First half of 2013 Results presentation - Emmi UK · First half of 2013, Results presentation, 28 August 2013 Page 3 Key figures for the first half of 2013 Sales in line with expectations,

First half of 2013Results presentation

Telephone conference for analysts and investors

Lucerne, 28 August 2013

Overview of the first half of 2013

Results for the first half of 2013

The success factors

Focus on the second half of 2013 and outlook

First half of 2013, Results presentation, 28 August 2013 Page 3

Key figures for the first half of 2013

Sales in line with expectations, earnings marked by price pressure

§ Net sales CHF 1,567 million− Growth of 17.0 %

§ EBIT CHF 65.0 million*− Growth of 5.3 %− EBIT margin 4.2 % (2012: 4.6 %)

§ Net profit CHF 39.0 million*− Decline of 0.8 %− Net profit margin 2.5 % (2012: 2.9 %)

* EBIT and net profit have been adjusted for one-time effects of CHF 18.9 millionand CHF 15.4 million in 2012 as well as CHF 2.4 million and CHF 2.0 million in2013, which resulted from extraordinary income generated from the disposal offixed assets.


Sales split: Switzerland and international

Continued growth abroad – slight fall in Switzerland

Switzerland§ Net sales CHF 891 million

− Decline of 1.6 %− Market share in core business improved slightly− Declines primarily in the trading and catering

businesses, and due to divestments

International§ Sales CHF 676 million

− Increase of 55.8 %− The acquisitions of Kaiku and Diprola, cheese

exports and local products/brands were important drivers


Key performance drivers

New product launches and established brands support performance

§ Launched in the spring, Jogurtpur and good day got off to a promising start in the Swiss market

§ Continued import pressure, price competition

§ Sales decline due to the disposal of the stake in Nutrifrais and the termination of the frozen food logistics business

§ Growth of Emmi Caffè Latte in Switzerland and abroad despite unfavourable weather

− Additional volume thanks to new “Mr Big”− Influence of new competitors negligible

§ Sales growth generated through Swiss cheese specialties in Switzerland and abroad, as well as internationally through locally produced cheese

§ Growth of A-27 and of Kaiku in Chile in Tunisia


Overview of key figures for the first half of 2013

Sales growth according to plan, earnings marked by price pressure

Amounts in CHF million 1HY13 1HY12 1HY11 1HY10 1HY09Net sales 1,567 1,339 1,310 1,275 1,281Earnings before interest, taxes, depreciationand amortisation (EBITDA) as % of net sales

119.3*

7.6

109.3*

8.2

101.0

7.7

104.2

8.2

84.6

6.6

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

65.0*4.2

61.7*4.6

57.04.4

60.74.8

44.73.5

Net profitas % of net sales

39.0*2.5

39.3*2.9

35.22.7

39.93.1

32.82.6

Headcount (FTEs) 5,112 3,820 3,614 3,542 3,504

* Adjusted for one-time effects of CHF 2.4 million (previous year CHF 18.9 million) on EBITDA and EBIT, and CHF 2.0 million (previous year CHF 15.4 million on net profit. These effects resulted from extraordinary income generated from the disposal of fixed assets.


Development of net sales in the first half of 2013: Group

Growth at Group level 17.0 %

1,339.2 1,566.6

+17.9%

+0.3% -1.9% +0.7%

Group salesin CHF million Extraordinary factors:

§ Decline in butter and milkpowder exports:CHF 32 million§ Disposal of stake in Nutrifrais:

CHF 4.5 million*§ Disposal of frozen food business:

CHF 3.3 million**

* Disposal completed on 1 April 2013** Disposal completed on 1 March 2013

2012 Acq. FC Vol. Price 2013

Acq: acquisition effects; FC: currency effects; Vol.: volume effects; Price: price effects


Development of net sales in the first half of 2013: Switzerland, international

Slight decline in Switzerland, international growth driven by acquisitions

Sales Switzerland Sales internationalin CHF million in CHF million

905.3 890.5

-0.5% -0.4% -0.7%

organic -1.1%

433.9 676.1

+56.4%

+0.9% -5.0% +3.5%

organic -1.5%

2012 Acq. FC Vol. Price 20132012 Acq. Vol. Price 2013

Acq: acquisition effects; FC: currency effects; Vol.: volume effects; Price: price effects


Development of net sales in the first half of 2013: Switzerland

Positive development of brand concepts, solid core business

Sales of cheese Sales of fresh products Sales of dairy productsin CHF million in CHF million in CHF million

245.8 243.4

- +0.3% -1.3%

organic -1.0%

174.6 174.1

-2.4% +2.4% -0.3%

organic+2.1%

337.2 338.6

- +0.9% -0.5%

organic+0.4%

2012 Acq. Vol. Price 20132012 Acq. Vol. Price 20132012 Acq. Vol. Price 2013

Acq: acquisition effects; Vol.: volume effects; Price: price effects

Decline of 0.3%: - Adjusted for disposal of Nutrifrais stake(CHF 4.5 million), the area posted growth

- Growth of Caffè Latte & Mix-it Müesli- Promising start for Jogurtpur and

good day- Decline in trading business

Decline of 1.0%:- Growth of Raclette, Kaltbach, Gruyère- Positive development for Chäs Schiibe- Fall in price and volume for Emmentaler

and generic volumes

Growth of 0.4%: - Slightly positive development in volumes


Development of net sales in the first half of 2013: international

27.0

143.0+465.2%

+0.4% -47.2% +12.2%

188.1 241.4

+22.9%

+1.0% +1.3% +3.1%

157.9 223.3

+38.0%

+0.7% -0.8% +3.5%

Sales of cheese Sales of fresh products Sales of dairy productsin CHF million in CHF million in CHF million

Growth 28.3 %:- Growth for Gruyère, Kaltbach, Appenzeller - Positive exports in D, UK, USA- Growth in local US production- Acquisition effect: Diprola and Kaiku

Growth 430.6 %:- Decline due to reduced butter exports related to lower milk quantities (decline ofCHF 19 million compared with H1 2012)

- Acquisition effect: Kaiku

Acq.: acquisition effects; FC: currency effects; Vol.: volume effects; Price: price effects

Growth 41.4 %:- Strong growth for Caffè Latte

in Spain, UK, Austria- Positive performance by A-27- Onken: slight decline in UK- Acquisition effect: Kaiku

Cheese, Caffè Latte, A-27 and Emmi Roth USA as important sales drivers

organic+4.4%

organic +2.7% organic

-35.0%

2012 Acq. FC Vol. Price 2013 2012 Acq. FC Vol. Price 2013 2012 Acq. FC Vol. Price 2013



The success factors



The following factors contributed to the lower margin: § Price pressure in Switzerland§ Milk price-related price increases

not yet fully realised§ Slight dilution effect due to the

acquisition of Kaiku

+12.0465.2

34.7

521.1

33.3

Gross operating profitas % of net sales

+17.01,339.21,566.6Net sales∆ in %1HY121HY13in CHF million

Net sales to gross profit

Gross profit increased, gross profit margin slightly lower


§ Strict cost management with positive influence on operating expenses

§ EBIT reduced from 4.6 % to 4.2 %

Gross profit to EBIT

Higher productivity leads to disproportionally low increase in operating expenses

* Adjusted for one-time effects of CHF 18.9 million in 2012 and CHF 2.4 million in 2013, which resulted from extraordinary income generated fromthe disposal of fixed assets.

+5.361.74.6

65.04.2

EBIT*as % of net sales

-0.40.4Write-back neg. goodwill

+13.748.054.7Depreciation and amortisation

+9.1109.38.2

119.37.6

EBITDA*as % of net sales

+12.9356.226.5

402.225.7

Total operating exp.as % of net sales

+12.0465.234.7

521.133.3

Gross operating profitas % of net sales

+17.01,339.21,566.6Net sales1HY13

+24.80.30.4Company-produced additions to plant/equipment

∆ in %1HY12in CHF million


Extraordinary income and expenses for the first half of 2013

Extraordinary effect from the sale of property

Gains on disposal of fixed assets2012: The sale of the former Butterzentralein Lucerne generated extraordinary income of CHF 18.9 million (up to EBIT), or CHF 15.4 million after tax.

2013: The sale of the frozen food logistics site in Kriens generated extraordinary income of CHF 2.4 million (up to EBIT), or CHF 2.0 million after tax.

in CHF million 1HY13 1HY12EBIT, as published 67.4 80.6Gains on disposal of fixed assets

2.4 18.9

Adjusted EBIT 65.0 61.7

in CHF million 1HY13 1HY12Net profit, as published

41.0 54.7

Gain on disposal of fixed assets

2.4 18.9

Additional tax expenses -0.4 -3.5

Adjusted net profit 39.0 39.3


All positions with disproportionally low increase

§ Rise in personnel expenditure and maintenance due to acquisitions

§ Slightly higher marketing/sales-related expenses due to launch of Jogurtpur and good day

§ Energy: price increases§ Logistic expenses: increase in

volumes abroad

Detailed overview of operating expenses

in CHF million 1HY13 1HY12 ∆ in %Personnel expensesas % of net sales

198.912.7

178.613.3

+11.4

Marketing and sales-related expensesas % of net sales

61.5

3.9

59.5

4.4

+3.4

Occupancy expenses, URE, leasing

34.4 33.7 +2.1

Energy, operating materials and supplies

32.2 28.0 +15.0

Logistics expenses 45.6 34.5 +32.2Other operating expenses 29.6 21.9 +35.2Total operating expensesas % of net sales

402.2

25.7

356.2

26.5

+12.9


Net profit margin remains in line with medium-term target range

EBIT to net profit

* Adjusted for one-time effects of CHF 2.4 million (previous year CHF 18.9 million) on EBITDA and EBIT, and CHF 2.0 million (previous yearCHF 15.4 million on net profit. These effects resulted from extraordinary income generated from the disposal of fixed assets.

-13.741.02.6

Net profitas % of net sales

-2.310.2Minority interests

+2.611.318.0

TaxesAverage tax rate in %

-14.062.5Earnings before taxes (EBT)

-1.2-6.4Financial result

+0.41.5Gains from associated companies

-13.267.4EBIT∆ 1HY121HY13in CHF million

39.02.5

10.2

10.918.1

60.1-6.4

1.565.0

∆ 1HY13

unadjusted adjusted*

-0.3

+3.3

-2.3

-1.2

+0.4

1HY12

39.32.9

7.9

10.418.1

57.6-5.2

1.161.7

54.74.1

7.9

13.918.1

76.5-5.2

1.180.6

-0.5

+2.5


§ Equity ratio slightly up despite acquisitions, remains significantly higher than the target ratio

§ Means for further financing secured

Equity ratio in the first half of 2013

Improved equity ratio

Balance sheet dates: 2008 – 2012: 31.12.; 2013: 30.6.

1683 1655 1729 1949 2323 2329

49.6

56.5 52.450.2 51.2

0

10

20

30

40

50

60

70

0

500

1000

1500

2000

2500

2008 2009 2010 2011 2012 2013

Total assets Equity ratio

in CHF million in %

Target equity ratio in %


0

50

100

2008 2009 2010 2011 2012 1HY2013

Produced locally Export from CH

Major acquisitions

2006: Trentinalatte, yogurt,fresh cheese (Italy)

2009: Roth Käse (USA)

2010: Cypress Grove Chèvre (USA)Fromalp, cheese (CH)

2011: Onken, yogurt (UK)A-27, desserts (Italy)Rutz Käse (CH)

2012: Kaiku, fresh products and regional specialities (ES)Diprola, cheese packaging (F)

2013: Käserei Studer (CH, 2HY)Rachelli, desserts (Italy, 2HY)

Percentage shares of export business out of Switzerlandand locally produced foreign business 2008 – 2013

Wide-ranging local production supplements exports from Switzerland

40%

60%

67%

33%

53%

47%

64%

36%

75%

25%

in %

30%

70%



The success factors



Taste

Health/natural goodness

Convenience

Sustainability

Key trends for Emmi

Trend analysis as the basis for innovation


Success drivers:Established brands ...

§ Good growth in key markets, including double-digit growth in the UK, Spain and Austria

§ Launch of Mr Big and Caramel Limited Edition

§ Growth of Gruyère in CH, A, D, UK, NL, USA (AOC and Kaltbach)

§ Consistent training of counter staff is proving successful internationally

§ Additional stimulus from 1HY13 thanks to Käserei Studer

§ Double-digit growth § New product packaging§ Increased capacity utilisable

from Q4

§ Solid single-digit growth§ Additional capacities and the

acquisition of Rachelli will provide further impetus for 2014

Trend: convenience, sustainability Trend: taste

Trend: taste, convenience Trend: taste


0

10

20

30

40

50

60

70

80

90

100

110

2007 2008 2009 2010 2011 2012 2013

CH Export

Even after ten years, there is further potential

§ Sales growth more than 10 % in the first half of 2013 both in Switzerland and international markets

Established brands: Development of Caffè Latte

Million cups (from our plants)


Success drivers:... and new concepts

§ Excellent first quarter§ High distribution coverage,

good placement in retail § Excellent consumer feedback§ Three new flavours to be

introduced in Q4

§ Very well established within one year

§ Pleasing growth on Swiss market

§ Positive result after launch§ High distribution coverage,

good placement in retail § Very positive initial consumer

feedback§ Additions to the range under

evaluation

Trend: convenience Trend: natural food Trend: healthy eating


360° marketing activities for Chäs Schiibe (cheese slices)

Poster campaign

Offers 1+1, +2 slices and duo

TV campaign and online TV

Internet/social media

National leaflet mailshot with discount vouchers

Sampling

Image and campaign adverts

Trade fair

Umbrella brand promotion via Leporello

The perfect fit


360° marketing activities Emmi Jogurtpur

TV campaign

Posters and print

Internet/social media

PR activation/FIS sponsorship

National mass mailshot

Multi-pack promotions Sampling

2nd POS

Megaposters in train stations

A yogurt with no hidden surprises


360°marketing activities good day

TV campaign

Promotion formats

In-store promotions

good day by Emmi.

Tasty and healthy.TM

FlyerSocial media and interactive website

2nd POS

Print

Sampling



The success factors



Vision § Long-term success as an independent company in open markets

Market positioning § No. 1 among Swiss milk processors

§ The top company for Swiss cheese, both in Switzerland and abroad

§ A leading company in Europe for premium dairy products

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

Profitability § 2.5 – 3.5 % net profit margin

Shareholders’ equity § Equity ratio of at least 40 %

Independent and successful in open markets

Strategy and vision


Emmi’s strategic pillars

Defence of position within Switzerland

International growth

Cost management

Emmi is becoming more international and increasing more competitive


International Switzerland

in CHF million

1147 1479

260

435 447

587

18261482 1583

444

509

0

500

1,000

1,500

2,000

2,500

2002 2003 2004 2005 2006 2007

1407

1917 19262027

23352501

2008

3,000

1914

2671 2619

626

2045

2009

675

1944

50%

50%

in two years

732

1952

2684

2010

2721

811

1,9091910

2011

Net sales 2002 to 2013 and medium-term target

Approaching the target of a 50/50 share between Switzerland and International

3,500

2013** EstimateInternational Switzerland

in CHF million

1147 1479

260

435 447

587

18261482 1583

444

509

0

500

1,000

1,500

2,000

2,500

2002 2003 2004 2005 2006 2007

1407

1917 19262027

23352501

2008

3,000

1914

2671 2619

626

2045

2009

675

1944

50%

50%

in two years

732

1952

2684

2010

2721

811

1,9091910

2011 2012

2981

1139

1842


The market environment in 2013

Factors affecting sales in the second half of the year

Stimulating

§ Successful launch of new products§ Good performance of established

product concepts§ Stagnating retail tourism§ Milk price increase

§ Organic growth (Caffè Latte, A-27, Cypress Grove Chèvre, Roth)§ Markets: USA, Tunisia, Chile§ Additional production capacities in

the US§ Expansion of existing channels§ Price increases

Limiting

§ Strong price pressures§ Import pressure§Weak catering, trading and industrial

business§ Fall in immigration

§ Lower level of exports to decrease pressure on the Swiss market as a resultof lower milk volumes§ Decline in consumption in southern

Europe§ Currency development of GBP to EUR

Switzerland

International

Figures assume constant exchange rates and raw milk prices, and a stable economy


Measures in Switzerland for the second half of 2013

Reinforcing established concepts and innovations, cost management

Brand reinforcement§ Wide-ranging Kaltbach campaign including print, TV,

sampling and point-of-sale measures§ Promotion of seasonal cheese specialties (fondue, raclette)§ Continuation of Jogurtpur and good day campaigns§ Launch of three new varieties of Jogurtpur

Acquisitions§ Utilisation of the potential of Käserei Studer in Switzerland

and abroad (cheese specialties, from 1 July 2013)

Sponsorship§ Use of sponsorship of skiing events to reinforce the Emmi

brand

Cost management§ Further tapping of potential to increase productivity


Brand reinforcement§ Additional activities for Roth Käse: focus on food service and

point-of-sale measures§ Promotion of cheese specialties in the US and major European

markets (incl. Käserei Studer)§ iPad promotion for Emmi Caffè Latte (focus: Germany, UK,

Austria and France)§ Relaunch of the Onken brand in Germany, launch of winter

editions in UK and Germany

Acquisitions§ Strengthening of leadership position for desserts (A-27, Rachelli)

Investments § Start of operations at new production capacities in the US (Q4)§ Completion of expansion of dessert production in Italy (start of

operations in Q1 2014)

Introduction of Operational Excellence in Spain and ItalyEvaluation of opportunities in new markets

International measures for the second half of 2013

Focus on key markets and products


Significant growth abroad, net profit margin on a par with 2012

Outlook for 2013 as a whole

Growth including 2013 acquisitions, profit

New outlook Outlook as ofend-March 2013

§ Group sales 8 – 10 % 6 – 8 %

§ Sales in Switzerland -1 – -2 % -2 – -3 %

§ International sales 25 – 30 % 20 – 25 %

§ EBIT, CHF 140 – 155 million 140 – 155 million

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

(Figures assume constant exchange rates and raw milk prices; they include acquisitions in 2013 but exclude extraordinary factors)


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

Growth excluding acquisitions, profit§ Group sales 2 – 3 %

§ Sales in Switzerland stable

§ International sales 6 – 8 %

§ Net profit margin 2.5 – 3.5 %

Medium-term objectives

2 – 3 % organic growth per year for the Group

AppendixAdditional information


Dairy products31 % (CHF 482 million)

Other products/services5 % (CHF 75 million)

Powder/concentrates3 % (CHF 42 million)

Cheese31 % (CHF 485 million)

Fresh cheese5 % (CHF 85 million)

Fresh products25 % (CHF 398 million)

Product groups (net sales in first half of 2013)

Well-balanced product portfolio

Net sales in first half of 2013: CHF 1,567 million: total for 2012: CHF 2,981 million


Expansion through subsidiaries and cooperations

International base

Canada

France

Switzerland

Spain, Pamplona,Kaiku

United Kingdom

Germany

Austria

Benelux

Italy, Rovere della Luna,Trentinalatte

USA, Monroe, WI Emmi Roth Inc.

USA,PennYan, NYCASP

USA, Arcata, CACypress Grove Ch.

Italy, Rancio Valcuvia, A-27

Chile, Pitrufquén,Kaiku – Surlat

Tunisia, Mahdia,Kaiku – VitalaitFrance,

Toulouse,Kaiku – Yéo

Chile, Loncoche,Kaiku – Chilesur

France,Avignon,Diprola


Price increases initiated in late spring 2013

Development of milk prices

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

EU Switzerland, industry milk Switzerland, milk for cheese productionSources: BLW, LTO

Documents

First half of 2013 Results presentation - Emmi UK · First half of 2013, Results presentation, 28 August 2013 Page 3 Key figures for the first half of 2013 Sales in line with expectations,