GERMANY – DMK, Germany’s largest dairy company, has announced plans to acquire its venture partner’s remaining 49% stake in Mlekoma Dairy, a sales and distribution business in Poland.
This move aims to bolster DMK’s presence and promote its Milram brand in Poland’s food service and retail markets.
The acquisition, which remains subject to approval by Polish competition authorities, is seen as a strategic effort to enhance DMK’s branded business in Poland. A spokesman for DMK confirmed the focus on expanding Milram’s footprint in Poland.
In the context of this deal, the Saudi group Saudia Dairy & Foodstuff Company (Sadafco) will retain ownership of Mlekoma’s dairy-processing factories in Poland.
Sadafco initially partnered with DMK in the Mlekoma Dairy venture after acquiring the Polish dairy group Mlekoma, which was already in partnership with DMK.
This acquisition news follows DMK’s recent announcement of plans to close a domestic facility and reduce capacity at three others due to declining milk production volumes.
The north-eastern Germany site in Dargun is set to be shuttered, with facilities in Edewecht, Hohenwestedt, and Everswinkel to be scaled down.
These measures, expected to impact approximately 150 employees, will be implemented by spring 2025, with DMK engaging in discussions with affected employees to explore their options.
The past year was challenging for the DMK Group, marked by market disruptions and negative one-off effects that led to unsatisfactory annual results.
The average milk price for 2023 fell short compared to competitors, resulting in significant stock devaluations, especially for cheese, and lower demand in key product lines. Higher energy costs due to long-term contracts also impacted the results.
Despite these setbacks, DMK remains financially robust. CEO Ingo Müller emphasized the company’s resilience and proactive measures taken in 2023 to address these challenges.
“You grow with challenges and can learn a lot from them—despite the difficulties,” Müller said. He noted that milk prices have been rising, and the company is working towards a competitive milk price target for 2024.
Key financial figures from the past year reflect these challenges: DMK paid an annual average of 41.1 cents per liter to its farmers, which, while high in a multi-year comparison, was below the competition’s average for 2023.
Earnings stood at €13.2 million, down from the previous year, while turnover remained steady at €5.5 billion. Nevertheless, DMK’s financial position strengthened, with the equity ratio rising from 31.3% to 34.7% in 2023.
Looking ahead, the milk market has stabilized with more normalized supply and demand dynamics. DMK anticipates a more stable price level, offering a positive outlook for 2024, though past volatility suggests ongoing caution.
The “Strategy 2030” initiative, launched in 2019, aims to strengthen and expand high-value product lines while reducing lower-return products.
This strategy includes reducing capacity at four DMK sites by early 2025 to strengthen the company’s future position and operational efficiency.
“Compared to before, DMK now has a clear identity,” Müller concluded, underscoring the company’s transformation under the “Strategy 2030” initiative.
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