Industry & Wholesaling
In a challenging economic environment, M-Industrie performed well and gained market shares in 2011. Despite negative inflation and negative foreign currency effects, sales are, pleasingly, even slightly up on the previous year at CHF 5.333 billion.
In 2011 the business of the Migros Group was dominated by substantial price reductions and closed 0.9% down on the previous year. Wholesale business continued to perform well, rising by 6.8% to CHF 627 million. International business posted strong, currency-adjusted growth of 15% (in CHF effectively by 3.6%) to CHF 492 million.
With cost saving and productivity increase programmes, it was possible to limit the effects of negative inflation. But last year’s high EBIT was no longer achieved. The EBIT is still CHF 185.7 million (2010: CHF 232.9 million). At the end of 2011, M-Industrie employed 10 679 people (+156 on 2010).
| in CHF million | 2011 | 2010 | Change in % |
| Net revenue from goods and services sold | 5'333.2 | 5'315.8 | 0.3 |
| Other operating income | 45.6 | 40.7 | 12.0 |
| Eliminations | –251.4 | –227.7 | 10.4 |
| Total income | 5'127.4 | 5'128.8 | 0.0 |
| Earnings before financial income, income tax and pension plan effect (EBIT) | 185.7 | 232.9 | –20.3 |
| Segment assets | 2'099.0 | 1'985.3 | |
| Investments in long-term assets | 156.6 | 135.3 | |
| Employees | 10'679 | 10'523 |
Market position in Swiss wholesale business expanded
M-Industrie performed very well in an extremely challenging environment. Despite strongly falling domestic prices and difficult foreign currency circumstances, net sales rose by 0.3% from CHF 5.316 billion to CHF 5.333 billion. As such, M-Industrie gained market shares.
In its Migros business, M-Industrie passed on the productivity increases and more favourable purchasing prices resulting from currency conditions in the form of lower prices. The volume increases were not able to offset the negative inflation, which resulted in sales falling by 0.9%. With the substantial price reductions, M-Industrie supports the price-performance leadership of Migros. Sales within the Migros Group (i.e. Denner, migrolino and LeShop) grew by more than 10%.
The business with Swiss customers outside Migros retail performed very pleasingly and posted a 6.8% increase. Further preparations were made in 2011 to enhance the business with gastronomy and industrial wholesalers thanks to value-added concepts and a distribution expansion.
In its international business, M-Industrie managed to expand its position. Exports were increased by 2.0% (currency-adjusted by 12.4%) despite the unfavourable currency situation. Companies abroad grew by about 30% in local currencies. The currency situation hit profitability, for which reason initial measures towards consolidation were taken in 2011.
Differentiation thanks to innovation
Thanks to its innovative capacity, M-Industrie further expanded its business with brand owners. A series of products was launched under the Barilla and Weight Watchers brands.
In the bakery products and pasta areas, a gluten-free range was established with trail-blazing developments, which will be rolled out this year.
The range of lactose-free and soya-based products was expanded, which provides a foundation for further growth.
Investments in the Swiss business areas
M-Industrie invested more than CHF 150 million in Switzerland as an industrial centre in the year under review and thereby further improved competitiveness. The major ELSAvenir project, thanks to which the logistics chain was optimised and material flows were made more efficient, was completed with the official inauguration in November. Over the past five years, some CHF 100 million has been invested in ELSA, thereby making it one of Europe's most modern milk processing plants.
Sustainability in practice
As part of Migros' sustainability strategy, M-Industrie verified its activities and business models and rolled out various initiatives for optimisation. As such, the decision was made to gradually, but by 2015 at the latest, switch to «Segregated Quality» for palm oil procurement. Migros will then procure palm oil and its derivatives as actually physically sustainable palm oil (RSPO certified from that date). The company also increasingly procures coffee, cocoa and tea from sustainable production in accordance with Utz certification. M-Industrie also showed particular commitment to climate protection by optimising its production processes and raising awareness amongst employees during energy saving weeks ((Link Energie & Klima)). Finally, the companies brought innovative products to market, such as the natural cosmetics line I am Natural as well as gluten-free bread, pasta and bakery products.
Targets and outlook
A very challenging financial year can be expected both in the Swiss market and in international business. The currency situation is unlikely to abate, which is why a consolidation with the simultaneous use of selective growth opportunities is planned. In all target markets, the key to success is in the proximity to customers, in value-added concepts, innovations and convincing quality with a good price-performance promise. The previous strategy will be further pursued consistently.