Editorial

Dear Shareholders

In the first half of 2023, Emmi posted a solid performance in an ongoing challenging market environment. It continued to implement its strategy with clarity and consistency and made significant progress at the operational level compared to the difficult first half of 2022. Our employees around the world have once again impressively and enthusiastically demonstrated the many benefits that Emmi provides: Together, we produce high-quality dairy products with care and consideration for both people and nature in order to create the best dairy moments for our consumers – today and for generations to come. Our responsible business model geared towards long-term profitable growth as well as our focused strategy help us to do the right thing and remain economically successful. Our approach is based on unique, innovative brand concepts, a diversified portfolio and an agile organisation with a strong local presence.

“Emmi is pursuing its growth strategy with passion and respect for people and nature.”

Urs Riedener

Strong sales growth along strategic priorities

The broad-based, price-driven organic sales growth of 6.5% in the first half of 2023 is based on the consistent implementation of strategy and differentiated market positions with innovative brand concepts as well as the diversified country and product portfolio.

Thanks to leading brand concepts such as Emmi Caffè Latte, Emmi Energy Milk and Jogurtpur and close cooperation with our customers, and supported by the renewed dynamism in the food service business, sales in the Swiss home market developed positively with organic growth of 6.0%.

In the international business, the strong momentum in the division Americas continued with organic growth of 9.6%. Markets such as Chile, the USA, Spain, Brazil and Mexico recorded significant growth, and the chilled premium desserts business in the USA performed particularly well. The division Europe reported modest organic growth of 2.0% due to the challenging economic environment. However, sales of Emmi Caffè Latte and fresh goat’s cheese at Bettinehoeve were positive, while the export business with cheese from Switzerland and the goat’s milk powder business in the Netherlands hampered sales performance.

High capacity for innovation in strategic markets and niches

Our strategic pillars have once again proven themselves to be important drivers of growth. With new ready-to-drink coffee varieties from Emmi Caffè Latte, which appeal specifically to Generation Z, we have succeeded in reaching a younger target group. Emmi recorded strong growth in the chilled premium desserts segment in the USA thanks to its high quality, innovative strength and customer focus. In the speciality cheese sector, the pressure on exports from Switzerland remains high. Nevertheless, we were able to achieve pleasing growth at Group level. The integration of Athenos’ leading feta business in the key US market provided a significant boost to sales. However, performance in the area of plant-based milk alternatives is challenging.

Our core priority is innovation that is geared towards relevant consumer trends and along growing categories. With our innovative brand concepts such as Emmi Caffè Latte with Fun Latte in Switzerland and Europe, Bontà Divina with a sugar-free, protein-enriched chocolate mousse in Italy, Cypress Grove with a cheddar made from goat’s milk in the USA or Kaiku with a vegan Greek yogurt in Spain, we were once again able to inspire consumers with our products. Even outside our strategic niches, we impressed in Switzerland with innovations such as the Globi sales promotion for Aktifit, organic milk in reusable glasses or milk packaging featuring Disney characters.

Responsibility through conviction

In line with our aspiration to be a role model in sustainability, as anchored in our corporate strategy, we published our seventh Sustainability Report in June 2023. This report provides an account of our long-standing commitment to sustainability and shows a positive overall development in all three areas of activity: employees, society and the environment. Together with partners, Emmi has established a science-based list of criteria for sustainable milk outside Switzerland. The co-initiated resource project “KlimaStaR Milch”, which aims to make the Swiss dairy industry more competitive in terms of climate protection as well as food and land competition, also got off to a successful start. Emmi likewise recorded a good performance in terms of decarbonising its energy supply and reducing waste and food waste.

Improved results thanks to recovery in international markets

Thanks to operational advances, − particularly in the strategic niche of chilled premium desserts in the USA and in the important growth market of Chile, as well as continuing strong performance in Mexico and the ongoing recovery of the food service business, Emmi managed to improve significantly on the first half of 2022. Our major efforts with regard to efficiency programmes also had a supporting effect, as did our cost discipline and responsible price increases, which almost compensated for the significant increase in input costs.

The operating result at EBIT level increased by CHF 29.9 million to CHF 138.5 million in the first half of 2023, which corresponds to an EBIT margin of 6.6% (previous year: 5.4%). Net profit was CHF 97.8 million (previous year: CHF 78.1 million) and the net profit margin was 4.6% (previous year: 3.9%).

Ongoing portfolio­ transformation

As part of its ongoing and consistent portfolio transformation and its focus on profitable and strategic markets and niches, Emmi announced the disposal of Gläserne Molkerei on 6 July 2023, which was completed on 14 August 2023. This transaction has not yet had any impact on the half-year financial statements. In the second half of 2023, however, it will result in a one-off loss of around CHF 38 million in EBIT and around CHF 30 million in net profit. The negative cash impact of the transaction amounts to approximately CHF 10 million.

On 3 July 2023, Emmi also completed the sale of the non-strategic minority stake in Ambrosi in Italy, which was announced in the previous year. This transaction has also not had any impact on the half-year financial statements. However, it will have a positive effect of around CHF 3 million on net profit in the second half of 2023.

“Thanks to the hard work and great dedication shown by our teams, Emmi has been able to consolidate its position in an ongoing challenging environment.”

Ricarda Demarmels

Confirmation of forecasts on a disposal-adjusted basis

Emmi maintains its outlook, adjusted for the special effects from the disposal of Gläserne Molkerei and Ambrosi as mentioned above, and expects organic sales growth of 3.0% to 4.0%, adjusted EBIT of CHF 275 million to CHF 295 million and an adjusted net profit margin of 4.5% to 5.0% for 2023 as a whole. Emmi is also sticking to its medium-term forecast.

Continuity in supervision and management

The Annual General Meeting elected Urs Riedener as the new Chairman of the Board of Directors in April 2023. We would like to thank the outgoing Chairman Konrad Graber for his tireless efforts to secure a strategically sound footing for the Emmi Group over his many years of successful collaboration. Former CFO Ricarda Demarmels succeeded Urs Riedener as CEO of the Emmi Group at the beginning of the year. Sacha D. Gerber took up his position as the new CFO on 1 June 2023, and Raffael Payer will complete Group Management as the new CMO effective 1 October 2023. The Board of Directors and Group Management, backed by a strong management team and over 9,000 dedicated employees, are committed to making sure that Emmi stays on its course for success. We would like to thank each and every one of them for their hard work and loyalty.

Urs Riedener

Chairman of the Board of Directors

Ricarda Demarmels

CEO