Maintaining a successful course
The Uelzena Group reports a ‘good to satisfactory’ business performance in 2023, an outcome that was not a foregone conclusion at the start of the business year. Persistently high inflation rates, a shortage of skilled workers and a general climate of uncertainty characterised by wars, crises and conflicts. Despite these challenging conditions, the company can report steady development and that it stayed on course.
Robust result despite ongoing challenges
The company’s key performance indicators show satisfactory progress. As expected, it was not possible for the Uelzena Group to build on the results of previous years, but it still achieved a turnover of €931 million. The group earnings were €12.3 million and the equity ratio of 35.9 % was significantly above that of the previous year. Overall, sales rose slightly in the Uelzena Group in 2023. Despite the increased volume, revenues declined due to the raw material pricing trend. There were 845 employees in the group on the reporting date of 31 December 2023, 48 of these had training contracts.
Satisfactory milk payout
In 2022, approximately 860 million kg of raw ingredients was delivered, which equates to an increase of four percent over the previous year. Uelzena’s milk payout was significantly below the record high of the previous year at an average payout of 40.55 euro cents, although it was still above the average of past years. The reason for this is the higher raw milk volume, which led to supply pressure and the associated drop in revenue. In addition to the declining milk payout, the farmers were faced with greater policy-based constraints and continually high production costs. This led, for example, to nationwide protests by farmers aiming to bring about a change in agricultural policy.
Expansion of capacities
The expansion and modernisation of the site in Uelzen continued in the reporting year with the commissioning of the new spray-drying plant, extending the capacities of the successful contract drying division. The foundation was also laid for the expansion of the Altmark cheese dairy in Bismark. The capacity expansion helps to safeguard the future of the group and gives dairy farmers guaranteed sales for the raw milk they produce within the region. The investments and modernisations in plant and building technology to reduce emissions at all sites will continue to be made to keep production sustainable and add value.
Outlook for 2024
Further projects are planned at all company sites which will help to continue the positive development in the future and ensure our strategic corporate objectives. Major objectives remain a competitive milk payout, sustainable profit generation and the independence of the company group. In the course of the new reporting obligations, sustainability management in Uelzen will be expanded and sustainability officers will be nominated at the other respective sites.
Context: Why the Uelzena Group needs a sustainable corporate strategy
The Uelzena Group is a dairy that faces one key challenge, namely the heavily fluctuating prices for its main products of milk powder, butter and cheese on national and international markets. The Group is responding to this challenge with a strategy of diversification and differentiation. The primary objective is to compensate for fluctuations in milk prices and to provide farmers with a competitive milk payout.
A lot depends on the business success of the Uelzena Group; the milk payout for the members as well as the employee wages, capital expenditure and taxes. It is therefore the company’s responsibility to maintain and expand corporate performance in the long run and to continuously invest into its future viability.
The Uelzena Group is a medium-sized cooperative enterprise with 845 employees and consolidated sales of 931 million euros, processing almost 860 million kilograms of liquid dairy raw materials, 778 million kilograms of which is raw milk, at four production sites in northern Germany. The business purpose of Uelzena Group is the support of its member cooperatives and their milk producers. See also: Company profile
Our management approach: Company
The main focus in the action field ‘company’ is economic performance. Systematic planning and hard work are the foundations for the business success of the Uelzena Group. In its efforts, the Group is supported by various management systems and processes such as strategic multi-year planning, risk management, compliance and management by targets.
Corporate management defines long-term goals, plans implementation measures and monitors their effectiveness. Norms and standards are constantly further developed and require adaptation in corporate management.
Our sustainable corporate strategy – overview on targets and measures
Corporate objectives
- The Uelzena Group aims at generating a competitive milk payout for its members and guaranteeing reliable purchases
- The goal is not short-term profits, but rather continual good corporate results
- The independence of the Group must be maintained in the long term
Reliable and guaranteed sales
The Uelzena Group is committed to its members to reliably buy all of their milk. The company fulfils this obligation every year, again and again to 100 percent. This is achieved by ensuring that processing capacities and sales opportunities – i.e. access to customers - are always in line with the amount of raw milk delivered by the members. A medium-term strategy and investment plan (multi-year investment plan) was developed for the entire Uelzena Group that involved all business divisions, sites and executives. The plan includes the further development and modernisation of the corporate sites and the individual lines of business.
Balanced use of financial resources
Economic performance is expressed as the ability to generate appropriate revenues on the markets and to act cost-consciously. The generated revenues make it possible to pay the member companies and their milk producers a competitive milk price (operational costs) while at the same time strengthening equity with the surplus. It is important to have a sufficient amount of our own capital, otherwise the Uelzena Group, with growing capital requirements would have to rely disproportionately on external financing, for example, for investments. Added to that, the equity also acts as a buffer in difficult market situations.
Diversification
The Uelzena Group uses diversification to create several earning pillars that allow it to generate appropriate results. This enables the Group to better counterbalance unfavourable developments in market prices or sales in individual business or product fields. In total, it decreases the economic risk for the company and its member enterprises.
Differentiation
When it comes to products and services, the Uelzena Group is a strong partner to its customers. The Group reliably takes care of the requirements from demanding customers and market segments. This creates added value for the customers and a basis for, very often, many years of partnership – this makes a significant difference in a competitive environment.
Strategy and management systems
The Uelzena Group has implemented various management systems in order to ensure proper management and control of the company. There are clearly defined work instructions, procedures, responsibilities and process descriptions in place:
- Strategy and sustainability process
- Systematic risk and crisis management
- Quality management based on ISO9001 and a continuous improvement process
- Energy management based on ISO 50001
- A team responsible for occupational safety that reviews accidents and implements improvement measures
- Reviews of IT systems in terms of data protection and privacy issues
- Compliance officer who receives and checks information on violations of the Code of Conduct and, if necessary, initiates measures