On track despite challenges

The Uelzena Group’s business development continued to be affected by the Covid-19 pandemic in the 2021 reporting year. Fortunately, raw ingredient processing and production has been maintained since the start of the pandemic, while the operational profit and milk payout significantly increased compared with the previous year. Despite difficult framework conditions, the company maintained its course and implemented the scheduled strategic measures.

Successfully negotiated challenges

The 2021 financial year was associated with major challenges for all business divisions. Nearly all divisions had to contend with, in some cases, extreme supply shortages as a result of the disrupted global supply chain. From the middle of the year, the effects of rising inflation were also felt along with sharply increased energy costs. Despite the tense market situation, the Uelzena Group increased its sales in 2021. The turnover increased markedly in virtually all product groups. Similarly to skimmed milk powder, prices for butter and cheese experienced positive growth during the course of the year. Only the delicatessen dairy products and health divisions saw a drop in turnover. As a result, a 13 percent increase in turnover was reported compared with the previous year. The Group was able to build on its successful year prior to the coronavirus pandemic with a turnover of €768 million in 2021.

Satisfactory milk payout

The overarching objective of Uelzena as a cooperative is to generate a sustainable and competitive milk payout price for its milk suppliers. In the reporting year the average payout was 35.44 euro cents, making the payout 3.87 euro cents higher per kilogram than the previous year. Despite the improved payout, the economic situation remains strained for the milk producers due to the sharply increased operating costs.

Expansion of capacities

About 18 months of construction from the initial groundwork to handover of the finished and tested plant to production – that's our schedule for building the new spray-drying plant in Uelzen, which started in 2020. This state-of-the-art plant is specialised in spray drying vitamins and minerals, as well as other specific ingredients, to the highest quality requirements. “High Care” is therefore the highest priority when designing and equipping the new spray-drying plant for the contract drying division. This includes, for example, a strict hygiene zones concept with hygiene airlocks to separate the different areas, and cleaning concepts with separate washing and drying rooms to clean plant components. In energy terms, the plant will meet the latest standards and enable production that is both sustainable and conserves resources. A bridge with an automated conveyor belt connects the plant to the fully automated high-bay warehouse, which was commissioned in 2019. To relieve pressure on the spray drying towers at the Uelzen site, which were running at full capacity, the capacities in the instant beverage field were expanded in Ratzeburg. Capacity potential has been significantly increased by the commissioning of an agglomeration plant to produce readily soluble and loose powdered products.

„Even in challenging periods, we have remained on our chosen path and invested in the future. In this way, we are pursuing the goal of building on the successful business development to date and generating a competitive milk payout for the milk producers."

Jörn Dwehus, Chairman of the Board, Uelzena eG

Whey processing secured

Biolac GmbH & Co. KG processes about a million tonnes of whey, its sole raw ingredient, into whey derivatives annually. In the course of restructuring, Milchtrocknung Südhannover eG was changed into a GmbH (limited liability company) with new shareholders Uelzena eG, Fude & Serrahn, and Breitenburger Milchzentrale, and is now the sole owner of Biolac. Uelzena is using this strategic opportunity to secure the long-term processing of its own whey volumes, which are used in innovative products for the national and international market.

Outlook for 2022

The Uelzena Group remains in an exceptional situation in 2022. Besides the ongoing Covid-19 situation and the associated supply shortages, the war that began in Ukraine at the end of February has had a pronounced impact on energy and feed prices, in addition to the resulting humanitarian crisis. Nevertheless, the strategic projects to safeguard the sustainability of the Group will continue to be promoted. The aim is to build on the successful business development to date and to generate a competitive milk payout for the milk producers. The completion of the spray drying plant in Uelzen as a central investment project continues to be a focus.

 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 790 employees and consolidated sales of 766 million euros, processing almost 788 million kilograms of liquid dairy raw materials, 699 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.