German dairy co-op DMK saw its profits rise 9% last year to €79m, as profit margins widened slightly from 1.3% in 2018 to a still very narrow 1.4% in 2019. The co-op’s sales for the year increased by 4% to just under €5.8bn, while net profits fell by 20% to €24.5m, largely as a result of restructuring costs.
DMK said it invested €145m last year in capital projects, including the construction of a new infant formula plant to manufacture its own brand of baby formula, along with a new milk drying facility.
DMK is the largest dairy co-op in Germany, processing about 7bn litres of milk every year, supplied by its 6,000 dairy farmer members.
As a result of this loss in milk supply, DMK were forced to close a number of milk processing facilities
However, the co-op lost a massive 1bn litres in milk supply last year, as a large cohort of dairy farmers walked away from the co-op to rival dairy processors.
As a result of this loss in milk supply, DMK were forced to close a number of milk processing facilities and outsource milk processing to other companies. Ingo Muller, CEO of DMK, said both measures cost the co-op money, but allowed it to stabilise the business following the loss of such a large volume of milk.
On top of this, the milk price paid to farmers also suffered. Muller said the co-op’s milk price for 2019 (32.3c/l at 4.2% fat and 3.4% protein, according to LTO) was not where he wanted it to be, as it was below the average milk price paid by other dairy companies, against which DMK benchmarks itself.
SHARING OPTIONS: