Swiss cheese maker Emmi said it was on track to meet its full-year targets after a first half performance boosted by acquisitions and product launches.
Turnover for the first six months of 2003 was SF921 million (€592m), up 50 per cent on the previous year as a result of the acquisition of a number of companies during 2002. Profits were boosted by the rise in sales but also by a strong performance from the company's innovative chilled products range, rising by 100 per cent to SF23 million.
Difficult conditions in the market for Emmentaler exports took their toll on operating profits, although Emmi said that at SF60.5 million, EBITDA growth of 49 per cent was only slightly lower than had been expected.
The strong increase in sales was helped by the successful integration of the various businesses acquired by Emmi over the last year, including cheese maker Tiger and the Bern-Ostermundigen.
The restructuring of its chilled products division has also led to a significant improvement in sales at this division. In both the domestic and export markets, innovative products such as Aloe Vera yoghurts and the good summer weather helped the company increase sales of yoghurt drinks, yoghurt, ice cream and mozzarella during the first half.
The hot weather also failed to dent sales of Emmi's Swiss cheese brands, which posted a 17 per cent increase, while the dairy products division was boosted by a 39 per cent increase in the market share for cream.
Emmi also benefited from a considerable improvement in its German business, where the Aloe Vera yoghurt and yoghurt drink, and good sales its semolina dessert, all contributed to a significant upturn in earnings. Further gains are expected in the second half, and Emmi is confident that it has the right mix of products to finally break into the notoriously difficult German dairy market.
Overproduction in the Emmenthaler market will continue to weigh heavily on profits in the second half, Emmi said, as it will not be able to implement the much needed price increases to compensate for the cessation of state export subsidies for the cheese in November.
Emmi is nonetheless continuing with its efforts to revamp the Emmenthaler market, not least by reducing production levels and increasing the marketing support for its Emmi brand in a bid to increase consumer loyalty.
The recent link up with the US company Johnson & Johnson, distributor of Benecol, the cholesterol-cutting ingredient made by Finland's Raisio group, is also set to give a major boost to sales in the second half. Following the successful launch of a range of Emmi chilled products containing the novel ingredient in Spain, Portugal and Switzerland, the Swiss group is targeting the UK and France in the second half of 2003 and early 2004.
After a period of rapid expansion, the company is now investing in its new businesses, with SF17 million already set aside for a new ice cream storage facilty at the Bern-Ostermundigen dairy which will allow Emmi's Lusso Foods subsidiary to signficantly increase its output.
Emmi is also intensifying its efforts in the cheese sector, with an expansion of the Kirchberg BE service centre costing SF35 million.
With a good second half expected, despite ongoing problems in the Emmenthaler export market, Emmi said it hoped to see a 35 per cent increase in sales to SF1.1 billion for fiscal 2003, while profits would be around SF42 million.