Dear Shareholders

Emmiʼs positive sales performance in the fourth quarter of 2017 continued in the first months of the current year with the Group benefiting in particular from strong sales in the business division Europe. The business divisions Switzerland and Americas were also able to post organic sales growth.

In total, Emmi generated Group sales in line with the full-year forecast published in March 2018. The business divisions Switzerland and Americas met expectations while the business division Europe clearly exceeded them.

Pleasing organic sales growth

Sales at Group level were CHF 1,674.8 million, an increase of 4.7 % compared to the first six months of 2017. In organic terms, i.e. excluding currency and acquisition effects, this resulted in a rise of 2.4 %.

The positive sales trend was primarily apparent in the international markets. The good performance was broad-based. The business division Switzerland again faced considerable pressure on prices and from imports but was able to post organic growth thanks to higher milk prices. In the business division Europe, Emmi Caffè Latte grew considerably in a number of markets and the dessert business also achieved pleasing growth. In the business division Americas, Emmi made good progress in key strategic markets. We are particularly satisfied about the fact that Chile has recovered and is returning to growth.

Higher EBIT, stable EBIT margin

In the first half of 2018, Emmi generated an EBIT of CHF 95.0 million, compared to CHF 90.4 million in the previous year, corresponding to an increase of 5.1 %. The EBIT margin was stable at 5.7 % despite the highly competitive environment. This result again demonstrates the importance of Emmiʼs cost-saving programme, which has now been implemented for a decade.

Furthermore, net profit amounted to CHF 129.0 million, almost doubling compared to the previous yearʼs figure of CHF 66.0 million. The net profit margin was 7.7 % (previous year: 4.1 %). The sharp increase is the result of the sale of the minority stake in the US-based company The Icelandic Milk and Skyr Corporation “siggiʼs”. Shareholders benefited from the sale through a special dividend in spring 2018. Adjusted for this non-recurring effect, net profit was CHF 72.1 million (a rise of 9.2 %) and the net profit margin was 4.3 %.

Organic growth remains a challenge

Compared to the first half of 2017 when sales were weak, Emmi has posted a clearly improved performance. However, sales in the second half of 2018 will be compared to a period shaped by an extremely strong final quarter of 2017. Emmi therefore expects that the growth curve will flatten in the second half. Alongside organic growth, the emphasis will be on cost management – in Switzerland and abroad. The dessert business in Italy is being brought together under one roof. We hope that this will generate synergies in production, sales and above all in the development of new products. Innovation is also an important driver of success in this business.

Effective brand concepts as a solid basis

Emmi will rely on proven brands and support them with innovations in the second half of the year. In Switzerland, the focus is on new varieties of the high-protein Yoqua yogurt and a Kaltbach-aged mountain cheese. A vegan range of yogurts has just been launched in Spain, and in Germany Gläserne Molkerei recently began manufacturing “pure” yogurts based on the Jogurtpur concept, but organic. We also expect more momentum in cheese, where sales did not always meet expectations in the first six months.

Emmi is doing everything it can to continue to achieve organic growth in the second half of 2018 while also securing earnings. The conditions for this are right although our competitors will not make it easy for us.

Konrad Graber Chairman of the Board of Directors

Urs Riedener CEO