DMK’s “sweeping transformation” in full swing as turnover rises to €5.8bn

22 Jun 2018 --- German dairy cooperative and company, the DMK Group has gone through some significant changes that have given rise to a €5.8 billion turnover, paying above-average milk prices to dairy farmers and becoming Europe’s largest supplier of milk produced without genetic modification.

The DMK Group, including Milram, Humana and Uniekaas, claims to have scored initial wins in the first year of its extensive reorganization but Ingo Müller, CEO of the dairy company, warns the company must “keep moving” to maintain success in an “extremely volatile market going forward.”

Müller was presenting a turnover for 2017 of €5.8 billion (US$6.7 billion), which is a 12.6 percent jump on the previous year, earlier this week during the Annual Assembly of the owners from the Deutsches Milchkontor eG cooperative in Hanover.

At €29.6 million (US$34.4 million), the consolidated net profit for the year more than doubled. The equity ratio remains stable at 31 percent.

Müller says he is satisfied with business developments in 2017, claiming that following the total restructure of the business, the first positive effects are now coming to fruition.

“For the first time, we earned and paid a milk price above the average of German dairy companies,” he says. “Now repositioned as a modern food manufacturer, the DMK Group launched a product offensive in 2017.”

“For example, skyr and ice cream from Milram appeared for the first time in the chilled cabinets of major retail chains. There were further innovations from Milram in savory sliceable cheese and buttermilk drinks.”

DMK is the only licensee currently producing Bailey's ice cream in Germany. On the international front, the dairy company aims to pursue a strategy of “value-added before growth,” focusing on selected core markets.

Reorganization almost complete
The reorganization program will be implemented in full by the end of this month, according to DMK. The Group now operates with six autonomous business units and a new leadership team while approximately 1,500 employees have also been given new roles.

“The sweeping transformation in our company made heavy demands on us. And we will keep on the move since we will still be operating in an extremely volatile market going forward.”

“For that reason, the notion of peace, a steady state with no more change, is fundamentally Utopian. Conversely, that means that as long as the market is on the move, the players have to keep moving as well if they want to win,” adds Müller.

Largest supplier of GM-free milk in Europe
Within just eighteen months, DMK says it has risen to become the largest supplier of milk produced without genetic modification in Europe.

The volume of GMO-free milk produced at DMK totaled 2.3 billion kilos.

“As a cooperative, the DMK Group is a farmers' company. Our recent DMK history shows that we can make our cooperative profitable again for every individual member. We're reaping the rewards of our will to change both on the farms and in the dairy company,” Müller adds.

However, out of just under eight billion kilos of milk processed, around 800 million kilos could be lost through resignations by the end of 2018. The loss of just under half of this volume was definitely confirmed.

The dairy company, therefore, needed more flexible raw materials management and would procure raw milk from three sources in future: priority would always be given to milk from the cooperative's members; acceptance of their deliveries is guaranteed.

The company would also process raw milk supplied by cooperation partners for their self-marketed dairy products (toll production) and possibly also purchase milk on the market.

“With these three sources, we can react flexibly to different market and business situations. We can tailor our factories' capacity utilization and increase our value-added,” adds Müller.

Current market situation stable
Overall the market recovered last year turning a corner following the severe crisis in 2015/2016. DMK considers that the market has continued stable in the first half of 2018.

Demand is growing, both on the home market and internationally and DMK currently is paying its dairy farmers 32 euro cents per liter of milk.

“We envisage a stable-to-positive trend in farm-gate milk prices in the coming months.” And adds how he would exercise caution about further prognoses given the high volatility of the dairy market.

“We will concentrate on the continued development of our company and on remaining agile,” concludes Müller.

This feature is provided by Nutrition Insight’s sister website, Food Ingredients First.

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