Editorial

Dear Shareholders

The Emmi Group continued to perform well in the first half of 2024 in a market environment that remains challenging and is continuing to pursue its proven corporate strategy with a focus on systematic transformation of the portfolio.

Through their passion, expertise and craftsmanship, our employees impressively demonstrate the innovative power that lies in processing the natural product milk and what makes us who we are as Emmi: producing high-quality dairy products with the utmost care and respect for people and nature, in order to create the best dairy moments for our consumers. This is entirely in line with our long-term responsibility as a company – both today and for future generations.

We are committed to the focused implementation of our strategy and our robust business model to guarantee the continued economic success of the Emmi Group and ensure its ongoing development in line with our strategy. By means of our unique, innovative brand concepts and our diversified country portfolios, our agile, deeply rooted local organisations inspire our consumers around the world.

“Thanks to our teams’ great performance, Emmi has maintained its focused development and set a strategic course for the future.”

Ricarda Demarmels

Broad-based profitable volume growth

Emmi posted sales of CHF 2,017.2 million in the first half of 2024, which, as expected, was below the previous year’s figure. As expected, negative acquisition effects of 2.2% in the reporting year and negative currency effects of 1.9% weighed on sales performance. The encouraging, broad-based and profitable volume growth offset the negative price effects, driven largely by milk prices, resulting in flat organic sales growth.

The Swiss home market posted a slight organic decline in sales of 0.2%, which was attributable to the lower milk prices set by the dairy industry organisation (Branchenorganisation Milch) during the reporting period. The overall positive volume growth partially made up for the decline in sales driven by milk prices. Leading innovative brand concepts such as Emmi Caffè Latte, Emmi Energy Milk, Aktifit and Luzerner Rahmkäse performed particularly well. The iconic Emmi Caffè Latte brand is delighting its fans during its 20th anniversary year with creative marketing campaigns throughout Switzerland.

The division Americas experienced a subdued growth trend, with the result that organic growth amounted to 0.1%, which was below expectations for the year as a whole. This was primarily due to the ongoing milk shortage in Tunisia and the anticipated reduction in volumes in the US dessert business. Although overall sales in the cheese segment were slightly down, exports of Swiss cheese specialities and Athenos, the number one in the US feta market, continued to grow. The primary growth drivers in the division Americas include the key markets of ­Brazil and Chile, Darey Brands in the US and the trading company Mexideli.

The division Europe recorded organic growth of 2.0%, which exceeded its expectations for the year as a whole. Emmi UK, which achieved strong volume-­driven growth, in particular for Emmi Caffè Latte, was a positive highlight in this regard. In the strategic niche of premium desserts, the product portfolios of Emmi Dessert Italia and ­Pasticceria ­Quadrifoglio are characterised by high quality and a clear customer focus. Swiss speciality cheese from Kaltbach once again saw substantial year-on-year growth, particularly in the German and Dutch markets, thanks to its premium quality. Finally, the goat’s milk powder business in the Netherlands also posted stronger sales despite the persistently challenging environment in the Asian ­market, and offers the potential for ­further growth.

Better results thanks to portfolio transformation and progress in foreign markets

Profitable volume growth, continuous portfolio transformation and efficiency programmes were systematically pursued in the first half of 2024, along with a high degree of cost discipline, resulting in steadily improving operating results and margins. The progress made can be seen first and foremost in a significantly higher gross profit margin of 38.9% (previous year: 36.9%), particularly in the international business of the dessert companies in Italy and the USA, companies from the Kaiku Group in Spain, Chile and Tunisia, and in Brazil. The significant increase in personnel costs, which is a side-effect of the high inflation of recent years, reduced this growth at the gross profit margin ­level, but nonetheless resulted in encouraging margin improvements at the EBIT and net profit levels.

Operating result at the EBIT level ­increased to CHF 140.3 million in the first half of 2024 (previous year: CHF 138.5 million), which corresponds to an EBIT margin of 7.0% (previous year: 6.6%). Net profit increased to CHF 104.4 million (previous year: CHF 97.8 million), with a net profit margin of 5.2% (previous year: 4.6%).

Acquisitions in strategic niches and markets

In the first half of the year, the Emmi Group continued with the systematic expansion of its portfolio through strategic acquisitions in Brazil, its Swiss home market and Europe. All acquisitions are characterised by a high strategic and cultural fit, enabling the Emmi Group to serve relevant consumer needs in categories that are growing profitably. This approach not only strengthens the Emmi Group, but also secures its economic success over the long term. In the key market Brazil, Emmi reinforced its market position through the acquisition of Verde Campo in May 2024. The strong and well-established brand is regarded as a pioneer in the high-quality protein segment, offering innovative and functional premium dairy products. In June 2024, Emmi announced the acquisition of its long-standing partner, the Lucerne-based coffee roaster Hochstrasser, in order to strengthen its coffee expertise. This will ensure Emmi’s outstanding barista quality and innovative development of the iconic Emmi Caffè Latte in the long term.

After the balance sheet date, the Emmi Group also concluded a put option agreement for the acquisition of the French Mademoiselle Desserts Group. The contemplated acquisition will strengthen the strategic category of premium desserts and add French desserts to the portfolio. This would make Emmi a “category captain” with the ability to offer a comprehensive range of high-quality, innovative products. Concurrently, the classic retail channels will be augmented to encompass the in-store bakery segment, and the food service channel will be significantly strengthened. The contemplated acquisition will open up new market opportunities for Emmi, enabling the company to assume a leading global role in the constantly growing and profitable premium dessert category as a “Desserts Powerhouse”.

Strong local ties and a long-standing commitment to responsibility since 1907

Ever since its beginnings in 1907, the Emmi Group has stood for a commitment to sustainability that is deeply rooted in its business model and strategy. We firmly believe that, as a company, we must seek to reconcile economic, social and ecological aspects in order to achieve sustainable and profitable growth. It is a belief that we live out on a daily basis. In collaboration with Coop, Emmi took an important step at the start of the year towards achieving the sustainability goals of both companies by launching a recyclable PET bottle for milk and dairy products. This environmentally friendly packaging innovation is currently the only one in Switzerland that can be recycled and reprocessed in a closed-loop system.

In line with its sustainability objectives, Emmi is dedicated to promoting a more sustainable dairy industry. In Switzerland, Emmi co-initiated the industry initiative “KlimaStaR Milk” with Nestlé, aaremilch AG, ZMP and AgroCleanTech in 2022. At the end of May 2024, all of the partners carried out the first comprehensive assessment of the pioneering project, with uniformly positive results. The calculation of the greenhouse gas emissions of the companies was significantly lower than expected and the most important levers to further reduce them were identified. Furthermore, the objectives set for reducing food competition were met. The challenge is to combine both objectives, which is something that all participating companies are striving to accomplish.

Efforts to promote sustainability have also been stepped up internationally. 80% of the milk volume purchased by the subsidiary Quillayes Surlat in Chile is certified with the AENOR animal welfare label, which makes Quillayes Surlat the first South American company to buy milk certified with this animal welfare label.

“We are pursuing our ambitious strategy with a focus on responsibility and treating all stakeholders with respect.”

Urs Riedener

Confirmation of 2024 outlook ­excluding acquisition effects

Emmi is maintaining its sales and earnings outlook, excluding the potential effects of the contemplated acquisition of the Mademoiselle Desserts Group, and continues to expect an EBIT of between CHF 295 million and CHF 315 million as well as a net profit margin of between 5.0% and 5.5% for 2024. It is not yet possible to reliably estimate the impact of the contemplated acquisition of the Mademoiselle Desserts Group on full year 2024 due to the fact that the closing date has not yet been determined and the effects of the purchase price allocation cannot currently be determined with sufficient accuracy. Emmi expects sales growth to be slightly higher in the second half of the year than in the first, despite the persistence of volatile market conditions. For 2024 as a whole, Emmi continues to ­anticipate organic sales growth of 1% to 2% at Group level.

Continuity in supervision and management

At the 2024 Annual General Meeting, the shareholders of Emmi AG re-elected all members of the Board of Directors for a new term of office by a substantial majority and also confirmed Urs Riedener as Chairman by a sizeable majority. The Board of Directors has appointed Oliver Wasem as CFO and a new member of Group Management as of 1 July 2024, succeeding Sacha D. Gerber. Oliver Wasem has played a key role in shaping the transformation of the Emmi Group’s finance function since 2013 as Head of Group Controlling and Deputy CFO, and has also been responsible for Investor Relations since 2023.

Together with its almost 10,000 employees, the Board of Directors and Group Management are dedicated to ensuring Emmi’s sustainable economic success on a daily basis through passion, expertise and innovation. We would like to thank everyone for their hard work.

Urs Riedener

Chairman of the Board of Directors

Ricarda Demarmels

CEO