emmi: on track for further growth · social media recently acquired: key brand roth cheese us...

Helvea conference, Bad Ragaz

Reto Conrad, CFO Emmi Schweiz AG

Bad Ragaz, 12 January 2012

Emmi:On track for further growth

Emmi in brief

Appendix

Key success drivers

Key financials and outlook

Investments and innovation

Helvea Bad Ragaz, January 2012; Emmi: On track for further growth Page 3

Vision § Long-term success as an independent company in openmarkets

Market positioning § No. 1 among Swiss milk processors

§ The top company for Swiss cheese, both withinSwitzerland and abroad

§ A leading company in Europe for premium dairy products

Growth § 2 – 3 % (innovations, gains in market share and smallacquisitions)

Profitability § 2.5 – 3.5 % net profit margin (new guidance)

Shareholders’ equity § Equity ratio of at least 40 %

Independent and successful in open markets

Strategy and vision


BackgroundStrategic pillars

Success factors

§ Critical company size/ key international player§ Early, proactive

adjustment to marketdevelopments§ Close customer

relationship beyondprice; reduction of interchangeability§ Competitive pricing/

"Fitness for European market"

§ Swiss market saturated; international growth§ Market liberalization in

all segments§ Discrepancy vis-à-vis

EU milk price§ Competition consolidation§ Customer consolidation§ Intensified price pressure

nationally / internationally

Emmi wants to become an international player withcompetitive structures

Defence of positionwithin Switzerland

International growth

Cost management

Helvea Bad Ragaz, January 2012; Emmi: On track for further growth

Dairy products27.8 % (CHF 365 Mio.)

Other products and services

6.7 % (CHF 87 Mio.)

Powder/concentrates3.3 % (CHF 44 Mio)

Cheese31.5 % (CHF 413 Mio.)

Fresh cheese7.1 % (CHF 92 Mio.)

Fresh products23.6 % (CHF 309 Mio.)

Product groups (net sales 1HY2011)

Broadly based product portfolio

Total net sales 1HY2011: CHF 1310 Mio.; Total 2010: CHF 2 684 Mio..


One Word EquityEmmi

Product Brands

One Word EquityBrands

Emmi PositionStatement

Original WellbeingInspirationRefinement

IndulgenceSwiss & local

jewels

Strengthening of brand concepts

Emmi’s house of brands

GenuinePremium Indulgence


Most important production sites in Switzerland

Constantly improved productivity and efficiency

Emmen LU

Kirchberg BE

Landquart GROstermundigen BE

Langnau BE

Dagmersellen LU

Kirchberg BE

Suhr AG


Expansion through subsidiaries and cooperations

International base

Canada

France SwitzerlandSpain

United Kingdom

Germany

Austria

Benelux

43% Kaiku

USA, Monroe, WIEmmi Roth Inc.

Penn Yan, NYCASP

USA, Arcata, CACypress Grove Ch.

ItalyRoverè della Luna

ItalyRancio Valcuvia

Emmi in brief

Appendix

Key success drivers


Acquisitions and innovation


Focus in 2011

CH: Optimized product portfolio; Intl: mix of local products and Swiss exports

Switzerland: Strong brand concepts§ Organic growth with high value brands

§ Successful launch of new products: Emmi Milk Shake, Emmi Mini Marinati

§ Elimination of low-margin generics

§ Reduction of 3rd party logistics services

§ Extensive tailor-made product and services packages for the trade

§ Additional cost saving initiatives due to the rough market environment

Stable market share

International: Successful acquisitions§ Extended distribution with recently

acquired local brands (Onken, Roth, Cypress Grove Chèvre, Bontà Divina)

§ Focussed marketing for exports out of Switzerland

§ Price increases to compensate for currency disadvantages

8 – 12 % growth in sales


0

10

20

30

40

50

60

70

80

90

100

2006 2007 2008 2009 2010 2011

CH ExportSource: quantity ordered from our plants

Key brand: Emmi Caffè Latte

Emmi Caffè Latte continues to grow

Million cups

Estimate

§ Growth 1HY 2011: + 6.2% (Switzerland +11%, Intl. + 4%)

§ 2011 as a whole: Single-digit increase in sales is realistic

2011:Solid growth in key markets likeSwitzerland, Austria, Spain and UK


Achievements in 2011 Activities for 2012

Results 2011: Double-digit growth in volume and salesPotential going forward: at least high single digit growth

§ Intregration completed§ New marketing team set up§ Various promotion activities with trade§ New limited edition “Sicilian Lemon”

on sale since August

§ Removal of Dr. Oetker branding from all pots from August

§ TV sponsorship “Let’s do lunch” on ITV1 August / September

§ Sharpened brand positioning (Honest Tasty Pleasure)

§ New packaging by May

§ Extensive campaign starting in June(Print, TV, social media)

§ New products: two limited editions,additional product range

§ Clear channel strategy

Recently acquired:Key brand Onken

No. 1 within branded big-pot yogurts in the UK


Achievements in 2011 Activities for 2012§ Sales specialization: food service,

retail and specialty retail

§ Increasing range expertise in Swiss export cheese and locally produced cheese

§ Relaunch of all "Swiss" products in red and white packaging (August)

Positioning as the expert for specialty cheese

§ Cheese education program in the food service sector –> partnerships with key chefs and Culinary Institute of America

§ Recipe contest to all Chefs

§ Various Gruyère promotions, also in retail

§ Launch of new types of fondue, also using social media

Recently acquired:Key brand Roth cheese

US market: Wide range of cheese and fresh products

Four-year average growth: Market 5.5%, Emmi Roth 15%Potential going forward: Growth clearly above market, assuming that market growth will be slightly more moderate


Emmi-Roth USA: Cheese experts for the food service industry

Activities for restaurant chains

§ Culinary advisory services- infrastructure- product range- nutrition facts- menus

§ Cooking classes for Chefs§ Development of recipes§ State-of-the-art test and show kitchen


Achievements in 2011 Activities in 2012

Results 2011: Solid double-digit growthPotential going forward:Solid double-digit growth

§ New range “The Flash Back Family”§ Strong social media presence § New trends (e.g. cheese matching with

beer)§ Cheese “education”: recipes, advice§ Innovative marketing activities (eg.

Wedding cheese cake)

§ 20th birthday of Humboldt fog§ Cheesemonger’s education program§ Website re-do, blog launch, content

creation for social media§ Increased number of tasting events§ Finalize expansion projects

Expansion of cheese range in the US

Recently acquired:Key brand Cypress Grove Chèvre


Recently acquired:Key brand Bontà Divina

A-27 SpA offers new business opportunities

Achievements in 2011 Activities for 2012§ Assessment synergies in Benelux & UK§ Re-definition of marketing mix§ Redesign of packaging§ Development of new products in the top-

range Bontà Divina Delizia§ Evaluation of synergies in further

markets

§ Integration into Emmi’s books§ Definition of synergy potential in

Emmi's key markets§ Merging of sales organizations

1st priority: Germany starting Jan 1, 2012§ Definition of investment case for

2012 and 2013

Results 2011: Double-digit growthPotential going forward: Solid double-digit growth


0 50 100 150 200

2010

2009

2008

2007

2006

2005

Emmi's expansion in the premium dessert market

A-27 SpA is well established in Emmi's key markets

Million portions

Production volumes Most important markets (2010)

§ Maximum capacity was reached in 2009

Belgium; 6%

Australia; 2%

Netherlands; 2%

France; 44%

Germany; 14%

UK; 12%

Italy; 20%

Emmi in brief

Appendix

Key success drivers




International Switzerland

CHF million

1133 1479

256

414 447

587

18261465 1583

444

509

0

500

1,000

1,500

2,000

2,500

2002 2003 2004 2005 2006 2007

1389

1879 1926 2027

23352501

2008

3,000

1914

2671 2619

626

2045

2009

675

1944

50%

50%

In 4-6 years

732

1952

2684

2010

Sales 2002 - 2010 and the long-term goal

Continuous growth with medium-term 50/50 ratiointernational and Switzerland


0

50

100

1HY2007 1HY2008 1HY2009 1HY2010 1HY2011 mid-term

Production abroad Export CH

75%

25%

65%

35%

54%

46%

62%

38%

74%

26%

Percent

Important acquisitions2006: Trentinalatte (Italy)2009: Roth Cheese (US)2010: Cypress Grove Chèvre (US)

Fromalp (CH)2011: Onken, yogurt (Germany)

A-27, desserts (Italy)

Trend (depending on currency situation)

International markets: Percentage shares of export business and locally produced business 2007 - 2011

International markets: Higher increase in share of locally produced business


Investments as a prerequisite for further growth:Italy

New factory for dessert production

Type of investmentProduction facilities in addition to existing A-27plant in Northern Italy

PurposeMeet increasing demand for premium desserts

Magnitude and timing§ CHF 15 million investment in 2012/2013§ Double capacity§ Production to be up and running by end 2013


Investments as a prerequisite for further growth:USA

Additional capacity for goat cheese production

Type of investmentNew creameryNew goat farm with 200 animals 2012 (600 in 2013)

PurposeMeet increasing demand for goat cheese, significant expansion of production capacity

Magnitude and timing§ CHF 6 million investment in 2012 § Double capacity§ Production to be up and running by end 2012


Investments as a prerequisite for further growth:Switzerland, Kaltbach

New capacity for fresh goat cheese production

Type of investmentExpanded production facilities

PurposeIncrease efficiency by producing Bettex cheeses(acquired end 2010) in Kaltbach

Magnitude and timing§ CHF 4.5 million investment in 2012§ Production to be up and running by end 2012


Investments as a prerequisite for further growth:Switzerland, Saignelégier

Additional capacity for Tête de Moine Cheese

Type of investmentAdditional building with state-of-the art solar system

PurposeIncrease capacity for Tête de Moine affinage

Magnitude and timing§ CHF 8 million investment in 2012§ To be up and running by end 2012


Possible routes for acquisitions

Brand Jewel

Stra

tegi

c/In

tern

atio

nal

Tact

ical

/Sw

iss

Possible

CH

F1’

000

mio

. C

HF

50 M

io.

TechnologyLeader / Added

Value PL

no

Possible

Market Synergies/Efficiency

Rutz Käse

Roth Cheese/Fromalp

Organic

Biedermann

Possible

Regional /competion of product range

Molkerei Basel

Onken

BontàDivina

CypressGrove

Focus on existing Emmi international key markets


Image shaped through innovative brand concepts

The culture to support innovations

2003

Benecol

2005 2007

Minicol

Choco Latte

Swiss Müesli

Luzerner Yogodu

Kaltbach Le Gruyère

MC Neil Benecol Drink

Emmi Caffè Latte Lassi

2004 2006

Création Yoghurt

Kaltbach Raclette

SwissAlp Käse

Winzer

2008

Gala Mousse

Emminent

2009

Emmi Caffè Latte Zero

Energy Milk

Mozzarella

Luzerner Scheiben

Tigre

Yogi Drink

2010

KaltbachExtra

Emmi CaffèLatte Intenso

2011

Milk Shake

Mini Marinati

Yogurt Milk

Kaltbach Fondue

Fondue withoutalcohol


Trend scouting to back up innovations

§ Indulgence

§ Wellbeing / Health

§ Convenience

§ Sustainability

Lactose Free „All Natural“ Toni

Major trends in the food industry

Emmi in brief

Appendix

Key success drivers




Amounts in CHF millions 1HY11 1HY10 1HY09 1HY08 1HY07Net sales 1,310 1,275 1,281 1,289 1,199Earnings before interest, taxes, depreciationand amortization (EBITDA) as % of net sales

101.0

7.7

104.2

8.2

84.6

6.6

85.7

6.6

68.2

5.7

Earnings before interest and taxes (EBIT)as % of net sales

57.04.4

60.74.8

44.73.5

47.93.7

32.02.7

Net profitas % of net sales

35.22.7

39.93.1

32.82.6

26.62.1

22.71.9

Headcount (FTEs) 3,614 3,542 3,504 3,351 3,337

Overview of key figures

1H2011 earnings exceed 2009 levels


0

20

40

60

80

100

120

31.12.08 / 31.12.09 31.12.09 / 31.12.10 31.12.10 / 30.6.11

Exchange rate-driven sales decline since 2007

Sales decline of CHF 120 million in 2.5 years

CHF millions

§ With a stable exchange rate since the beginning of 2009, export sales would have been 1/6 higher!§ 2011 half-year decline already

higher than in 2010 as a whole


1683 17291831

16551635

47.9 49.6

56.553.855.3

0

300

600

900

1200

1500

1800

2007 2008 2009 2010 20110

10

20

30

40

50

60

70

Total assets in CHF millions Equity ratio (%)

In CHF millions as %

Target equity ratio in %

§ Equity ratio remains high, considerably in excess of target

§ Basis for further financing remains very solid

Equity ratio in first half of 2011

Financing basis continues to be very stable

2007 – 2010: 31.12.; 2011: 30.6.


Growth incl. acquisitions, profit

Outlook Outlookcurrent situation as at 31.3.2011

§ Group sales 2 - 3 % 3 - 5 %

§ Sales Switzerland 0 - 2 % 0 - 3 %

§ Sales Intl. 8 - 12 % 10 - 15 %

§ EBIT, CHF million 120 - 130 120 - 140

§ Net profit margin 2.5 - 3 % approx. 3%

(Figures assume exchange rates as at the second half of August 2011 and constant raw milk prices; including known acquisitions)

Outlook for 2011 as a whole

2 - 3 % Group growth


(Figures assume constant exchange rates and raw milk prices; organic)

Growth without acquisitions, profit

§ Group sales 2 – 3 %

§ Sales in Switzerland stable

§ International sales 6 – 8 %

§ Net profit margin 2.5 – 3.5 %

No change from outlook as per 25 March 2011

Medium-term objectives

2 – 3 % organic growth per year at Group level


Emmi in full speed. Now and in the future.

Alpine skiing is the perfect fit for Emmi

Appendix 1: Sustainability


Sustainability is a high priority

Emmi’s first sustainability report

§ Emmi started its sustainability initiatives back in the early nineties

§ The sustainability report complies with theGlobal Reporting Initiative (GRI) standards(reporting level C+)

§ The report is available in German and English and can be downloaded fromhttp://group.emmi.com/en/about-emmi/sustainability.html

http://group.emmi.com/en/about-emmi/


2005 2007

Dagmersellen : Switchover of various systems from heating oil to natural gas/biogas

Dagmersellen: Use of lukewarm water to cool air compressors => Reduced consumption of groundwater

Landquart : Milk cream now cooled using cold milk

2006 2010

Logistics: ongoing adaptation of delivery schedules, moderni-sation of vehicle fleet

Start of cooperation with the"Abfallbörse“(waste exchange project)

Berne: Heat generation from waste water

Molkerei Biedermann: Solar power thanks to photovoltaic installation

Emmen: New woodchip-fired steam plant

2009

Landquart: heat recovery using compressed air

Berne: heat recovery from waste gas, Energieverbund Mösli

2008Fromco Moudon:Heat generation using newcool air compressors

Emmen production facility: Heat generation using ventilation energy

Sustainability is a high priority

Key environmental measures 2005 to 2010

Bever: Introduction of a solar system

Continuous energy optimization measures in the six largest sites

2011

86% of large trucks at lowestemission level (EURO 5)


* Emmi estimate

82 81 80 7979 7770

0

20

40

60

80

100

2007 2008 2009 2010

Objective Actual Emmi

Index

2000

65-70*

CO2 emissions: Emmi exceedsthe targets set by the Energy Agency for Industry

CO2 emissions reduced by 30% within 10 years


WaterWaste to incinerationplant

Electricity

Dotted line = product sales as a benchmark

2008 2009 2010

100

90

80

88.0

89.9

92.396.9

97.194.8

98.6

Index

Environmental index Emmi Group 2008 - 2010

Disproportionate decline in emissions

Appendix 2: Market background


Per-capita consumption of yogurt and cheese

Stable in central Europe, upwards trend in UK, US and Asia

stable22.7 kg8.5 kgItaly

up2.5 kg**n.a.Japan

specialty cheese up; yogurt up

18.0 kg5.2 kg*US

Yogurt: overall stable, big potup; specialty cheese: up

6.0 kg10.6 kgUK

stable22.8 kg17.8 kgGermany

stable21.5 kg18.2 kgSwitzerland

TrendCheeseYogurtMarket

*2007, all others 2010** estimate


Direct suppliers Mittelland, Berne, Northern andEastern Switzerland

Central SwitzerlandMilk ProducersZMP

Others

Milchverbandbeider Basel MIBA

Nordostmilch

30%

Milk suppliers Switzerland

808 833 880 834 873

41 53

83

38 40

0

200

400

600

800

1000

2006 2007 2008 2009 2010

Milk Cream

Switzerlandin kg million

Milk and cream processing by Emmi

Volume of milk and cream processed by Emmi in Switzerland

Emmi processes over 900 million kg


Price gap has widened again

Price handicap on raw materials Switzerland - EU

Milk price comparison Switzerland - Germany [at farm level in CHF]

35

40

45

50

55

60

65

70

75

Dez 09

Jan 10

Feb 10

Mrz 10

Apr 10

Mai 10

Jun 10

Jul 1

0

Aug 10

Sep 10

Okt 10

Nov 10

Dez 10

Jan 11

Feb 11

Mrz 11

Apr 11

Mai 11

Jun 11

Jul 1

1

Aug 11

Sep 11

Okt 11

Nov 11

Switzerland Ø industrial milk Switzerland Ø cheese milk Germany

appr

ox. 2

0

appr

ox. 1

5

appr

ox. 2

2

appr

ox. 1

9

emmi: on track for further growth · social media recently acquired: key brand roth cheese us...

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