Emmi Ag · SIX:EMMN
Emmi — Vontobel Summer Conference 2009
40 slides from Emmi's conference presentation, Jun 5, 2009
Slide 1: Vontobel Summer Conference
Vontobel Summer Conference Reto Conrad CFO Photo Interlaken, 5 June 2009
Slide 2: Agenda
Agenda Overview Emmi Group Annual results 2008 Strategy and key points Current market situation and outlook Vontobel Summer Conference – Interlaken, 5 June 2009 Page 1
Slide 3: Strategy and vision
Strategy and vision Independent and successful in open markets Vision • Independent and internationally successful dairy in open markets Market positioning • The leading Swiss company for cheese and milk products • The leading company for Swiss cheese worldwide • One of the leading premium dairies i
Slide 4: Business model: broadly based product portfolio
Business model Broadly based product portfolio (sales figures 2008) Dairy products Fresh products 29,9 % (CHF 804 million) 21.6% (CHF 581 million) Other products/ services 7,3% (CHF 176 million) Powder/concentrates 3.3% (CHF 90 million) Cheese 32.7% (CHF 881 million) Fresh cheese 5.2% (CHF 140 milli
Slide 5: Sharp rise in growth: sales trends 2002–2008
Sharp rise in growth Sales trends 2002 – 2008 In CHF millions 2‘750 2‘693 2'500 2‘501 7.1% growth in a still highly 2'250 2‘335 626 competitive environment 587 2‘027 509 2'000 1‘879 1‘926 CAGR overall 11.1% 1'750 444 447 1'500 1‘389 414 CAGR international 18.1% 1'250 256 1'000 2‘067 1‘826 1‘914 750
Slide 6: Emmi in comparison to the international market
Emmi in comparison to the international market The 20 leading dairies worldwide and Emmi 16.9 16 14 Europa Umsatz in Mrd. Euro Welt 12 10.2 9.6 10 8.8 8.1 7.6 7.6 8 6.4 6 4.7 4.4 3.5 3.4 3.3 3.1 4 3.0 2.8 2.4 2.3 2.3 2.2 1.6 2 0 hr or es rm r Fo A a dm st d La e la rra tlé i am lis tF s O uto Fo ods
Slide 7: International scope
International scope Expansion through subsidiaries and alliances Belgium / Netherlands USA Canada • Craamer & Co. B.V. Tiel • Emmi Canada, Inc. • Emmi USA Inc, NY • Emmi Benelux B.V., Tiel • Roth Käse USA Ltd. • S.A. Haerten & Inter. N.V. United Kingdom • Emmi UK Ltd., Putney/London Germany • Emmi D
Slide 8: Innovations by Emmi
Innovations by Emmi Image strongly shaped by pioneering brand concepts - high number of innovations Minicol Création Yoghurt SWISS Gala Aloe Vera (Dec. 2002) Müesli/ Mousse Evolus Yoghurt Benecol Migros Mivolus Drink Lucerne Emminent Yogodu Choco Latte 2003 2004 2005 2006 2007 2008 Winzer hard chees
Slide 9: Agenda
Agenda Overview Emmi Group Annual Results 2008 Strategy and key points Current market situation and outlook Vontobel Summer Conference – Interlaken, 5 June 2009 Page 8
Slide 10: Highlights 2008 (1/2)
Highlights 2008 (1/2) Solid market performance and rigorous cost management Growth of 7.7% to CHF 2,694 million (organic growth of 6.6%) Disproportionately low cost development thanks to rigorous cost management Net profit of CHF 58.7 million (2.2 % net profit margin) New image EBIT margin of 3.8% M
Slide 11: Highlights 2008 (2/2)
Highlights 2008 (2/2) Investments in productivity and international expansion Concentration of processed cheese production in Langnau i.E. according to plan Expansion to double the capacity at the Kaltbach cave started Expansion of position for Appenzeller cheese with the acquisition of Walter Schmi
Slide 12: Facts and figures financial year 2008
Facts and figures financial year 2008 Clear improvement in operating result CHF million 2008 2007 ∆ in % Net sales 2,693.6 2,501.2 +7.7 Gross profit 818.3 759.4 +7.8 as % of net sales 30.4% 30,4% EBIT 102.1 62.3 +63.8 as % of net sales 3.8% 2.5% Net profit 58.7 41.3 +42.3 as % of net sales 2,2% 1.6%
Slide 13: Net sales to gross profit (1/2)
Net sales to gross profit (1/2) Solid market performance CHF million 2008 2007 ∆ in % Price increases implemented with neutral margin Net sales 2,693.6 2,501.2 +7.7 Gross profit 818.3 759.4 +7.8 Gross profit margin of 30.4% as % of net sales 30.4 % 30.4% maintained at a good level despite > Value ad
Slide 14: Gross profit to EBIT (2/2)
Gross profit to EBIT (2/2) Significant increase in EBIT margin CHF million 2008 2007 ∆ in % Increase in operating Gross profit 818.3 759.4 +7.8 expenses disproportionately as a % of net sales 30.4 % 30.4 % low at +2.0% Other income 3.3 5.1 -35.3 Significant increase of 1.3% Operating expenses 637.2
Slide 15: Rigorous cost management
Rigorous cost management Disproportionately low increase in operating expenses CHF million 2008 2007 ∆ in % Cost reduction measures of +1.3 CHF 15 million wholly Personnel expenses 314.4 310.5 implemented Advertising and marketing 108.3 99.5 +8.8 Mittelland Molkerei target Occ. Exp, maint., repairs,
Slide 16: EBIT to net profit
EBIT to net profit Net profit margin on target CHF million 2008 2007 ∆ Negative impact of exchange loss on financial EBIT 102.1 62.3 +39.8 result (CHF 7.8 million) Financial result -26.0 -12.0 -14.0 Taxes higher than prior Result assoc. companies 2.2 0.5 +1.7 year at CHF 9.0 million Extraordinary (2
Slide 17: Healthy balance sheet structure
Healthy balance sheet structure Increase in equity ratio Assets Liabilities Increase in equity by CHF 35.7 million to CHF 736.3 million Current assets Liabilities (50.4%) Equity ratio increased from 42.8% (48.5%) to 43.7% (excl. minority interests) Reduction in net debt by 6.1% to CHF 287.4 million
Slide 18: Cash flow from operating activities
Cash flow from operating activities Significant improvement in operating cash flow CHF million 2008 2007 Largest investment projects: Cash flow from operating activities 113.9 80.8 Concentration of production Investment in tangible assets -83.2 -77.8 of processed cheese in Langnau (2008 CHF 21.5 Inv
Slide 19: Agenda
Agenda Overview Emmi Group Annual Ressults 2008 Strategy and key points Current market situation and outlook Vontobel Summer Conference – Interlaken, 5 June 2009 Page 18
Slide 20: Strategic focus - overview
Strategic focus - overview Broad expansion of international business Strategy reviewed, confirmed and finalized by the Board of Directors and Group Management Secure leading position as full-range supplier in the Swiss market for the long term Strongly expand international business: Sales abroad equ
Slide 21: Background: strengths and weaknesses
Background Strong standing in Swiss market – international business is being expanded Strengths Weaknesses Above-average growth driven Emmi is not yet a major player by acquisitions in strategically significant (CAGR 05-08: 7,4%) foreign markets Strong innovations and Profitability considerably lowe
Slide 22: Market liberalization – next steps
Market liberalization – next steps Further liberalization of the Swiss market is foreseeable 1• Elimination of 4• Unilateral introduction 5• Possible elimination 7 • Liberalization of passive domestic market and of the Cassis-de-Dijon of cheese subsidies refinement trade export subsidies principle 2
Slide 23: Opportunities and risks of liberalization
Opportunities and risks of liberalization Import pressure on standard products – opportunities for fresh products High Import pressure after liberalization is greatest on standard products (butter, cream, powder) EXPORT OPPORTUNITY Fresh Pro- ducts Import pressure from 2012 with (volume/price) Chees
Slide 24: Emmi wants to become an international player with competitive structures
Emmi wants to become an international player with competitive structures Background Success factors: Strategic Swiss market saturated; Critical company size/ pillars international market key international player) growing Early, proactive Market liberalization in adjustment to market Defence of posit
Slide 25: Emmi's vision
Emmi's vision To operate as an independent company in open markets with long-term success Net profit margin: 2-3% Sales growth: 2-3% p.a. Equity ratio: >40% Fresh products Cheese A leading company THE company for Domestic market - in Europe for premium Swiss cheese, Switzerland dairy products both w
Slide 26: Strategic international focus
Strategic international focus One of Europe's leading premium dairies Growth outside Leading company for Swiss cheese worldwide Switzerland Organic growth of 8-10% p.a. in focus markets > Germany, Italy, Austria, the UK and the US Targeted reinforcement via acquisitions and alliances Growth with pre
Slide 27: Strengthening of position in the US market through Roth Käse
Strengthening of position in the US market through Roth Käse Growth outside Ideal complement to product range Switzerland Emmi USA Roth USA Retail Food Service Range completion Kaltbach No range > $40 per kg > $30 per kg Emmentaler, Brand specialities Gruyère AOC > $25 per kg > $30 per kg Industrial
Slide 28: Strategic alliance with Kaiku
Strategic alliance with Kaiku Growth outside Strengthening market position Switzerland Kaiku is number 2 in the Spanish market for probiotic fresh-product concepts (sales 2008: approx. EUR 230 million) Kaiku generates 77% of its sales in Spain and 23% in South America Increase in stake from 23% to 4
Slide 29: Strategic focus - Switzerland
Strategic focus - Switzerland Defence of position Maintain leading position in domestic market within Switzerland Secure/defend position as leading full- range supplier in all channels > Maintain market share in the retail trade > Growth in the food service segment Reduction of interchangeability >
Slide 30: Stake in Nutrifrais SA
Stake in Nutrifrais SA Expansion of market position in flan/yoghurt Defence of position and French-speaking Switzerland within Switzerland Specialized in the production of desserts, yoghurt and quark > Some CHF 20 million turnover, 30 employees > 5 million kg of processed milk from the Geneva region
Slide 31: Rigorous cost management
Rigorous cost management Ensure competitive cost structures after Cost management market is liberalized Investments in productivity-enhancing measures such as > Concentration of processed cheese production > High-bay warehouse Suhr > Fruit base processing Emmen > Optimization of operational processe
Slide 32: Strengthening of umbrella brand
Strengthening of umbrella brand Differentiation through enjoyment and Swiss tradition Real Swiss premium taste Single brand with Single brand with distinct Single brand with implicit umbrella brand dominant umbrella brand umbrella brand Switzerland and abroad Original Refinement Inspiration Wellbein
Slide 33: Taste and origin as differentiation
Taste and origin as differentiation Partner of choice for "Real Swiss Premium Taste" Brand concepts with Swiss origin as differentiation Partner of choice for "Real Swiss Premium Taste" Vontobel Summer Conference – Interlaken, 5 June 2009 Page 32
Slide 34: Focus on Swissness – illustrated by Swiss Müesli
Focus on Swissness – illustrated by Swiss Müesli Successful performance in German key market Sales of Swiss Müesli in Germany (in units sold) National campaign focusing on +36% taste and 'made in Switzerland‘ Targeted expansion of the "Emmi Swiss" product range with premium +277% yoghurts +38% Dec.
Slide 35: Agenda
Agenda Overview Emmi Group Overview of 2008 financial year Strategy and key points Current market situation and outlook Vontobel Summer Conference – Interlaken, 5 June 2009 Page 34
Slide 36: Economic outlook for Switzerland in 2009
Economic outlook for Switzerland in 2009 Consumption still stable – clear drop in GDP Economic growth (GDP) corrected downward for 2009 by KOF (-2.8%) and SECO (-2.2%) Consumer spending: Still marginal growth of 0.2% in April year-on-year Private consumption will still be underpinned by lower inflat
Slide 37: International focus markets hit by recession
International focus markets hit by recession Impact still only marginal on retail trade US retail trade still expects growth of 2.1% despite declining GDP (-2.2%) US dairy industry +3.4% Significant drop in GDP in Germany > Retail trade forecast: impact will be keenly felt in second half > Growth in
Slide 38: Measures in a recession
Measures in a recession Stay flexible Prepare various scenarios Maintain flexibility with continous planning Adjust to short-term developments (e.g. marketing expenditure) Continued rigorous cost management Vontobel Summer Conference – Interlaken, 5 June 2009 Page 37
Slide 39: Outlook and targets for financial year 2009
Outlook and targets for financial year 2009 Decline in Swiss market – growth abroad Maintain sales at 2008 level Switzerland: Sales around 5% lower with falling prices due to lower raw material prices International: Growth of around 15% > Organic growth 0 – 1% > Slower organic growth will be compens
Slide 40: Questions and answers
Questions and answers For further information please contact: Reto Conrad (CFO) Reto.conrad@emmi.ch Stephan Wehrle (Media&Investor Relations) Stephan.wehrle@emmi.ch Mobile: +41 79 356 8123 Vontobel Summer Conference – Interlaken, 5 June 2009 Page 39