Emmi milks sales as profits sour

Disappointing international earnings have trimmed 2007 profits at Swiss dairy concern Emmi despite a seven per cent rise in sales to SFr2.5 billion ($2.3 billion).

Profit margins of 1.5 to 1.7 per cent are anticipated for last year, compared with 2.3 per cent in 2006. However, cost-cutting measures are aimed at boosting net profits to two per cent in 2008.

The 2006 acquisitions of Swiss dairy Mittelland Molkerei and Trentinalatte in northern Italy were largely responsible for lifting sales both in the domestic market and abroad. Without these two additions, sales growth would have more than halved.

A range of factors, including the liberalisation of the European Union cheese market, resulted in lower than expected international earnings growth in the second half of 2007.

Emmi plans to save SFr20 million in the next two years by simplifying its product range, cutting 20 jobs, optimising marketing and advertising activity and lowering logistical and operational costs.

Last year Swiss food retailers slashed butter prices in stores, while claiming that “cartels” artificially kept prices 40 per cent higher than in Germany.