Company

Record turnover and broad growth

Changed market conditions and a variety of new measures and renovations has enabled the Uelzena Group to achieve a record turnover. Thanks to healthy economic developments and positive contributions by the subsidiary companies, the company can look back on a successful business year overall. This was achieved not only by an excellent group net profit but also by a milk payout above the federal average. Implementing ongoing investment projects is a key component of the company’s future.

.The generally positive trend in the production and sales volumes made for a record turnover with an increase of nearly 9 percent compared with the previous year. The group net profit of 9.4 million euros was 5 percent above the previous year’s value. Once again, the equity ratio rose which shows that the adopted investment course is on solid ground. In 2019, the milk payout price was 33.79 euro cents per kilogram raw milk, which is above the national average. All these developments are all the more gratifying given the severe drought once again last year, which again presented challenges to milk producers.

100 percent goal attainment

In 2019, all economic goals were achieved in full, which is due to the forward-looking corporate strategy, the corresponding investments and the positive sales trend in nearly all business divisions. Milk fat is the only area in which the group had to accept declining sales related to price. In contrast, the milk powder business grew with the turnover rising by more than 40 percent compared with the previous year. Non-milk products also recorded an increase in turnover. Significant price increases in the individual business divisions, in addition to increased sales volumes, were a major reason for this positive trend. All in all, the Uelzena Group was able to improve on the previous year turnover of 647 million euros to achieve 705 million euros in the reporting year – a result that marks a record high.

Milk payout above the national average in Germany

In 2019, the milk payout of the Uelzena Group rose to 33.79 euro cents/kilogram raw milk. Given that the federal average fell by 0.69 euro cents/kilogram raw milk, this is remarkable. The price paid was striking, particularly in the north of Germany, which highlights the strong position of the group in regional competition. The reasons for this lie in the economic health of the company, a balanced mix of added value with products for different markets in global retail.

We are on course with our strategic direction but the coronavirus pandemic requires short-term measures to safeguard the business processes and health of our employees.

Jörn Dwehus, CEO, Uelzena

CompanyIncreased added value thanks to the baby food-grade strategy

The demand for high-quality contract drying and milk powder products has risen dramatically compared with previous years. Uelzena identified this trend early on and crucially boosted its baby food-grade production by qualifying two drying towers in Uelzen. The company is consistently following this approach with the new investment project for tower no. 12. Raising the quality to baby food-grade makes it possible to open up new markets with greater added value, a decisive factor for these strategic investments. A considerable growth potential is envisaged for the future in the field of contract production, especially for baby food products.

Newly built high-bay warehouse commissioned

Thanks to the new high-bay warehouse, the concept of short distances has already paid for itself in 2019 with lower logistics costs (transport and storage costs) and reduced emissions. The warehouse has also given rise to a modern infrastructure, offering additional benefits for the entire site. Commissioning the high-bay warehouse did not restrict the operational business. Initial difficulties during the start-up due to isolated IT and technical faults were successfully compensated for by our staff’s excellent coordination.

An average of 1,300 pallets (40 ramp contacts) were moved per day in the reporting year, with storage utilisation at 8,860 pallets on average. Only products on non-standard pallets will continue to be outsourced. The high-bay warehouse is designed for growth and could be expanded if required. Besides reducing the administrative work, it also offers a flexibility gain in terms of our own production, which can now be supplied with goods more quickly because logistical receiving or collection processes have been facilitated. As raw materials are now stored directly on site, the goods receipt period is much shorter thanks to the “short” direct route to the lab. This enables us to react more quickly to unforeseen requirements such as any suddenly required production changes.

 
Outlook for 2020

Despite the current prevailing COVID-19 pandemic, the company is continuing with its strategic projects. At the moment, it is not possible to determine the precise impact and consequences this will have on the company. However, it is conceivable that declining sales markets due to national and global lockdown measures, and the abrupt lack of demand, will mean substantial losses in these markets. Whether these losses can be absorbed in the second half of the year or which measures will be needed, cannot be predicted at present.

However, a new partnership was formed in May 2020 to present a more diversified company for the future. With a 50 percent share in BHI Biohealth International GmbH, the Uelzena Group will integrate its nutrineo-health food solutions (nutrineo) business division into the joint company. The new partnership will combine the product diversity and innovative strength of both parties and secure further expansion over the coming years in a fast-growing health market. A joint investment programme to expand production capacities is in the pipeline. Further information on the new partnership can be found here.

 
.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 around 780 employees and consolidated sales of 705 million euros, processing almost 729 million kilograms of liquid dairy raw materials, 636 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

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