DMK Group: Stable sales with extensive restructuring investments
Corporate restructuring completed
The DMK Group has used 2019 to implement and complete many of the measures initiated as part of its realignment. Looking ahead, the company intends to continue working on reducing costs in 2020, while the investments made in recent years should now bear fruit.
Ingo Müller, CEO of the DMK Group, also wants to close the gap in the milk price in the current business year and reach the average of comparable dairies: “2019 has demanded an enormous amount from all of us, the farmers, the employees in the DMK Group and the entire industry. Our milk price was not where we wanted it to be in 2019. In the past year, however, we were able to overcome many of the issues that had been a hindrance for us - the restructuring of DMK is now complete.”
Achievements in 2019
In order to be able to react quickly and flexibly to the changing demands of the market and consumer demands and thus remain competitive in the long term, the company has invested, among other things, in the new plant in Strückhausen for baby milk powder and in a new powder tower in Beesten. In addition, the former joint venture DVN in the Netherlands is now wholly owned by the DMK Group, and construction of a new plant for specialty cheeses has begun in Russia. In addition, the DMK Group continued to consolidate the ice cream division in 2019 and began concentrating production at the Everswinkel and Prenzlau sites. The acquisition of Alete has also enabled the company to strengthen its brand business. In addition to a large number of projects, the company also had to deal with a major loss of milk volume at the beginning of 2019, which was absorbed by plant closures, plant wage models and a changed product range policy. All projects still had an impact on earnings and payment performance in the past fiscal year.
The first positive effects of the corporate restructuring are also reflected in stable key figures: sales in 2019 are higher than in the previous year at EUR 5.8 billion (2018: EUR 5.6 billion). The equity capital ratio is stable at 30 percent (2018: 30.9 percent). Net income for the year is EUR 24.5 million (2018: EUR 30.6 million) - a solid result under the above-mentioned conditions.
Despite corona, the strategy is clear
Coronavirus has presented the DMK Group, as well as the entire economy, with an unprecedented challenge, but the company is coping well with it, thanks in part to the changes it has undergone in recent years. For Ingo Müller, this shows the strong cohesion within the company, "The exceptional situation resulting from coronavirus requires a particularly high degree of solidarity. As a cooperative, this sense of “we” is in our blood. I am proud of our employees and farmers who, despite the difficult circumstances, do their best every day to ensure normal operations. The outlook for our industry is now brightening. There are signs that markets are stabilising. We will benefit from this as we look ahead. As DMK, we have so far come through this crisis relatively well. Nevertheless, I am aware that the absolute milk price is clearly too low for our farmers. We will do everything in our power to make the positive market signals tangible for farmers as well.”
After the crisis, the company wants to push ahead with the planned changes. For instance, in order to further reduce costs, the “Pacesetter” programme was launched with the aim of optimising supply relationships and service contracts. The focus also remains on the company's management capability in 2020. The transformation of the finance department begun with the “One Finance” programme is helping to achieve this.
Dr Frank Claassen, CFO of the DMK Group says on this, “There's still a lot of work to be done. Again in 2020, our responsibility is to ensure that we only spend money when it is really being used wisely. We must continue to work on proper control of our processes. Our strategy aims to make us increasingly independent of short-term market fluctuations. We will do this by offering, for example, more high-margin products and fewer standard products.”
Representatives’ meeting postponed
Due to the pandemic, the representatives’ meeting scheduled for the end of June also had to be postponed. The company is planning the event for the autumn.
A detailed interview with Ingo Müller and Dr Frank Claassen on the DMK Group's share price and other key figures for the 2019 financial year can be read online in the annual report at www.dmk.de.