DMK Group benefits from reorganization

By Jim Cornall

- Last updated on GMT

DMK, which launched many new products in 2017, said its reorganization will be completed by the end of June.
DMK, which launched many new products in 2017, said its reorganization will be completed by the end of June.

Related tags Dmk Milk

Germany's largest cooperative dairy company, the DMK Group, says it has seen positive effects in the first year of its sweeping reorganization.

Ingo Müller, CEO of the dairy company, presented a turnover for 2017 of €5.8bn/$6.7bn (12.6% up on the previous year) in Hanover on Wednesday at the annual assembly of the owners from the Deutsches Milchkontor eG (DMK) cooperative. At €29.6m ($34,2m), the consolidated net profit for the year more than doubled. The equity ratio remains stable at 31%.

Speaking to delegates, 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."

DMK Group Vertreterversammlung

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 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.

Reorganization complete soon

The reorganization program will be completed by the end of June, the cooperative said. 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,"​ Müller said.

GMO-free milk

Within the past 18 months, DMK has become the largest supplier of milk produced without genetic modification in Europe. The volume of GMO-free milk produced at DMK totaled 2.3bn kilos.

The management team noted that, out of just under 8bn kilos of milk processed, around 800m kilos could be lost through farmer resignations by the end of 2018. The loss of just under half of this volume was definitely confirmed.

The dairy company said it 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 partners for their self-marketed dairy products (toll production) and possibly also purchase milk on the market.

Müller said, with these three sources, DMK can react flexibly to different market and business situations.

“We can tailor our factories' capacity utilization and increase our value added," ​he said.

Current situation stable

The management team said the market has continued to be stable in the first half of 2018, with demand growing both in Germany and internationally.

Müller said DMK envisages 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," ​he noted.

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