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DMK in a change

We act in the service of the farmers

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15.04.2021
In 2021, CFO Dr. Frank Claassen is looking forward – as for him, the company has lots of financial potential, working together with the farmers.

Despite the ongoing pandemic, the DMK Group is looking forward to the year ahead – rightly so?

Absolutely! We are all hoping for an end to the pandemic – but until then, we’re learning better and better how to cope with it, thanks to our health and hygiene regulations. There’s also a silver lining on the horizon as dairy prices are rising and the markets are expecting the situation to keep improving. So our goal is to push through higher prices.

How have the different market segments changed during the crisis?

Food retailing has expanded, with Edeka, Lidl, Rewe and Aldi at the forefront – and that has helped our brand and trade products too. However, there was also a larger impact on the whole food services market, which is very important to us. That means customers from the food service, hotel and restaurant sectors, who process cheese, cream or butter for their own customers.

 

Why is the food service area so important for DMK?

The segment is highly profitable, because the focus is less on the price than on the characteristics of the product. For example, we can offer our customers the right melting properties for cheese, or help them prepare milkshakes faster. This market is really driving growth at DMK. Unfortunately we haven’t recovered to the levels we were at before the crisis, which is painful, as we have a very strong position on this market.

DMK has reorganized and modernized the entire finance department and has also reassessed procurement. How are these measures helping?

They’re making money for us because they optimize our purchasing of nondairy products that we buy, such as packaging. We spend a billion euros a year on this, so it’s really important to make savings.

You reorganized the Finance department under the banner “One Finance.” What’s the department working on right now?

The team examines each business unit’s figures and plays a key role in helping us make faster and better decisions that are more accurate and more transparent. We’re developing digital financial tools that are able to show us sales and earnings at the push of a button. With prices changing rapidly, I need to know what my costs and revenues are, and how they are changing, on a daily basis. But at DMK, we also benefit from the S&OP – the Sales and Operations Plan. That’s where we calculate the flow of milk volumes: How much comes in, how is it distributed and what is it used to produce? With the information available faster, we are able to make better and more accurate decisions.

 

Germany has an election this year and farmers are protesting more and more about environmental regulations and milk prices. How does DMK see that?

Farmers are our owners and we stand alongside them in solidarity with their interests, which are justified. People have often said it’s the dairy against the farmers but that isn’t true. Without their milk, the company would not exist. There are many farmers on the supervisory board and other committees. We discuss every step and we are here to answer questions. We’re very much aware of their difficulties – though as a dairy, our job can’t be to speak out on the political stage. Our job is to turn milk into the best dairy products at competitive prices and market them. The more world-class products we produce, the more farmers benefit.

 

Farmers are also benefiting from the Fixed Price Model...

We’re happy it’s becoming more popular! The size of our company allows us to offer the model where we buy their milk at a fixed price, as we trade the milk on the futures exchange. We put ourselves at the service of the farmers and act on their behalf. The fixed price isn’t aiming to be better than the market. That would be reckless. It’s a hedging instrument to free farmers from price fluctuations. It means six to eight months ahead they can know what they will get for a certain amount of the milk they produce. That stabilizes their revenue flows and makes them more independent.

The cooperation with the Netherlands is also going well. What are you hoping for, from the synergies between DMK and Uniekaas?

Uniekaas is a great cheese with a long tradition and with it, we can further develop the brand business in the Netherlands and Benelux. In terms of sales, Uniekaas has been integrated into the BU Brand, while production-wise, it’s integrated into the BU Private Label. In both areas we’re also using local knowledge to become better and better. Uniekaas may be a small brand, but it’s growing profitably.

Is DMK planning further investments abroad?

We never rule it out but markets abroad have their own rules. We weigh up the risks and advantages of doing some of our production locally. The places where we see opportunities are in those markets where the dairies aren’t all underbidding each other, and where customers appreciate DMK as a reliable supplier. The top priority for exports should, of course, be our milk and our dairy products and that’s going well right now in Japan and the Dominican Republic, among other places. Our Oldenburger cheese brand is very popular abroad.

 

Are there other areas where major work is needed in 2021?

DMK’s main focus is set the pillars of our strategy are in place. Now, we are working through our projects one by one – that’s what we did in 2020 in spite of the pandemic and we’ll keep doing that in 2021. We’re reorganizing business in BU Baby, we’re continuously improving thanks to the Tiger project in the plants, we’re continuing to grow closer together as DMK across the German/Dutch border, and we’re continuing to look very closely at our cost structures. We can’t just relax – standing still isn’t an option. “We’re on it!” is our motto.

Frank Claassen, the DMK Group’s Chief Financial Officer (CFO) since 2019.

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