMP Invest AG, Lucerne, the Zentralschweizer Käsermeister Genossenschaft, Sursee, and the MIBA Genossenschaft, Aesch (BL), form a group in the sense of Article 121 FinMIA. The Group owns 60.5% (previous year: 60.5%) of the total voting rights.

As at 7 June 2016, Capital Group Companies Inc., Los Angeles, USA, informed us that it owned 268,500 registered shares of Emmi AG (5.019%). No further disclosure notifications have been made since.

As at 31 December 2022, Emmi Wohlfahrtsfonds (welfare fund) owned a total of 6,000 shares of Emmi AG (unchanged from previous year).

28 Risk management and internal controls

28.Risk management and internal controls

The Board of Directors of Emmi AG has the ultimate responsibility for risk management, while implementation is delegated to Group Management. Irrespective of the type of risk, there is a generally applicable risk management process. As part of a formal process, significant business risks are assessed in a first process step in workshops and individual interviews, and then analysed and evaluated according to the extent of the potential damage and their likelihood of occurrence. The second process step involves risk management and the creation of a list of measures per risk as well as risk reporting.

The Board of Directors of Emmi AG discussed and approved the risk assessment in the year under review. It monitors the implementation of the defined measures by Group Management. No exceptional risks that went beyond normal limits were identified during the assessment. The process is repeated annually. The following risks, among others, were identified as significant risks to the Emmi Group:

  • Milk price difference internationally: The milk price difference between Switzerland and other countries continues to have a negative impact on the sales of domestically produced products both in Switzerland, as the volume of imported milk products increases, and abroad. Although full liberalisation of the Swiss milk market remains a long-term risk, this is absorbed through targeted and sustainable growth abroad. Any risks related to the international growth of the Emmi Group are minimised by strictly focusing on the strategy and its implementation.
  • Inflation: Inflation rose in all markets relevant to the Emmi Group last year; in some particularly important markets, such as the USA or many European countries, it rose to a historically very high degree. Inflationary trends have made a major portion of Emmi’s input costs significantly more expensive. This applies not only to various raw materials, but also to energy and logistics costs, for example. In addition, we had to acknowledge that wage costs have already risen significantly in many countries on the back of high inflation. If Emmi is unable to pass on the significant increase in costs to customers via higher sales prices, or if this is only achieved with a time lag, this could lead to a loss of margin.
  • Energy risk: Energy price increases, the rationing of energy supplies and interrupted energy supplies of electricity, natural gas and oil pose a significant risk for some production sites. The risk of price increases for electricity, natural gas and crude oil has already materialised in part, significantly increasing energy costs. A risk of rationing exists for electricity, natural gas and oil, although it is not assumed that this could occur simultaneously for all three energy sources. There is a risk of a short-term interruption to energy supply for electricity and natural gas. This risk is mitigated through strategic purchasing of energy sources, efficiency improvement measures, business continuity management and price increases.
  • Currency risk: Currency movements represent a significant risk for the Emmi Group, which has a tendency to increase based on the continuing internationalisation of business activities. We aim to achieve natural hedges with purchases in foreign currencies. Furthermore, in line with the Emmi strategy, expenditure and production volumes in foreign currency zones are being increased through capital expenditures and acquisitions.
  • Price pressure: National and international product tenders, as well as a potentially successful market launch of products made from milk alternatives, threaten in the medium term to result in price erosion, which could lead to a loss of margin mainly for generic products. If the prices of Emmi products remain stable in foreign currency, this may lead to a margin loss. If prices increase, market shares might be lost. However, the successfully established Emmi brands, including the ones in the milk alternatives segment, offer long-term value creation potential.
  • Trade agreements: The drafting of trade agreements with countries in which Emmi operates presents both opportunities and risks for the company. Switzerland is currently engaged in various talks aimed at negotiating new trade agreements or renegotiating existing ones, but progress is slow. As a result, the Swiss dairy industry is increasingly falling behind its competitors – especially those from the European Union – on the international market in terms of market access conditions. Negotiations that are unfavourable for Emmi could potentially also lead to heavy import pressure in Switzerland. A suspension of the bilateral agreements with the European Union would make it harder for Swiss export products to gain access to the market (e.g. due to the reintroduction of customs duties on cheese), posing a considerable risk. With the growth and local anchoring of our foreign subsidiaries, this risk is becoming smaller in its effect.
  • IT outages: With the growing continuity of processes and increasing penetration and standardisation of IT systems, the extent of damage caused by a potential outage increases. Shutdowns of entire plants can very quickly lead to high losses. With increasing investments in IT security, this risk is continuously analysed and mitigated; however, a residual risk remains.

The Emmi Group is exposed to various financial risks through its business activities, including credit, liquidity and other market risks. Credit risks are managed by means of continual monitoring of day-to-day business and appropriate risk assessment when closing a transaction. Liquidity risk is managed by means of central cash management, which ensures that the planned liquidity requirement is covered by corresponding financing agreements. Other market risks, such as currency and interest rate risks, are partially hedged using derivative instruments. The non-hedged portion is consciously borne as a risk. The currencies which are of particular relevance to the Emmi Group are the euro, the US dollar and the British pound.

To ensure that the consolidated financial statements comply with the applicable accounting standards and are reported accurately, the Emmi Group has set up effective internal control and management systems, which are reviewed regularly. Accounting and valuation include estimates and assumptions regarding the future. These are based on the knowledge possessed by the respective employees and are regularly examined with a critical eye. Where a financial position includes a major valuation uncertainty that could lead to a significant change in the carrying amount, this uncertainty is disclosed accordingly in the Notes. However, no risks that could lead to a significant correction to the company’s assets, financial position or results of operations as reported in the annual accounts were identified as at the balance sheet date.

29 Subsequent events

29.Subsequent events

From the balance sheet date until the consolidated financial statements were approved by the Board of Directors on 28 February 2023, no other major events occurred which could have adversely affected the validity of the consolidated financial statements for 2022 or which would have to be disclosed.

30 Summary of consolidated companies, associates and joint ventures

30.Summary of consolidated companies, associates and joint ventures

Consolidated companies

Head office

Currency

Capital in 000s 31.12.2022

Capital share 31.12.2022

Capital share 31.12.2021

Switzerland

 

 

 

 

 

Emmi AG

Lucerne

CHF

53,498

100%

100%

Baumann Käse AG

Münchenbuchsee

CHF

100

100%

100%

Emmi Dessert International SA

Lugano

CHF

250

100%

100%

Emmi Finanz AG

Lucerne

CHF

100

100%

100%

Emmi International AG

Lucerne

CHF

5,000

100%

100%

Emmi Langnau AG

Langnau i.E.

CHF

3,000

100%

100%

Emmi Management AG

Lucerne

CHF

500

100%

100%

Emmi Schweiz AG

Lucerne

CHF

5,700

100%

100%

FDS Fromagerie de Saignelégier SA

Saignelégier

CHF

1,050

86%

86%

Fromco S.A. Moudon

Moudon

CHF

2,100

60%

60%

Käserei Studer AG

Hefenhofen

CHF

720

100%

100%

Lesa Lataria Engiadinaisa SA

Bever

CHF

2,000

80%

80%

Mittelland Molkerei AG

Suhr

CHF

20,000

100%

100%

Molkerei Biedermann AG

Bischofszell

CHF

1,010

100%

100%

MOPRO Luzern AG

Lucerne

CHF

120

100%

100%

Regio Molkerei beider Basel AG

Frenkendorf

CHF

3,000

80%

80%

Swissexport, Aktiengesellschaft Schweizerischer Käseexporteure

Berne

CHF

100

79%

79%

Spain

 

 

 

 

 

Admilac Servicios Profesionales, S.L.

San Sebastian

EUR

3

73%

73%

Altamira Alimentaria, S.L.

Renedo

EUR

3

73%

73%

Kaiku Corporación Alimentaria, S.L.

San Sebastian

EUR

82,110

73%

73%

Kaiku Internacional, S.L.

San Sebastian

EUR

77,877

73%

73%

Kaiku Km0, S.L.

Bilbao

EUR

625

73%

73%

Lácteos de Navarra, S.L.

Pamplona

EUR

9,647

73%

73%

Lecherias de Madrid, S.L. 1)

Madrid

EUR

3

29%

Llet Nostra Alimentaria, S.L.

Barcelona

EUR

2,764

33%

33%

SDA Bilbao, S.L.

Bilbao

EUR

3

73%

73%

SDA Catalunya

Barcelona

EUR

3

53%

53%

SDA Guipuzcoa, S.L.

Bilbao

EUR

3

73%

73%

Servicios Logisticos Jundiz, S.L.

Vitoria

EUR

102

73%

73%

Soc. Servicios Logísticos SDA Central, S.L.

Bilbao

EUR

3

73%

73%

Tecnología y Calidad Láctea, S.L.

San Sebastian

EUR

3

73%

73%

1) Lecherias de Madrid, S.L. was founded on 28 November 2022.

Consolidated companies

Head office

Currency

Capital in 000s 31.12.2022

Capital share 31.12.2022

Capital share 31.12.2021

Italy

 

 

 

 

 

Emmi Dessert Italia S.p.A.

Milan

EUR

1,000

100%

100%

Emmi Holding Italia S.r.l.

Milan

EUR

1,714

100%

100%

Emmi Italia S.p.A.

Milan

EUR

500

100%

100%

Pasticceria Quadrifoglio S.r.l.

Piumazzo

EUR

104

100%

100%

Netherlands

 

 

 

 

 

AVH dairy trade B.V. 2)

Heerhugowaard

EUR

18

100%

90%

Bettinehoeve B.V. 2)

Etten-Leur

EUR

18

100%

90%

Emmi Benelux B.V.

Tiel

EUR

525

100%

100%

Emmi Finance Netherlands B.V.

Tiel

EUR

p.m.

100%

100%

Emmi Javelin B.V. 3)

Tiel

EUR

100%

Goat Milk Powder B.V. 4)

Etten-Leur

EUR

1

100%

81%

Germany

 

 

 

 

 

Emmi Deutschland GmbH

Essen

EUR

75

100%

100%

Gläserne Molkerei GmbH

Dechow

EUR

375

100%

100%

Gläserne Molkerei Münchehofe GmbH

Münchehofe

EUR

100

100%

100%

Hofmolkerei Münchehofe GmbH

Münchehofe

EUR

25

100%

100%

Molkerei Biedermann GmbH

Constance

EUR

25

100%

100%

France

 

 

 

 

 

Distribution Frais Disfrais SAS

Avignon

EUR

192

100%

100%

EF Immo 84 SCI

Nice

EUR

270

100%

100%

Emmi France SAS

Nice

EUR

3,927

100%

100%

Ets Schoepfer SAS

Avignon

EUR

1,252

100%

100%

Austria

 

 

 

 

 

Emmi Österreich GmbH

Nüziders

EUR

2,800

100%

100%

Hale GmbH 5)

Wartberg

EUR

18

83%

66%

Leeb Biomilch GmbH 5)

Wartberg

EUR

70

83%

66%

United Kingdom

 

 

 

 

 

Emmi UK Limited

London

GBP

4,717

100%

100%

Tunisia

 

 

 

 

 

Centrale Laitière de Mahdia, S.A.

Mahdia

TND

36,000

47%

47%

Société tunisienne d'engraissement des veaux S.A.R.L. in liquidation 8)

Mahdia

TND

140

47%

47%

2) Emmi increased both of its stakes in AVH dairy trade B.V. and Bettinehoeve B.V. from 90% to 100% on 11 April 2022.

3) Emmi Javelin B.V. was merged with Goat Milk Powder B.V. on 29 June 2022.

4) Emmi increased its stake in Goat Milk Powder B.V. from 81% to 100% on 11 April 2022.

5) Emmi increased both of its stakes in Hale GmbH and Leeb Biomilch GmbH from 66% to 83% on 26 April 2022.

Consolidated companies

Head office

Currency

Capital in 000s 31.12.2022

Capital share 31.12.2022

Capital share 31.12.2021

United States

 

 

 

 

 

Bello LLC

Delaware

USD

6,948

88%

88%

Classe Foods LLC

Delaware

USD

p.m.

88%

88%

Cypress Grove Chèvre, Inc.

Arcata

USD

202

100%

100%

Emmental Cheese Corp.

Orangeburg

USD

6

100%

100%

Emmi Dessert Intermediate Holdings (USA) LLC

New York

USD

7,988

100%

100%

Emmi Dessert Participations (USA) Corp.

Delaware

USD

18,195

100%

100%

Emmi Dessert USA LLC

Delaware

USD

75,521

88%

88%

Emmi Equator RTD Coffee LLC 6)

Delaware

USD

p.m.

70%

Emmi Holding (USA), Inc.

Orangeburg

USD

1

100%

100%

Emmi Resume LLC

Delaware

USD

p.m.

100%

100%

Emmi Roth USA, Inc.

Monroe

USD

2

100%

100%

Emmi USA Inc.

Orangeburg

USD

800

100%

100%

Jackson-Mitchell, Inc.

Turlock

USD

27

100%

100%

Luce Foods LLC

New Jersey

USD

22,214

88%

88%

Luna Foods LLC

Delaware

USD

4,903

88%

88%

Redwood Hill Farm & Creamery, Inc.

Sebastopol

USD

835

100%

100%

Switzerland Cheese Marketing (USA) Inc.

Orangeburg

USD

1

79%

79%

Tomales Bay Foods, Inc.

Petaluma

USD

895

100%

100%

Vivi Foods LLC

New York

USD

11,411

88%

88%

Zingg + Co. Inc.

Orangeburg

USD

1

100%

100%

Mexico

 

 

 

 

 

Alimentos Finos del Sureste, S.A. de C.V.

Cancun, Qroo

MXN

100

41%

41%

Comalca 2000, S.A. de C.V.

Cancun, Qroo

MXN

14,960

41%

41%

Comalca Gourmet, S.A. de C.V.

Cancun, Qroo

MXN

12,623

41%

41%

Distribuidora Internacional de Lacteos, S.A. de C.V.

Mexico City

MXN

50

38%

38%

Distribuidora Mexideli, S.A. de C.V.

Mexico City

MXN

100

51%

51%

Mexideli 2000 Holding S.A. de C.V.

Mexico City

MXN

101,759

51%

51%

Mexideli, S.A. de C.V.

Mexico City

MXN

68,350

51%

51%

Tecnologias Narcisco, S.A. de C.V.

Mexico City

MXN

60

51%

51%

Chile

 

 

 

 

 

Chevrita S.p.A.

Santiago

CLP

676,077

38%

38%

Distribuidora de Alimentos Chile S.p.A.

Santiago

CLP

798,271

38%

38%

Eurolac Chile S.p.A.

Santiago

CLP

47,040,582

73%

73%

Surlat Corporación S.p.A.

Santiago

CLP

47,008,983

73%

73%

Surlat Industrial S.p.A.

Pitrufquen

CLP

31,310,389

38%

38%

Quillayes Peteroa S.p.A.

Santiago

CLP

12,222,584

38%

38%

Quillayes Surlat S.p.A.

Santiago

CLP

54,392,884

38%

38%

Quillayes Surlat Comercial S.p.A.

Santiago

CLP

7,934,483

38%

38%

Canada

 

 

 

 

 

Emmi Canada Inc.

Saint-Hubert

CAD

19,150

100%

100%

Switzerland Cheese Marketing Inc.

Saint-Hubert

CAD

1

79%

79%

9314 – 8591 Québec Inc.

Saint-Hubert

CAD

3,137

100%

100%

Brazil

 

 

 

 

 

Emmi do Brasil Holding Ltda.

Sao Paulo

BRL

825,000

100%

100%

Laticínios Porto Alegre Indústria e Comércio S.A.

Ponte Nova

BRL

463,312

70%

70%

6) Emmi Equator RTD Coffee LLC was founded on 23 March 2022.

The percentage of voting rights controlled by the Emmi Group in the subsidiaries of Kaiku Corporacion Alimentaria, S.L. and the subsidiaries of Mexideli 2000 Holding S.A. de C.V. differs from the capital share since Emmi controls these subsidiaries through its control of the parent companies.

Associates and joint ventures

Head office

Currency

Capital in 000s 31.12.2022

Capital share 31.12.2022

Capital share 31.12.2021

Switzerland

 

 

 

 

 

BO Butter GmbH

Berne

CHF

500

33%

33%

Cetra Holding SA

Mezzovico-Vira

CHF

250

34%

34%

FDC Fromagerie de Courgenay SA

Courgenay

CHF

990

25%

25%

Floralp Butter GmbH 1)

Berne

CHF

125

33%

Sbrinz Käse GmbH

Sursee

CHF

180

24%

24%

Switzerland Cheese Marketing AG

Berne

CHF

290

23%

23%

Thurgauische Käse-Reifungs AG

Weinfelden

CHF

2,000

25%

25%

Spain

 

 

 

 

 

Batiovo I.A.E.

Madrid

EUR

12

37%

37%

NaturAll BBVV-2018, S.L.

Corella

EUR

2,617

18%

18%

Serkolat Bide, S.L.

San Sebastian

EUR

8

37%

37%

Italy

 

 

 

 

 

Ambrosi S.p.A.

Brescia

EUR

10,000

25%

25%

Sepa S.r.l.

Pieve Porto Morone

EUR

100

40%

40%

Germany

 

 

 

 

 

Carl Fr. Scheer GmbH + Co. KG

Willstätt

EUR

500

25%

25%

Scheer Verwaltungs u. Beteiligungs GmbH

Willstätt

EUR

26

25%

25%

United States

 

 

 

 

 

Big Red Cheese Company LLC

Monroe

USD

p.m.

50%

50%

EB Snacks LLC

Delaware

USD

2

50%

50%

Emmi Meister LLC

Fitchburg

USD

2

50%

50%

Kindred Creamery LLC

Fitchburg

USD

1

30%

30%

1) Floralp Butter GmbH was founded on 21 December 2022.