DMK Group pays above-average milk price

Germany’s largest cooperative dairy company, the DMK Group (including MILRAM, Humana and Uniekaas), has scored initial wins in the first year of its sweeping reorganisation. Ingo Müller, CEO of the dairy company, presented a turnover for 2017 of 5.8 billion euros (12.6 percent up on the previous year) in Hanover on Wednesday at the Annual Assembly of the owners from the Deutsches Milchkontor eG cooperative. At 29.6 million euros, the consolidated net profit for the year more than doubled. The equity ratio remains stable at 31 percent.

CEO Ingo Müller is satisfied with business developments in 2017 

Speaking before the delegates at the Hannover Congress Centrum, Ingo Müller said: “We totally restructured the DMK Group. We’re now feeling the first positive effects. 2017 was a good year for us. For the first time, we earned and paid a milk price above the average of German dairy companies”. 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 savoury sliceable cheese and buttermilk drinks. DMK is the only licensee currently producing Baileys 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.

DMK Group’s reorganisation completed by mid-year

The reorganisation programme will be implemented in full by the end of June. The DMK Group now operates with six autonomous business units and a new leadership team. Around 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,” says Müller.

DMK largest supplier of non-genetically modified milk in Europe

Within just eighteen months, DMK has risen to become the largest supplier of milk produced without genetic modification in Europe (“GMO-free milk”, to use the exact term). The volume of GMO-free milk produced at DMK totalled 2.3 billion kilos. CEO Müller sums up: “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”.

Raw milk from three sources in future

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. Says Müller: “With these three sources we can react flexibly to different market and business situations. We can tailor our factories’ capacity utilisation and increase our value added”.

Current market situation stable

The market recovered overall in 2017. After the serious crisis in 2015/2016, it turned the corner in 2017. The Management Team considers that the market has continued stable in the first half of 2018. Demand is growing, both on the home market and internationally. At present, DMK is paying its dairy farmers 32 eurocents per litre of milk. Ingo Müller: “We envisage a stable-to-positive trend in farm-gate milk prices in the coming months”. He said 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”.