Combined annual report and
sustainability report 2014
Global success with German quality
DMK GROUP – our strategy
Our goal:
To become
Europe's most
successful dairy
cooperative
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Cheese
Ingredients
Fresh dairy products
Subsidiaries
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Internationalisation
Innovation
Brands
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About this report
Reporting framework
With its third combined annual report and sustainability
report, DMK GROUP is documenting its economic,
ecological and social achievements for the year 2014. The
company provides information to all DMK’s relevant
stakeholder groups in this compact and holistic overview.
The combined reporting is based on the G3 Guidelines of
the Global Reporting Initiative (GRI), which has examined the report and confirmed that it complies with
Application Level B. With the help of globally recognised
guidelines, the GRI aims to make organisations’ reporting
more transparent and comparable. A summary of the GRI
Content Index is given on page 74. The detailed version
and further information are to be found on our website at
www.dmk.de/en/responsibility/sustainability/strategy/.
DMK reports on the company’s progress on an annual
basis and will publish its next report in accordance with
the GRI’s new G4 Guidelines. The last combined annual
report and sustainability report appeared in June 2014.
The present combined annual report and sustainability
report provides information on the results and most
significant developments of the 2014 fiscal year, which
runs from 1 January to 31 December 2014. In addition,
the report contains information on developments in the
current 2015 calendar year. The facts and figures relate
to DMK’s associated companies and participating interests. The goals of the “DMK 2020 Sustainability Strategy:
Our milk. Our world.” refer to:
dairy farmers and member dairies of DMK eG and
contract suppliers to DMK GmbH,
DMK GmbH and companies in which DMK has a
minimum participating interest of 75 percent.
Facts, figures or goals with a different frame of reference
are specifically indicated at the relevant point.
DMK has gathered the data and content in close collaboration with the responsible departments of the company
and by analysing the following management systems:
consolidated annual financial statements/
financial data
employee ratios: electronic
personnel management system
environmental indicators: environmental
management system DIN EN ISO 14001;
energy management system DIN EN ISO 50001
Specific details of data gathering and differences in or
limitations of facts and figures are noted directly in the
relevant tables and texts.
The aim of this report is not only to provide a compact overview for all stakeholders, but also to involve them in the
process of its creation. For that reason, insights from
employee surveys and the dialogue with various groups
have, for example, been incorporated into the report. If you
have any suggestions or comments about this report, please
write to:
[email protected]
We are interested in your opinion.
Further information
Further information on the Global Reporting Initiative and the
GRI Guidelines can be found at
www.globalreporting.org.
Detailed material about the company and the DMK 2020 Sustainability
Programme is available at
www.dmk.de/en/ and in the progress reports
on the DMK 2020 Sustainability Programme.
Note
For ease of reading the masculine form is used in this report in referring
to persons. This is always taken to mean people of both genders.
DMK in brief
With 26 sites in ten German regions and over 7,400 employees,
DMK GROUP is Germany’s largest dairy company. The cooperative-based
company, which has its registered office in Zeven, Lower Saxony, sources
around 6.8 billion kilos of milk every year from its 8,900 active milk
suppliers and makes it into internationally recognised quality products
for retailers, food manufacturers and bulk consumers. With a turnover of
5.3 billion euros, DMK GROUP is also one of the leaders of the European
dairy industry. DMK is present in around 100 countries all over the world
through strong brands such as MILRAM, Ravensberger, Osterland, Oldenburger, Humana, Intact, Leben’s, Biolabor, hansal and NORMI. The range
of products made by DMK GROUP’s business units and subsidiaries covers
a spectrum from basic milk products, cheese and dairy ingredients for
food manufacturing to baby food, ice cream and health products.
Deutsches Milchkontor eG
Group key figures
2014
Incoming raw materials 1
Turnover
billion kg
6.8
EUR billion
5.3
Investments
EUR million
201.6
Tangible assets
EUR million
717.0
Equity capital
EUR million
573.9
Balance sheet total
EUR million
1,531.9
Average number of employees
of which apprentices
1
Incl. raw milk, skimmed milk, cream, concentrates etc.
7,440
254
1
Global success with German quality
DMK GROUP is perfectly prepared for the sweeping changes in the milk market
thanks to its foresighted business management. The years in which DMK has
been driving sales expansion in Europe and, above all, in growth markets outside
Europe are bearing fruit. Alongside the important but stagnating home market,
this expansion will safeguard the economic performance of the company and
its dairy farmers in the long term. With the branded products from its different
business units and subsidiaries, DMK positions itself in the world market as an
innovative company with a long heritage and is a reliable supplier of quality
“Made in Germany”.
Contents
Leadership and strategy
Foreword by the DMK GmbH Management Team
Foreword by the cooperative’s elected officers
Highlights 2014
Business and responsibility
The cooperative
Stakeholder relations
4
7
8
10
16
18
Business and customers
Brands and products
Innovations
Internationalisation
Product responsibility
24
28
30
32
Milk production and processing
Business environment and background
Milkmaster Programme
Animal welfare and environmental impact
Environmental protection at the production sites
36
38
40
42
People and commitment
Values and opportunities
Employees
Dairy farmers
Region and responsibility
48
50
54
56
Financial information and key figures
Group Management Report 2014
Deutsches Milchkontor eG Group
profit and loss account
Deutsches Milchkontor eG Group balance sheet
Deutsches Milchkontor eG
Group cash flow statement
Deutsches Milchkontor eG
profit and loss account
Deutsches Milchkontor eG balance sheet
DMK Deutsches Milchkontor GmbH
profit and loss account
DMK Deutsches Milchkontor GmbH
balance sheet
Target status of DMK 2020 Sustainability Strategy
GRI Content Index – abridged version
Further information
Executive bodies
Sites
Structure of executive bodies
Group structure
Combined annual report and sustainability report 2014
58
61
62
64
65
66
69
70
72
74
76
2
Leadership and strategy
4
7
8
10
16
18
Foreword by the DMK GmbH Management Team
Foreword by the cooperative’s elected officers
Highlights 2014
Business and responsibility
The cooperative
Stakeholder relations
3
A model for the industry
As a company organised on cooperative lines, DMK GROUP places the responsible
handling of milk at the heart of its activities. With its healthy, high-quality,
responsibly-produced foods, DMK sets standards for the industry and positions
itself on the German and international markets as a successfully growing dairy
company on the way to becoming Europe’s most successful dairy cooperative.
DMK sets standards by:
fair, transparent business management with a long-term focus,
a continuous and open dialogue with the various stakeholder groups, its alignment with the new challenges of the German and
international markets,
concentration on profitable growth in its strategic business units,
the use of brands, innovations, and subsidiaries to strengthen the total
company’s market position,
a long-term sustainability strategy that is a trend-setting combination
of corporate and social responsibility.
4
Leadership and strategy
Foreword by the DMK GmbH Management Team
Foreword by the DMK GmbH
Management Team
From left
Dr Dirk Gloy
Managing Director DMK GROUP
Operations/Logistics
Ines Krummacker
Managing Director DMK GROUP
Human Resources
Michael Feller
Managing Director DMK GROUP
Marketing/Sales
Sönke Voss
Managing Director DMK GROUP
Agricultural Affairs/Raw Materials
Dr Josef Schwaiger
CEO DMK GROUP
Ingo Müller
Managing Director DMK GROUP
Central Quality Management,
R&D, Ingredients
Volkmar Taucher
Managing Director DMK GROUP
Finance/Administration
Leadership and strategy
Foreword by the DMK GmbH Management Team
Ladies and Gentlemen, Shareholders,
Our combined annual report and sustainability report for this year has been given the title “Global success with
German quality”, which essentially also underpins our new umbrella brand strategy. On the basis of the vision we
presented in 2013 with the core values entrepreneurial, fair and innovative, our strategy focus is to pursue profitable
growth in our strategic business units in the German and international markets. We are using brands, innovations
and our subsidiaries to strengthen our market position as a cooperative-based company on the way to leadership of
the European dairy cooperatives. With the new umbrella brand strategy, we are positioning ourselves on global markets
as a future-oriented company with a long heritage that also represents top German quality abroad. A partner-like
relationship with dairy farmers, business partners and employees is also a trend-setting feature of our DMK 2020
Sustainability Strategy.
Our performance in this fiscal year confirms that we are taking the right approach: our turnover came to 5.3 billion
euros and our profit to more than 42 million euros, and our equity ratio improved year on year to 37.5 percent. At the
same time, we were in a position to make capital investments of more than 200 million euros. On this financially
secure base, we are soundly placed to deal with future market fluctuations and further investments and – not least
on the basis of our subsidiaries’ vigorous growth – have shown in a highly volatile market that we as Germany’s largest
dairy cooperative are on the right track.
With a volume of 6.8 billion kilos of milk processed, we paid our cooperative’s dairy farmers a stable milk price of
36.86 eurocents per kilo on average, the same level as comparable dairies. This is a considerable achievement, particularly in view of weaker global markets and the turmoil caused by the embargo on Russia in the second half of the
year. With the milk volume rising even before the quotas were abolished, the survey of dairy farmers in the year under
review shows that from 2015 onwards we can expect an annual regional increase in the milk volume of up to four percent. Since we are guaranteeing to take all the milk our farmers deliver even after the end of the milk quotas on
1 April 2015, the year under review found us preparing to process and market larger volumes profitably in the future.
In order to do so we have driven internationalisation in global growth markets, invested in highly flexible modern
production to process our raw materials and continued to develop our portfolio towards highly profitable products
that meet customers’ requirements.
One core factor for our success is our employees. In this area, too, we have taken many measures in the reporting
period to establish our vision firmly, stabilise our proven high employee satisfaction level and offer a wide range of
training and continuing professional development courses – not least our advancing internationalisation makes
special demands on our workforce, and we support them with language courses among other opportunities. Following
the implementation of our factory structure concept, we further optimised the organisation of our company and its
subsidiaries in the year 2014. To standardise processes in areas such as accounting, human resources and finance
across the entire DMK GROUP, we surveyed the current situation at DMK and its subsidiaries in the reporting period.
We have now analysed the results and are developing concrete measures to further optimise working relationships
and efficiency throughout the corporate group. This will make an important contribution to a profitable future.
Combined annual report and sustainability report 2014
5
6
Leadership and strategy
Foreword by the DMK GmbH Management Team
“We are in close contact with our
retail partners and customers and take their
changing requirements very seriously.”
Many of our customers have been making advances in sustainability issues in the past years. As a dairy company,
we are in close contact with our retail partners and customers and take their changing requirements very seriously.
There are many issues out there, including adherence to ethical standards, animal welfare certifications, requirements
on the origin and quality of feedstuffs, the products’ carbon footprint, the maintenance of biodiversity or desires
for alternative packaging. A long-term planning horizon is needed to find solutions to these different demands.
In addition, negotiations have to be undertaken in a fair process between DMK and customers as to who will bear
any additional costs.
To secure the economic foundations of our sites we also have to make sure that the requirements are designed in such
a way that the dairy farmers can implement them. With the Milkmaster Programme, which we initiated in the reporting
period, we are pursuing a new route that supports agricultural working and production methods conforming to our
ideas of responsible milk production. The programme provides the dairy farmers with recommendations on areas such
as feeding, animal welfare, animal health, the rearing of calves and young livestock and milk storage. The core of the
programme lies in continuous further development throughout the entire value chain. Other projects from our DMK
2020 Sustainability Strategy have also been progressed in the reporting period, as you will see in many sections of
this report. We take our responsibility seriously and also want to set standards for the area of sustainability within
our industry.
The first months of the year 2015 show that the still-volatile market will continue to pose the expected challenges for
DMK. We will face these challenges with the strategy we have adopted, and will be able to record further progress on
our way to becoming Europe’s most successful dairy cooperative. A merger proposal was accepted by the executive
bodies of DMK GROUP on 20 May and the members of the cooperative behind Dutch cheese manufacturer DOC Kaas
on 21 May. Following this important step, DMK will systematically continue the strategy of both companies. All
resolutions passed apply subject to the consent of the responsible competition authorities.
The Management Team
Leadership and strategy
Foreword by the cooperative’s elected officers
Foreword by the
cooperative’s
elected officers
Otto Lattwesen,
Chairman of the
Supervisory Board
Alfons Kerlfeld,
Chairman of the Board of Management
of Deutsches Milchkontor eG
Ladies and Gentlemen, Shareholders,
The long-term prospects for DMK members are bright, despite the high volatility of the milk market for us dairy farmers,
particularly in the second half of 2014 and at the present time, and the impact of the end of the quota system, which
has been making itself felt for some time. A growing world population and higher purchasing power is increasing the
demand for dairy products, particularly in many emerging economies.
Even if the upward curve shows the occasional dip, DMK’s members are well positioned to benefit from these growth
opportunities thanks to the favourable climatic and geographic conditions at their locations, their investments
in modern and sustainable dairy farming and their strong and flexible dairy company partner. With a milk price of
36.86 eurocents per kilo, DMK has succeeded in paying the cooperative members at a stable level despite the difficult
market, particularly in the second half. An extra payment of 1.5 cents per kilo was made in January for the month of
December. In order to include the farmers in the company’s business success, DMK deliberately decided against a
higher profit in the reporting period. The company ensured additional planning certainty and liquidity on the farms
with monthly milk price forecasts and twice-monthly payments.
In general, DMK keeps its eyes firmly on the cooperative members’ long-term economic security and focuses its
business strategy on generating the optimum value from the shareholders’ resources. The basis for the strategy’s
long-term success lies in a trust-based community of the dairy farmers and the company. Both sides have done a great
deal towards this in the year under review – through the dairy farmers’ high participation rate in the survey on volume
planning and a total of more than 100 joint events, the transparency of information that DMK has ensured through
the Milchwelt (“Milk World”) magazine and other measures, and DMK’s help in finding service providers for dairy
farmers who can support them in protecting their farms better against volatile market trends.
One milestone in our collaborative relationship is the Milkmaster Programme. This was developed from the DMK 2020
Sustainability Strategy and was worked out in detail by representatives of the cooperative’s elected officers and of
the company in close collaboration in the year 2014. The dairy farmers will be involved in its implementation from
2015 onwards.
Following the end of the milk quota system, it is still a concern in the current fiscal year to maintain and secure the
future of our joint economic success in a fair and trust-based community. The merger with DOC Kaas is a further
milestone in delivering benefits to us as farmers by a strategy backed by the cooperative.
Sincerely
Otto Lattwesen
Chairman of the Supervisory Board
Sincerely
Alfons Kerlfeld
Chairman of the Board of Management,
Deutsches Milchkontor eG
Combined annual report and sustainability report 2014
7
8
Leadership and strategy
Highlights 2014
Highlights 2014
TOP
NATIONALER
ARBEITGEBER
2015
DEUTSCHLANDS
BESTE
ARBEITGEBER
IM VERGLEICH
In Kooperation mit:
Milk volume planning confirms
joint growth trajectory
In June and December 2014,
DMK GROUP once more called
on its dairy farmers to complete a
survey on their production plans.
The results provide valuable information for volume planning and
evidence that the dairy farmers
want to grow together with the
company. On average, the survey
revealed an annual production
growth of up to four percent per
region for the eight very different
areas in which our milk suppliers
are located. This means that the
volume of milk processed by
DMK is set to increase by 15 to
20 percent by the year 2020.
Milkmaster: a programme by
dairy farmers, for dairy farmers
In the year under review,
DMK GROUP presented the
Milkmaster Programme. This is
a programme derived from the
DMK 2020 Sustainability Strategy
under which all the sustainability
measures on the farms for the
period 2015 to 2020 will be implemented. This joint DMK initiative
by dairy farmers, for dairy farmers
encourages methods of agricultural
work and production that are
in line with responsible milk
production and will strengthen
the cooperative’s farms.
Best employer among
the large food groups
In 2014, Focus magazine surveyed
the employees of 2,000 companies
in order to draw up a ranking of
employers. The result: DMK GROUP
is the industry leader in the category of groceries and luxury foods,
animal feed, drugstore articles
and medical consumer products.
Following excellent results in the
previous year’s rankings, this further improvement in our position is
proof of the high level of employee
satisfaction and the success of the
company’s activities in this area.
Leadership and strategy
Highlights 2014
Efficiency and quality: milk powder
factory with capacity of more than
600 million kilos of milk per year
2014 saw intensive construction
work ongoing at the Zeven site:
as part of extensive investments
in new processing capacity and
modern technology, a new milk
drying plant is being built there
which DMK will put into operation
in mid-2015. The spray tower has a
yearly production capacity of more
than 60,000 tonnes of top-quality
milk powder in line with international standards.
Whey proteins and lactose
for the world market
Production started at the Nordhackstedt site during the reporting
period. In future, 700,000 tonnes of
whey from DMK’s cheese production will be further processed there
to make whey protein concentrate
and lactose. DMK GROUP and Arla
Foods founded ArNoCo together
in the year 2011. The 50:50 joint
venture produces speciality whey
products for German and international food manufacturers.
MILRAM: bucking the
market trend
The year 2014 was a highly successful one for the MILRAM brand.
MILRAM was able to expand its
market leadership further in the
category of herb and savoury curds:
while the total market shrank by
2.7 percent, MILRAM’s sales volume
rose by 2.5 percent. At the same
time, MILRAM’s brand awareness
rose to more than 90 percent. On
the self-service shelves, the brand
added to its sales by 13.9 percent
(in cheese) in a declining overall
market. The cheese counter saw
MILRAM in second place by volume.
Combined annual report and sustainability report 2014
9
10 Leadership and strategy
Business and responsibility
Business and responsibility
With the goal of becoming Europe’s most successful dairy cooperative, DMK GROUP is focused on
achieving long-term performance and profitable growth with its four business units. The company
aspires to unite business success with the needs of its cooperative members and employees and the
demands of the environment and society. One of DMK’s measures to this end was the publication
in 2013 of the DMK 2020 Sustainability Strategy, which outlines the company’s course for the
period to the end of this decade.
Long-term strategic growth targeted
To DMK, entrepreneurial performance implies high
earning power, competitive milk prices and successful
presence in promising future markets. Top priority goes to
maintaining and expanding the stability of the company
and its subsidiaries. This takes precedence over rapid
growth. DMK re-invests profits into developing new
technologies and innovative products, into an attractive
environment for its employees and dairy farmers and into
expanding sales markets.
DMK has worked out a long-term strategy for this purpose
and continued its implementation in the reporting
period. The focus is on the four strategic business units
of cheese, fresh dairy products, ingredients and subsidiaries. The domestic and international business has to be
strengthened in all four strategic business units by establishing attractive brands, investing into high-performance
research and development for market-tailored products
and driving forward internationalisation in high-potential
markets.
New umbrella brand concept strengthens DMK GROUP
In the year 2014, DMK developed an umbrella brand concept which has carried all units under the single DMK
GROUP brand from January 2015 onwards. For example,
baby food producer Humana has become DMK BABY, the
MILRAM, Oldenburger and Osterland brands form part of
DMK CONSUMER. Additional areas are DMK ICE CREAM
and DMK INGREDIENTS. The umbrella brand concept
demonstrates the size, versatility and performance capability of the DMK family at a glance. With this approach,
DMK is strengthening the umbrella brand and the individual business areas alike. The fact that DMK has made
itself a success worldwide with German quality is communicated internally and externally. The defining characteristics of the umbrella brand are its cooperative origins,
the quality proposition, responsible, solution-oriented
and future-oriented entrepreneurial actions, partner-like
and trust-based dealings with customers, employees and
dairy farmers and close links with agriculture.
A model for the industry
The umbrella brand strategy aligned with the company ’s
vision directly leverages the strategic trilogy of a broad
product portfolio, modern production sites and the
strong presence in international growth markets with
which the DMK GROUP positions itself as a model for the
German dairy industry. The company continued to adapt
its product portfolio further to the new market challenges in the reporting year, which was characterised by
persistent strong competition and, in the second half, by
market volatility. The task in the years to come will therefore still be to find solutions to creating value profitably
with increasing milk volumes. To continue to grow profitably, DMK has further streamlined the production range
in the strategic business units in the year under review to
manage profitability and complexity. The main focus of
the company’s activities is on internationally marketable
products with high value added coupled with maximum
production efficiency through bundling and modernisation.
Leadership and strategy 11
Business and responsibility
DMK GROUP business strategy
Strategic business units
Cheese
Sliceable cheese
Mozzarella
F
resh cream cheese
Mascarpone
Fresh dairy products
Drinking milk
Cream, cream products
Fresh and UHT desserts
Butter
Ingredients
Subsidiaries
Dried milk products
Concentrates
Special ingredients
Baby food (Humana)
Ice cream
Health products
(Intact and Biolabor)
Strategies
Brands
MILRAM
Ravensberger
Osterland
Oldenburger
Innovation
Product development
Process development
Technology development
Flexibility for increasing milk volume
The strategic investments in the new mozzarella manufacturing plant in Georgsmarienhütte and the state-ofthe-art milk powder tower, built in Zeven to produce milk
powder of the best baby food quality, are to be seen in
this context, for example. The factory structure concept
completed in the reporting year and the further expansion
of the “milk swing” have once more made DMK and the
dairy farmers more future-proof in the reporting period.
The “milk swing” describes the possibility of having
flexible opportunities to use the raw material if prices are
under pressure or demand on certain markets changes,
thereby safeguarding the company against market risks.
Internationalisation
Asia
CIS countries
MENA countries
Africa and South America
The increasingly important internationalisation is a bonus
in view of a saturated domestic market and increasing
milk volumes. DMK actively continued to pursue a course
focused on profitable value added and the growth opportunities in promising future markets outside Europe in
the reporting period. With its products for consumers and
food manufacturers, tailored to the different regional
markets, the company has shown positive growth in
international markets in existing and new sales regions
despite some upheavals in international markets.
Combined annual report and sustainability report 2014
12 Leadership and strategy
Business and responsibility
Going new ways
To strengthen the position of the company as a whole,
DMK GROUP is also focusing on innovation, one core element of the vision: in terms of product developments,
investments in fixed assets, the optimisation of processes
and structures and also new alliances with additional
partners. The positive trend at the subsidiaries, all of
which were profitable in the reporting period, is due to
the new structures implemented by DMK in DMK BABY
and DMK ICE CREAM, for example. On the stable basis of
the year 2014, the company expects significant earnings
growth in these areas in the current fiscal year.
The company’s handling of its product portfolio and
processes is also defined by new ways. DMK has demonstrated its innovativeness by many examples in the
reporting period: by the development of new products
and investments of 200 million euros in new fixed assets,
which will allow more efficient manufacturing of the
quality products in demand on international markets.
This includes, for example, investments in much more
efficient curd production by bundling manufacturing in
Zeven. Zeven’s new milk powder tower also ensures
energy-efficient and resource-economical production in
this green-belt region with its strong bias towards dairy
farming. Thanks to the expected scale effects, it is a
cost-saving and highly efficient alternative to older
facilities and will soon amortise the investment. The new
cheese factory in Georgsmarienhütte and the modern
aseptic production facility in Erfurt are also aimed at the
efficient manufacturing of products for export by the
latest methods and with the latest equipment.
DMK does not only innovate through capital investment.
DMK GROUP operates here on the level of both content
renewal and organisational structures. Against this
background, the company surveyed the existing processes and structures in the year under review and has
started to develop a new, Group-wide structure. This aims
to tap synergies, clearly define responsibilities, standardise processes and strengthen the efficiency of the
corporate group.
New challenges also await the DMK GROUP’s employees
as a result of the company’s increasing size and internationalisation. The company will meet changing demands
and structures with transparent communication and
a wide range of training and continuing professional
development.
Systematic risk handling
Systematic risk and crisis management supports DMK
GROUP in achieving its corporate goals. It is embedded
on all levels and at all sites and is a permanently integrated element of responsible corporate management.
Risk management assesses the business activities of
DMK and its subsidiaries and participating interests. The
development of significant risks that could affect DMK
is monitored centrally.
Defined risk owners gather the data for the assessment
on the basis of qualitative and quantitative performance
ratios. Interfaces link a crisis management system with
the risk management system. The company prepares for
possible crisis situations with measures including its own
crisis organisation, nine defined scenarios with recommendations on actions prepared in advance and scheduled crisis drills.
Leadership and strategy 13
Business and responsibility
Sustainability strategy
DMK 2020
By 2020, we want to
advance sustainability
at DMK GROUP in five
areas each with four
fields of action and a
total of 60 goals.
AGRICULTURE
Our aspiration
We will improve the
conditions in which our cattle
are kept and reduce their
environmental impact.
Fields of action
Cow comfort
Animal health
Feed cultivation
Feeding
ENVIRONMENT
MILK
Our aspiration
Our aspiration
We will improve
the eco-balance
at our sites.
We will take
responsibility for our
dairy products.
Fields of action
Fields of action
Energy
Value added
Water
Quality
Waste
Product safety
Logistics
Packaging
TEAM
SOCIETY
Our aspiration
Our aspiration
Together we will do
our utmost to attain
long-term success for every
individual and for DMK.
We will support
the regions
we operate in.
Fields of action
Fields of action
Satisfaction
Dialogue
Training
Dairy competence
Diversity
Research
Elected office
Engagement
For detailed Information on the status of
the DMK 2020 Sustainability Strategy goals
please see pages 72 – 73.
For more information on the
DMK 2020 Sustainability Strategy visit
www.dmk.de/en/
responsibility/sustainability/strategy/
Combined annual report and sustainability report 2014
14 Leadership and strategy
Business and responsibility
Responsibility as a guiding principle
Competitiveness and growth are traditionally coupled
with responsible management and a regional orientation
at DMK GROUP. In the year 2013, DMK presented the
“DMK 2020 Sustainability Strategy: Our milk. Our world.”
(DMK 2020 for short). This ambitious programme is a
trend-setter for the dairy industry and draws up guidelines for responsibility as a guiding entrepreneurial principle in the future. DMK has set itself a total of 60 goals
in five areas, each with four fields of action, to be attained
by 2020 – from improving animal health and paying competitive milk prices through being a top employer and
reducing accidents to energy efficiency and supporting
the rural areas at its production sites. In addition, DMK
2020 deals with such important topics as climate protection, social and ecological standards in the supply chain,
packaging and social engagement.
Standardised audit universe for the whole Group
The DMK GROUP audit universe applies to the entire
group without exception and includes all subsidiaries in
which it has an interest of more than 50 percent.
It comprises 282 defined areas that are audited
at regular intervals on the basis of risk-oriented
sampling.
To prevent corruption, one of several steps in every
audit is a test for possible corruption risks.
This topic is also addressed in the DMK Code of
Conduct. A whistle-blowing system with an external
ombudsman acts as an additional preventive tool.
Annual review of sustainability goals
All 60 goals are supported by between two and seven
actions to be taken by DMK until the goals are achieved
in the year 2020 or earlier. Behind each goal there is also
at least one indicator, in most cases several, since the
majority of DMK 2020 goals tend to be qualitative in
nature. The indicators quantify how far the goals have
been achieved. A control system is used for internal management and control. DMK also makes selected data
available to a wider public, for example in this report.
The figure on page 15 illustrates the system behind the
DMK 2020 goals.
In consultation with the responsible areas, DMK checks
how far the goals have been achieved in annual goal
reviews which take place at the beginning of the year.
Where does the area stand? How far has goal achievement progressed? Are the planned measures being
implemented? Do the goal and action plans need to be
modified?
The goal review for 2014 showed that:
all the annual goals for 2014 were successfully
attained.
the company has started activities for three
additional goals.
four goals have made the transition from the
planning to the implementation phase.
An overview of all 60 goals and their status in the year
2014 is to be found on pages 72 – 73.
Leadership and strategy 15
Business and responsibility
Illustration of the DMK 2020 control system
DMK 2020
SOCIETY AREA, RESEARCH FIELD OF ACTION
Goal
“Support research across the milk value chain”
Actions to achieve goal (selection)
Control indicators for goal
1) Implement a system for placing annual research projects
Number of research projects supported
2) Support at least one research project p. a.
Amount of support (€)
3) Screen possible topics for future research projects
Sustainability management as a shared task
A comprehensive, solid structure is needed to implement
the ambitious DMK 2020 programme. The company
involves a variety of people and areas in implementation,
thus ensuring that sustainability is anchored and
embodied.
Management Board and executive bodies: The
executive levels of the cooperative and of DMK
Deutsches Milchkontor GmbH regularly consult
on the sustainability strategy and review the company’s sustainability performance.
Sustainability Management: This staff department
coordinates and manages all sustainability activities
and represents DMK with external stakeholders
and in specialist working groups such as business
initiatives.
Sustainability working group: Managers and
employees of the business areas which are directly
responsible for the implementation of the DMK
2020 goals and measures meet twice a year and
are in close contact with Sustainability Management. The responsible business areas include, for
example, Agricultural Affairs, Packaging Development, Purchasing, Innovation Management,
Occupational Health & Safety, Environmental
Protection and Human Resources.
Site officers: They implement measures in the
areas of Health & Safety, Environmental Protection
and Energy Management at the sites.
Council for the Future and Sustainability: This
high-ranking body made up of external experts
from business, science and politics is an important
driver for the Management Board in the strategic
direction of the company where matters of
corporate responsibility are concerned.
Steering Group: Every year, representatives of the
Council for the Future and Sustainability and DMK’s
Management Board assess the achievement of the
goals and deliberate and decide strategic issues.
Combined annual report and sustainability report 2014
16 Leadership and strategy
Cooperative
Cooperative
With a good 8,900 dairy farmers and cooperative shareholders, DMK GROUP is one of the major
dairies in Europe organised on a cooperative basis. The farmers identify with DMK and the
company’s strategic direction. Every dairy farmer embodies the principles of this modern
cooperative by running his farm responsibly and taking a hand in shaping the entire company
and its performance.
Founded on an organically grown community
The farmers have always been central to DMK as a company organised as a cooperative, since they are the suppliers of the milk, our most important raw material, and
the owners of Deutsches Milchkontor eG. Through their
work in agricultural bodies, they are also directly involved
in the dairy company’s strategic decision making. As a
result, the farmers’ milk production goes hand in hand
with milk processing and marketing within the cooperative-owned company. The 8,900-plus farmers maintain
a close relationship with “their” dairy company out of
conviction. There is great mutual trust between DMK
and the farmers on the basis of long-term collaboration,
in many cases grown over several generations. This
close connection between the partners in a value chain
also limits unpredictable business risks in the everyday
run of business.
All dairy farmers are involved in the company through the
executive bodies and therefore participate actively in
DMK’s corporate development and strategic decision
making. DMK’s Management Board consults with the
cooperative’s Supervisory Board and Board of Management members on important deliberations and decisions
on a basis of transparency and open communication.
Topics that DMK has worked on together with the dairy
farmers in the reporting period include capital investments as well as required processing capacity and sales
opportunities for the high growth in the milk volume in
the coming years.
The support of the executive bodies was also a key success
factor in the speedy introduction of the large-scale,
trend-setting Milkmaster Programme.
Activities of the Young Dairy Farmers’ Working Group
The Young Dairy Farmers’ Working Group undertakes
a study trip every year. In February 2014, 22 members
of the Working Group set out for Ireland to learn how
dairy farming is done in the “Emerald Isle”.
Visits to several dairy farms, guided tours of the
Dairygold and Glanbia dairy companies and numerous
talks with Irish experts were on the agenda.
Ireland is also getting prepared for the post-milk
quota era. Dairy farmers are planning to produce
around 50 percent more milk by the year 2020.
The sustainability theme is very important, because most
of the milk and dairy products go for export. The close
interaction of business, politics, associations and dairy
farmers in designing a common approach was impressive.
Leadership and strategy 17
Cooperative
“DMK GROUP supports us
farmers on practical
questions and involves
us in important
decisions – I like that.”
Peggy Käferle, dairy farmer
Clearly structured executive bodies
Entrepreneurial success depends on clear assignment of
responsibiities. The GmbH, or limited company, is responsible for DMK’s business operations. The production and
quality of the raw material milk is in the hands of the
cooperative of more than 8,900 farmers. Its structure is
clearly defined, with a Supervisory Board, Board of Management, Advisory Board and an Annual Assembly.
The Board of Management elected by the Supervisory
Board is made up of members from the cooperative’s
eight regions and is responsible for leading
Deutsches Milchkontor eG, the cooperative.
The Supervisory Board monitors the executive
activities of the Board of Management. In important
matters, the consent of the Supervisory Board to
decisions of the Board of Management is required.
At the Annual Assembly, 421 representatives pass
resolutions once a year on important matters such as
the approval of the annual financial statements and
the appropriation of the year’s net profit as well
as amendments to the articles of association and
the election of the Supervisory Board members.
One representative per 25 members is elected.
The Advisory Board, which consists of 80 members,
serves as the interface between the members and
the executive bodies. It discusses all strategic decisions made by Deutsches Milchkontor GmbH and the
cooperative and advises the Board of Management
and Supervisory Board. Important decisions by the
Board of Management and Supervisory Board are
discussed by the Advisory Board in order to preserve
the cooperative principles.
The aim of the Young Dairy Farmers’ Working Group
is to promote young talents in the group of elected
With qualifications into our shared future
Developing the elected officers plays a central role for
DMK. The aim is to give the cooperative’s members the
skills they need to work in the executive bodies. In the
year 2010, the company therefore developed a mandatory training programme for all relevant members of the
executive bodies in collaboration with the cooperative
training institute Akademie Deutscher Genossenschaften
in Montabaur ( www.adgonline.de). The seminars and
advanced training courses on subjects such as business
administration, sustainability and distribution are attended
by all elected members of the Supervisory Board, Board
of Management and Advisory Board. The elected officers’
training is run by external speakers, enabling the expertise
to be taught and deepened on an independent basis.
officers. Up to 75 young farmers should be active as
elected officers during the five-year period. Three
meetings are held every year. The young dairy farmers
in this voluntary organisation also make an excursion
once a year. The working group’s members are aged
between 18 and 35.
The executive bodies end their terms of office after five
years. The future Annual Assembly, the Advisory Board
and the Young Dairy Farmers’ Working Group were
re-elected and appointed for the coming five years in the
spring of 2015. The cooperative prepared intensively for
this in the period under review and, among other actions,
nominated the candidates at the “DMK vor Ort” (“DMK
on site”) events in the autumn.
Combined annual report and sustainability report 2014
18 Leadership and strategy
Stakeholder relations
Stakeholder relations
Stakeholders are various interest groups that have expectations on the company. Some of them
have close links with DMK – the dairy farmers, employees and customers, for example. Other
groups also express their desires and expectations, including media and consumer organisations.
The DMK GROUP’s activities affect a variety of stakeholders. At the same time, stakeholders often
have a significant influence on the business conditions for our corporate development. For this
reason, DMK maintains a respectful and open dialogue with stakeholders and adopts new ideas.
Dairy farmers
Employees
• Shareholders
• Contract suppliers
• Executive bodies
• Management Team
• Employees
• Apprentices
• Works Council
Science/academia
Media
Business partners
• Universities
• Universities of
applied science
• Research institutes
• Retail customers
• Industry customers
• Suppliers
• Banks/potential
investors
• Daily and local press
• Trade and business press
• News agencies
• TV and radio
• Online media
• End consumers
• Citizens/citizens'
initiatives
• Communities at sites
• NGOs in
environmental &
consumer protection
and animal welfare
• Associations
Consumers/public
• EU institutions
• Members of
national and
regional parliaments
• Local politicians
Associations/NGOs
Political sphere/public
Our memberships and alliances (selection)
DMK collaborates actively with around 90 organisations and associations in Germany and internationally. You will
find a list of all our memberships at www.dmk.de/en/responsibility/sustainability/strategy/. They include:
Milchindustrieverband e. V. (MIV)
Global Dairy Platform (GDP)
Deutscher Raiffeisenverband e. V. (DRV)
Roundtable on Sustainable Palm Oil (RSPO)
Association of the German Confectionery Industry (BDSI)
UTZ Certified
Leadership and strategy 19
Stakeholder relations
Detailed analysis of stakeholder expectations
DMK has identified eight groups of stakeholders (see
graphic on page 18) and has described in detail in previous
reports what these stakeholders expect of the company
and the formats DMK employs for dialogue with these
groups (see Combined Annual Report and Sustainability
Report 2013 pages 16 – 17).
DMK has established a number of approaches and analyses over the past years to find out about stakeholders’
expectations and encourage dialogue with them:
Direct exchange of views with stakeholders: Sustainability issues are also being increasingly addressed in
the forums where views are exchanged with stakeholders. Examples of such forums are the executive
bodies, events with the dairy farmers (see also the
chapter on the cooperative), reports in the employee
newsletter with options for dialogue and the annual
talks with retail partners.
Analyses: Regular analyses provide good indications
as to how the opinions of specific stakeholder groups
are trending. These include analyses of customer
complaints, consumer enquiries and media analyses.
In addition, DMK analyses feedback from stakeholders.
Stakeholder surveys: After the Combined Annual
Report and Sustainability Report is published, a survey is conducted among relevant stakeholders every
year: how well do they feel they are informed by the
report, what topics are particularly important to
them, where is there room for improvement? The survey for the year 2014 also supplied valuable feedback.
The aim here is to reach and involve a large number
of stakeholders in future.
Hotspots in the dairy industry
During the reporting period, DMK compared the current
status of its findings about stakeholders in an analysis by
an independent research institute.
The aim was to receive external validation of the extent
to which DMK covers topics relevant to stakeholders in
order to obtain new insights into the eight stakeholder
groups’ current and future issues (“hotspots”). The Institute For Sustainable Management (IfNM) conducted
the analysis and identified the different stakeholders’
hotspots. The results showed how diverse and, to some
extent, contradictory the stakeholders’ expectations are.
Some topics such as traceability, pasture feeding, domestic production of feedstuffs and GMO-free feeding, animal
welfare and regional production play a role for the broad
spectrum of stakeholders. However, widely differing
aspects are considered important on animal welfare
issues, for example. Some stakeholders such as dairy
farmers, business partners and consumer protection
advocates also find the payment of competitive milk
prices important. For the politicians, in contrast, this
point does not play a central role. They place more
emphasis on securing agricultural jobs and increasing
the use of renewable energy sources. Scientists demand
that dairy farmers should keep breeds intended for
different purposes in order to increase biodiversity.
Dairy farmers’ wishes include more information to consumers on the link between supermarket prices and milk
production.
Overall, the comprehensive analysis provides DMK with
starting points for developing new themes in its dialogue
with stakeholders. At the same time, it highlights those
areas where more information is needed. One of these,
for example, is the understandable desire for pasture
feeding for the cattle. For one thing, this is not possible
in all parts of Germany for reasons of space, and in addition it does not always represent the best option for the
cattle. Here, factors such as weather conditions and feed
composition requirements also have to be considered
(see also the chapter on business environment and background).
Combined annual report and sustainability report 2014
20 Leadership and strategy
Stakeholder relations
The opinions of our stakeholders are important to us. Here are comments from some of you
about your relationship with DMK GROUP and the DMK 2020 Sustainability Strategy – including
constructive feedback at our explicit request.
“DMK GROUP’s sustainability strategy across all stages of milk production,
processing and marketing is the only one of its kind to date. It is a pioneering achievement, culminating in the recent finalisation of the Milkmaster
Programme. Critical subjects such as environmental and climate protection,
animal welfare and the basic raw materials processed are also addressed.
I have been a member of the Expert Committee on Animal Welfare since
2014 and was able to convince myself of the seriousness and quality of
DMK’s sustainability management both at committee meetings and in
working directly with the company.”
Prof. Dr Franz-Theo Gottwald, Director of the Schweisfurth Foundation
“I have been tracking DMK’s sustainability activities closely since
2009 – as a Green who has fought vehemently against the indus­
trialisation of farming in the past. I can now say with total conviction that a major corporate group and sustainability are not a
contradiction in terms if the group’s top management sets out
seriously not just to communicate sustainability as an empty
marketing cliché but to implement it structurally in milk production
on the farms and in processing as a consistent principle. That’s not
a walk in the park, it can’t be done overnight. DMK has launched
highly ambitious but also potentially successful activities. DMK is
therefore on track and is a pioneer in farming that focuses on the
welfare of the farm animals. This is in accordance with the results
of the latest report by the German government’s agricultural
Advisory Board on the subject of farming with livestock.”
Rezzo Schlauch, lawyer, Parliamentary Secretary of State (retired)
Leadership and strategy 21
Stakeholder relations
“I was invited to join the panel of experts in the development
of the Milkmaster Programme. It’s interesting to see how
DMK has developed in the last year and is focusing on the
future in order to be able to pay competitive milk prices.
I’m impressed by the way DMK involves its members and,
for example, has developed Milkmaster with the involvement
of the farmers. It now seems to me to be important to transfer this enthusiasm to all the members. DMK can get even
better at informing its members about the developments
that lead to deteriorating milk prices.”
Dr Bianca Lind, Managing Director,
German Cattle Breeders Federation (ADR)
“The public is watching developments in livestock farming with
a critical eye, and food retailers are now also very sensitive in their
reactions here. In this situation, it is very important for dairy companies to develop an information base proactively together with
their suppliers and aim for a continuous improvement process. DMK
is on the right track with its ambitious Sustainability Programme.
It’s important to take the farmers along on this track step by step
and to show them opportunities to improve.”
Dr Hiltrud Nieberg, Director, Thünen Institute of Farm Economics
“I’m impressed by the committed way DMK
GROUP is addressing the subject of sustainability.
Congratulations! DMK 2020 is setting standards
even on the international plane. We have worked
with DMK on various innovation projects for some
years now. We’re now looking forward to seeing
how the company integrates sustainability into
the innovation processes.”
Dr Torsten Hemme, Managing Director, IFCN Dairy Research Network
Combined annual report and sustainability report 2014
22 Business and customers
Best products
for international
markets
In times of intense competition on volatile markets with
increasing milk volumes, DMK GROUP is consistently
placing dependence on the good name and quality of
its branded products. German quality with agricultural
origins in combination with innovative technologies and
a rigorous customer focus is the basis for opening up and
developing German and international markets. Together
with high flexibility in using the raw material, this will
allow the company security, profitable growth and longterm earning power. As a result, DMK will generate added
value for customers, shareholders and employees.
DMK and its brands impress the world:
In the area of fresh dairy products and ingredients,
DMK develops tailored products for the German and
international markets and individual customers to
be able to respond flexibly to market fluctuations
even in the face of increasing milk volumes.
With strong innovative powers and consistently advancing internationalisation, DMK presents itself to existing
and new customers as a high-performing, competent
and reliable partner.
To guarantee top quality, DMK researches, develops and
tests all processes and products with the help of the
latest technologies and integrated quality management
and quality assurance systems.
As a food manufacturer, DMK takes responsibility for
the impact of its products and production processes
on man and the environment.
23
24
28
30
32
Brands and products
Innovations
Internationalisation
Product responsibility
24 Business and customers
Brands and products
Brands and products
DMK GROUP can supply the German and international markets with a wide range of high-quality
products which the company and its subsidiaries distribute through a number of strong brands to
customers in retailing, food manufacturing and the hotel and restaurant sector. With brands such
as MILRAM, Oldenburger, Humana and Biolabor, the company has positioned itself successfully in
the year under review as a reliable, high-quality player in a number of markets in the cheese, fresh
dairy products, ingredients, baby food, ice cream and health products segments.
MILRAM strategy is bearing fruit
DMK successfully expanded the branded goods business
in the year under review with MILRAM, its core brand.
Bucking the general market trend, the strategy of a
broad and attractive product portfolio and the relaunch
of the brand image ensured highly positive growth.
MILRAM brought Brazilian flair to the chilled cabinets
just in time for the football World Cup, presenting
the MILRAM buttermilk drink Ipanema and MILRAM
SalsaQuark curd. Both were major hits, making
it a certainty that DMK will add SalsaQuark to its
existing range of savoury curds.
Brand awareness in the reporting period was over
90 percent.
With white line products like MILRAM FrühlingsQuark
herb curd and MILRAM fruit buttermilk and yellow
line products such as MILRAM Burlander, Müritzer
and FrühlingsKäse cheeses, DMK is the only
cooperative-­based dairy company to offer retailers
the full range.
Despite the fiercely competitive environment, the
branded products business with MILRAM fresh
dairy products and cheese grew in 2014 and market
leadership in the area of herb and savoury curds
was further expanded.
Best products for international markets
DMK GROUP can look back on a good year in the branded
products business despite the volatile market situation.
The record quantities supplied to important export countries and the significant decline in demand because of
the embargo on Russia and high stocks in China put
prices under pressure.
Nevertheless, 2014 was a successful year for the Oldenburger export brand. The brand enjoys a high level of
acceptance with consumers in around 100 countries all
over the world, and stands for quality Made in Germany
in dairy products, cheese and milk powders. The relaunch
of the design, repositioning and the expanded product
range made decisive contributions to the significant
growth in sales.
Business and customers 25
Brands and products
“In close collaboration with
retailers, we are constantly
optimising our shared value
added to expand our profitable
growth. It helps that MILRAM
shoppers have above-average
confidence in their brand.”
Matthias Rensch, Head of Brands Business Unit
In its German home market, DMK GROUP was also well
placed with the profitably growing MILRAM core brand
for grocery retailers and bulk consumers. The year 2014
was marked by increasing milk volumes in the first half
of the year and in the second by much tougher price and
competitive pressure, particularly in the yellow line
(cheese products). In this challenging situation, the DMK
brand successfully held its own as the key player in the
white line, i.e. drinking milk, milk drinks, yoghurt, cream
and curd products and desserts. MILRAM was the only
full-line retail supplier to record an increase in growth.
DMK also achieved profitable growth with the successful
regional brand Osterland in the reporting period.
With regard to the brands and products, DMK’s strategic
focus also continues to be on profitable growth and the
optimisation of value added. Actions taken in the period
under review include the further development of the distribution structure in Germany. Here, DMK is using a new
structure to concentrate even more strongly on the focal
distribution channels for key accounts in retailing, food
manufacturing and the hotel and restaurant sector. This
change also contributed to 2014’s healthy performance.
You will find further information about
the DMK brand portfolio at
www.dmk.de/en/brands/
Globally successful with ingredients
The strategic growth area of Ingredients also displayed
a positive trend in 2014. In this segment DMK supplies
food manufacturing customers with five product groups:
milk powders, dairy products, whey products, non-dairy
products and feedstuffs. In 2014, DMK once more
impressed customers in the milk powders segment with
the high quality of the merchandise it produced from its
own milk rather than externally sourced concentrate.
The area of dairy products, in which DMK supplies butter
and speciality butter products, for example, as well as
customised products in containers for further processing,
posted sales growth of 20 percent in the reporting period.
Subsidiary wheyco processed up to 4 million litres of
whey into whey protein concentrate, lactose and permeate powder during the year, serving food manufacturers
and other customers. The company’s capacity utilisation
is very high and it is steadily developing its product
portfolio further. It almost doubled its production volume
in 2014 after the market launch of its whey protein
concentrate WPC 80. DMK manufactures feedstuffs from
its own milk powder, and expanded its position as the
northern German market leader in this segment in the
year under review. DMK subsidiary DP Supply is an internationally leading player in spray-dried non-dairy coffee
whiteners and fat powders. ArNoCo, a joint venture of
DMK Group and Arla Foods Ingredients, also started production of whey protein concentrates in Nordhackstedt
in 2014.
Combined annual report and sustainability report 2014
26 Business and customers
Brands and products
Future-oriented quality assurance systems
DMK’s integrated quality management system is based
on DIN ISO 9001 specifications and complies with the
rules of the International Food Standard (IFS) and the
British Retailer Consortium (BRC). The factories’ extensive
certification enables DMK to meet the criteria for competing in the international arena. We also have organic
certification in accordance with the EU regulation on
organic farming in order to meet certain customer
requirements. DMK is QS-certified for the sale of feedstuffs such as skimmed milk powder. The company also
meets specific nutritional requirements with kosherand halal-certified dairy products.
DMK has used QM-Milch as its internal quality assurance
system since the year 2000. Since the dairy farmers are
also integrated in the system, it guarantees a uniform
quality of the raw material. In the context of DMK 2020
the company regularly checks what proportion of dairy
farms are externally audited and, in the future, what
proportion of first audits is completed successfully.
100 percent of farms were audited in 2014.
The central quality management department is responsible for handling cross-functional issues in this area and
supports the annual certification processes. Internal
audits by DMK are supported by external auditors. All
procedures and processes form part of the Integrated
Management System (IMS).
Internationalisation and an organically grown corporate
structure demand standardised quality assurance and a
continuous optimisation process. Together with the
factories’ QA departments, central quality assurance
takes care of the rules for criteria and test procedures.
These are binding on all factories and cover, for example,
the application, harmonisation and improvement of lab
analyses and the integration of new measuring systems.
Maximum quality and safety
DMK GROUP applies the strictest criteria to its dairy
products and manufacturing processes. From the farm to
the supermarket shelf, the company ensures the highest
quality and safety standards along the entire value chain.
In the area of product safety, for example, this includes
the HACCP (Hazard Analysis Critical Control Points) control system, a preventive management system for assessing the hazards and risks of processes and products.
The comprehensive HACCP concept checks the possible
health and safety impact and improvement potential of
all products in every step. It is applied from the development of the product concept, research and development,
certification, manufacturing, production, marketing and
sales promotion to storage, delivery, usage, maintenance,
disposal, and reuse or recycling.
Product safety standards and appropriate labelling are
demanded and applied for all raw materials and finished
products used within DMK GROUP. They relate to, among
other things, the origin of product components or of services and to composition – this applies in particular to
materials that could have an impact on the environment
or society and to the safe use of the product or service.
The effects on the environment and society are not fully
incorporated in the product labelling.
Business and customers 27
Brands and products
The company has included the issues of quality and product safety in DMK 2020 as fields of action in the area of
Milk. The goal of concluding a quality assurance agreement with all subsidiaries was reached in the reporting
period.
Awards and distinctions such as those of the DLG (German
Agricultural Association) are important for successful
quality assurance. In 2014, DMK received a total of 324 DLG
medals across all sites: 204 gold, 107 silver and 13 bronze.
Competition requires strong brands
This clear quality focus is also one of the defining strategies with which DMK GROUP is positioning itself in the
current year’s saturated domestic market, which is under
severe competitive pressure in the white and yellow lines
in particular.
Particularly in competition with retailers’ own brands,
only strong brands can make their mark. DMK therefore
continues to focus on attractive brands and product portfolios. The implementation of the MILRAM relaunch in a
number of channels is making a contribution to this, communicating the brand core of “home, freshness, community and authentic taste” with appropriate imagery. The
integration of Ravensberger products under the strong
MILRAM brand umbrella, which started in December
2014, will also reinforce MILRAM’s position as one of the
strongest brands in fresh dairy products. By adding the
successful regionally established Ravensberger desserts
and butter tubs to the MILRAM portfolio, DMK will be able
to exploit the potential of the MILRAM brand much better
in future and significantly increase the market penetration of Ravensberger products.
DMK brands
Combined annual report and sustainability report 2014
28 Business and customers
Innovations
Innovations
Innovations are critically important to the successful further development of DMK GROUP.
This is why the word “innovative” is anchored as a core value in the company’s vision alongside
“entrepreneurial” and “fair”. DMK brings this value to life with innovations along the entire value
chain – from milk production through development and further processing to product marketing.
Systematic innovation management
The innovation management system implemented at
DMK in the year 2011 follows the concept of networking.
It initiates, manages and networks innovation initiatives
for products, processes, business units, markets or purchasing sources along the entire value chain to the point
of implementation. In past years, the company has successfully built and established an innovation process
which incorporates all business areas from production
through marketing, controlling and business development to sales. The company’s innovativeness is strengthened by the active generation of ideas in the context of
creative and knowledge transfer workshops with interdisciplinary teams and the integration of external partners. Innovations at DMK are not only new products, but
also new business areas and models, new technologies,
procedures and processes, new ingredients for product
manufacturing and new packaging materials.
Our shared efforts also bear tangible fruit externally:
The cup wraparound launched in 2013 is a result of
this process, as is the MILRAM FrühlingsKäse that was
successfully placed on cheese counters in the year under
review (see box page 29).
Innovations through R&D
A central business area is the research and development
department (R&D). DMK GROUP invested heavily in its
development in the reporting period – in joint research
with universities, additions to the staff and also in equipment such as an experimental tower and filtration technologies. On the one hand, R&D supports the optimisation of the manufacturing processes, and on the other it
works together with innovation management in consultation with various parts of the company to develop a
wide range of projects of major importance to the DMK’s
future business success. The goal behind the investments
is to help boost the company’s long-term performance in
turnover, profit and good milk prices with the quality
improvements, product innovations, optimised processes
and new technologies that are constantly required.
Quality through innovative processes
The theme of innovation at DMK is by no means limited
to the development of marketable and profitable products.
Innovation also means optimising processes. For example,
the company and external partners worked intensively in
2014 on a pioneering SAP industry solution. Innovation
management and R&D also made a substantial contribution to the major investment projects in production
in the reporting period. With new plants such as the mozzarella cheese factory in Georgsmarienhütte and the milk
powder tower in Zeven, DMK does not just go for off-thepeg solutions, but works with process engineering developers to make a thorough up-front examination of the
technology used.
It is important to keep developing processes further,
particularly in the area of DMK INGREDIENTS. By targeted
investments in state-of-the-art technology, DMK positioned itself last year as a strong partner who develops
products tailored to market demand together with
customers from the food manufacturing industry. With
high-quality, constantly available raw material and
profound expertise, DMK serves the customers’ fast innovation cycles.
Business and customers 29
Innovations
“Innovation is everyone’s
responsibility so that we can shape
the company’s future together
and add value.”
Barbara Siegert, Head of Innovation Management Staff Department
Innovations support profitable growth
The goal of innovation management is to make
sustainable contributions to DMK’s profitable growth
with innovations of lasting value. One result of the
work of the staff department that was set up in
2011 is, for example, MILRAM FrühlingsKäse, which
DMK CONSUMER launched on the market as a logical
extension of the successful "FrühlingsQuark family".
DMK increased awareness of the new product with
an emotive TV spot and also encouraged consumers
to buy MILRAM FrühlingsQuark.
MILRAM cheese’s market growth in the self-service
segment in the year 2014 proves that the successful
introduction of FrühlingsKäse has had a positive
impact on the entire product range.
FrühlingsKäse has also been available on the cheese
counter since March 2014.
The cheese with finely harmonised herbs puts a fresh
taste on bread and adds a touch of class to salads.
The pack design and flavour profile, which is based
on the savoury curd market leader MILRAM
FrühlingsQuark, exploits product awareness and
tempts consumers to make trial purchases.
Quality management also plays a central role here. DMK
added human resources in that area in the reporting
period and defined processes that will always ensure the
latest state of the art and best possible quality, from the
farmer to the customer, in all new and further developments. The company also implemented numerous audits
and certifications in this area in 2014.
Further information on innovations as a
driver of DMK’s business is to be found at
www.dmk.de/en/innovation/
Innovations and sustainability
All departments work together to support sustainability
in a structured community. The DMK 2020 Sustainability
Strategy contains the goal of promoting sustainabilityrelated innovations. In concrete terms, the company
wants to have a set percentage of innovation projects
that are relevant to sustainability by the year 2020. DMK
is therefore successively developing criteria for taking
sustainability aspects into consideration and integrating
them into the innovation process.
Combined annual report and sustainability report 2014
30 Business and customers
Internationalisation
Internationalisation
DMK GROUP as a cooperative-based company owned by farmers has strong regional roots and,
at the same time, as an international corporate group it continues to focus on growth in other
countries. In view of widespread saturation in the German and European markets and an increasing
demand for milk and dairy products world-wide, the goal of an increased presence in international
growth markets continued to be a crucially important determinant of DMK’s entrepreneurial
actions in the year under review.
Expansion in growth markets
DMK’s internationalisation focuses mainly on countries
which cannot cover their demand for dairy products
themselves in the medium or long term. Continuous
expansion of the business in growth markets outside
Europe is of central importance to the company’s short-,
medium- and long-term earning power. In the period
under review, milk volumes, which had already increased
in the run-up to the end of the quota system, and the
turmoil in the market caused by the embargo on Russia
clearly showed the importance of robust alternatives to
traditional markets.
Non-European strategic focus is working out
DMK’s continuously strong export sales document the
success of its internationalisation strategy, concentrating
with top German quality on new markets in eastern
Europe, Asia, the Gulf states, Africa and South America. A
current example is the opening of the new sales subsidiary in Dubai in the first half of 2015, which will in future
combine and develop all business activities in the Gulf
states, the MENA countries and Africa. Despite the
absence at times of entire markets in North Africa, sales
rose slightly by volume compared to the previous year
and will continue to do so in the current year.
The subsidiaries in Shanghai now employ more than 20
people and helped to position DMK GROUP even more
effectively in the Asian market in the reporting period, for
example with the Oldenburger export brand. The brand
represents quality “Made in Germany” all over the world
and grew strongly in non-European countries in the year
under review. The Chinese market saw above-average
growth dynamics in the first half of the year, with a significant dip in the second half. Although this led to
increased pressure on prices and a temporary reluctance
to purchase in the region, this development does not alter
the long-term forecast of a high demand for imports. In
south-east Asia, DMK was able to progress its market
growth in the defined target regions despite stable
demand.
This development is evidence that the strategy underpinning DMK’s internationalisation, of having the company’s
own sales subsidiaries in key markets as well as sales
offices and joint ventures, will deliver the desired growth
effect.
New production facilities for the world market
DMK also has its sights firmly set on internationalisation
with its major investments in new production facilities.
The specialty whey products from the whey processing
plant which went into operation at the Nordhackstedt
site in 2014 as part of the ArNoCo joint venture also
particularly address international food manufacturing
customers. A new mozzarella cheese factory at the Georgsmarienhütte site has also gone into production. DMK
will produce 30,000 tonnes of different types of mozzarella per annum there, intended for food manufacturers
and international markets outside Europe.
Business and customers 31
Internationalisation
“The products of DMK GROUP’s
various brands are highly respected
by Asian consumers. We work
every day to position products
with German quality even
more successfully in
Asia’s growth markets.”
Qianying Zhao, International Markets Executive Assistant DMK BABY
Improved visibility on the international scene
In the year under review, DMK developed and implemented an umbrella brand strategy that is important
to its international positioning. In doing so, the company is responding to new requirements on the international market and is communicating internally and
externally at the Group and business area level a brand
model which has as its core top quality of German
origin, the company’s agricultural heritage and its
commitment to responsible management. Part of
the concept is a new corporate design that associates
the business areas and subsidiaries with DMK GROUP
at first glance. The business areas are now called
DMK BABY, DMK CONSUMER, DMK ICE CREAM and
DMK INGREDIENTS.
DMK INGREDIENTS strong partner
for international customers
In the fast-growing ingredients sector, DMK last year
continued a key account strategy aimed at growing internationally along with its customers from the food manufacturing industry. DMK impresses these customers
with the opportunity of sourcing high-grade German
quality from a reliable partner in sufficient quantities.
This is important because DMK can, for example, support
its customers in their growth in different regions in a
targeted way and can offer them a secure supply chain.
The potential supply volumes and expertise are of decisive
importance to food manufacturers. The highly profitable
special products that have been developed, in some cases
together with the customers, made for healthy growth in
the ingredients export business in the year under review.
Further information about
internationalisation is to be found at
www.dmk.de/en/company/
facts-figures/
Combined annual report and sustainability report 2014
32 Business and customers
Product responsibility
Product responsibility
In addition to top quality and safety, companies from the food industry which accept their
corporate social responsibility are also expected to be deeply engaged with the social and
ecological aspects of the products and their manufacture. DMK GROUP has brought topics
relating to product responsibility under the umbrella of the Milk and Agriculture areas of
the DMK 2020 Sustainability Strategy.
Responsibility for dairy products
Milk and dairy products are healthy and popular foods
that are enjoyed regularly by a large number of people. In
the past years, stakeholders have paid increasing attention to what the products are made of, how they are manufactured and what impact they have on the environment and humanity. This product responsibility was one
of DMK’s guiding concepts in creating the sustainability
strategy.
The focus of the Milk sustainability area is on the products. DMK concentrates here on four fields of action: the
fields of quality and product safety dealt with in the chapter on brands and products (see pages 24 – 27) as well as
value added and packaging.
DMK pursues two goals relating to responsibility in the
value chain: increased involvement of DMK suppliers in
complying with social and ecological standards, and more
sustainable sourcing of basic raw materials. While the
focus will be on the first of these goals from the current
fiscal year onwards, the second was the primary concern
in the reporting period.
DMK 2020
MILK
Our aspiration
We will take
responsibility for our
dairy products.
Fields of action
Value added
Quality
Product safety
Packaging
By 2020, we want to drive forward
sustainability in the area of Milk with
12 concrete goals in the fields of action.
The goals behind the fields of action and the status of goal
achievement in 2014 are to be found on pages 72 – 73.
Selected activities in 2014
More sustainable sourcing of basic raw materials
DMK wants to procure five important basic raw materials
from sustainable agriculture by 2019: cocoa, palm oil,
wood, vanilla and sugar. Wood is used in composites, in
transport packagings and as wooden sticks for ice lollies.
DMK uses the other four basic raw materials in making
dairy products such as desserts, yoghurt and ice cream.
Quality assurance agreement –
goal achieved
Membership of UTZ and RSPO
324 DLG medals
Further information on the sustainability
area of Milk is to be found at
w
ww.dmk.de/en/responsibility/
sustainability/milk/
Business and customers 33
Product responsibility
Multi-site certification in accordance with UTZ and RSPO standards
Following a time-limited changeover process, DMK
aims to use only cocoa certified according to the UTZ
standard and palm oil certified according to the RSPO
standard at all sites and at its wholly owned subsidiaries, wherever appropriate products are available. UTZ
and RSPO are internationally recognised certification
systems for the sustainable cultivation of cocoa and
palm oil respectively.
DMK laid the foundations to meet this goal by
joining UTZ and RSPO in the reporting period.
All DMK sites processing cocoa and palm oil will
obtain multi-site certification in accordance with
the UTZ and RSPO standards in the first half of 2015.
From 2015 onwards, the company will make the
transition to the physical use of certified cocoa
and palm oil step by step.
DMK already uses UTZ-certified cocoa and/or
RSPO-certified palm oil at its Holdorf site and
at DMK ICE CREAM.
Since these basic raw materials are used a great deal, DMK
is working on a stepwise transition to more sustainable
versions, starting with cocoa, palm oil and wood. Vanilla
and sugar will then be on the agenda by the year 2019.
Focus on packaging
The subject of packaging will remain a key area of interest
for DMK as a field of action in the sustainability area of
Milk. Goals include reducing the environmental impact
of packaging and developing alternative concepts. The
company is currently setting up a system to assess the
sustainability of packaging.
DMK wants to use only certified wood as a basic raw
material as well in the future. The goal of a multi-stage
transition is to use only FSC- or PEFC-certified woodbased materials at all sites within the foreseeable future,
provided that these are available on the supply market.
FSC and PEFC are recognised certification systems for
sustainable forestry and forest management.
DMK has been purchasing FSC- and PEFC-quality wooden
lolly sticks since the beginning of 2015. In the area of primary packaging, it has already been able to use around
50 percent FSC-standard soft packagings used for composite carton packagings. In secondary packaging, the
transition has already been made for cardboard trays,
further materials will follow in consultation with suppliers
and customers.
Cheese production provides an example of how to save
materials in business processes. In the reporting period,
DMK standardised and optimised the packaging for
self-service cheese at all its cheese factories. The size of
the packs was slightly reduced and waste from stamping
was reduced using a film guillotine, among other things.
In total, this project led to a permanent saving of
139,000m2 of top film and 132,000m2 of bottom film – an
area the size of around 38 football pitches.
Combined annual report and sustainability report 2014
34 Milk production and processing
Out of responsibility
for milk
The valuable raw material milk is the foundation of DMK GROUP’s business
success. With the capital entrusted to it by shareholders, the company processes
the raw milk as efficiently and effectively as possible. From the cow to the supermarket shelf, the central focus is an environmentally friendly approach with good
welfare quality for the farm animals and continuous, innovative improvement
of technologies, processes and entrepreneurial concepts.
DMK secures the future of the dairy farmers and the company by:
resource-conscious and efficient production and marketing,
systematic quality improvements using state-of-the-art technology,
modern and efficient logistical solutions,
capacity expansions that will enable us to continue to process and market
all the milk produced by our farmers in the future,
support for the farmers and the quality they produce by providing help
on issues of conditions for keeping cattle, animal health and feeding,
systematic environmental protection at all sites with a particular focus
on energy, water, waste and logistics.
35
36
38
40
42
Business environment and background
Milkmaster Programme
Animal welfare and environmental impact
Environmental protection at the production sites
36 Milk production and processing
Business environment and background
Business environment and background
The modern dairy industry makes an important contribution to regional value added and
to the protection of biodiversity in areas used for agriculture. DMK GROUP wants to support
its 8,900-plus dairy farmers in the environment of the new market economy conditions,
since the ambitious goals can only be implemented by shared efforts.
New market conditions
Every year, DMK processes more than 6 billion kilos of raw
milk. DMK plans around 800 collection routes per day to
ensure that the collection of milk from the farms runs
smoothly. The volumes of raw milk fluctuate depending
on the region and the season.
Volume of milk (mill. kilos)
171
DMK contract suppliers
5,861
Deutsches
Milchkontor e G
2014
Avg. fat
content
(%)
Avg. protein
content
(%)
Deutsches Milchkontor eG
4.05
3.39
DMK contract suppliers
3.95
3.38
Raw milk from dairy farmers, excluding raw materials from member dairies
and associated companies
As of 1 April 2015, the former milk quota scheme
has become a thing of the past and the European dairy
industry environment will be fundamentally altered by
the transition from quantity restrictions to unlimited
production. The EU milk package which came into force
in 2012 allows dairy farmers to decide how much milk
they will produce and deliver without governmental
influence from 2015 onwards. The DMK dairy farmers will
decide freely on the quantity of milk they will deliver and
will receive a guarantee that it will be purchased. DMK
started strategic volume planning for the raw material
with a small group of dairy farmers in 2009, and has
continuously extended raw materials planning since then
together with the dairy farmers. This will have a positive
effect on efficiency and the environment, while at the same
time the mutual obligations of supply and of acceptance
are of crucial importance to a functioning cooperative.
Modern agriculture: good for humans and cattle
Agricultural working conditions and production methods
have changed fundamentally in the past decades, particularly due to the modernisation and automation of individual processes, resulting in significant progress for
humans, animals and the environment: technical developments have made what often used to be very heavy
physical work easier for the farmers and helped to
improve milking hygiene, the protection of the cows’
udders and milk cooling and storage. Automatic feeding
systems optimise animal nutrition and feed efficiency.
The cubicle sheds that are now in almost universal use
are good for the cows and for the people who
work with them as well and combine economic criteria
with good farm animal welfare. Progressive methods
for removing manure from stalls reduce emissions,
Milk production and processing 37
Business environment and background
“The dairy industry in Germany
is confronted with a number
of challenges – we are addressing
them actively at DMK GROUP.”
Wilfried Nunnenkamp, Technical Communication/Milkmaster
intelligent control systems create good climatic conditions in the sheds, and biogas technology now allows
liquid manure to be used for energy, leading to a significant reduction in energy consumption and environmental
pollution.
During the year under review, a large number of visitors
received information about life and work on modern
farms and talked to the farmers at the nationwide farm
Open Days.
Regional diversity and protection of biodiversity
Because of the dairy cooperative’s scale, DMK encompasses a large, heterogeneous production and collection
area. It is important to DMK to preserve the individuality
of the regions and farms, since this enriches the cultivated landscape and society and strengthens both the
agricultural sector and value added in rural areas. The
company is working to achieve a greater acceptance by
society, particularly consumers, of the conditions governing present-day production methods and to establish
respect for the farmers’ daily work.
DMK recommends its dairy farmers to allow their cattle
to move freely on pasture as far as circumstances on their
farms allow. However, the one hundred percent pasture
feeding desired by consumers would lead in Germany
to many goal conflicts between social expectations,
agricultural practice, animal welfare and environmental
protection. Even in the future, it will not be possible to
give all cows the opportunity to graze on pasture in every
German location. Besides the fact that not all farms have
suitable pasturage available nearby and that the cattle’s
welfare could be affected by rain, wet and wind, the
metabolism of dairy cows also poses a problem: it makes
complex demands on the composition of their diets
which are not always satisfied by pasture feeding, since
the composition of the ingredients and the nutrition provided fluctuate considerably depending on the season
and the weather, presenting a risk to the animals’ health.
Dairy farmers therefore often deliberately choose to
accommodate their cattle all year round in high-welfare
indoor systems with contemporary feeding technology.
In addition, biodiversity is important, because the areas
used in agriculture perform a wide variety of functions.
Grassland and crop rotation enrich nature and the environment, and milk production is particularly closely associated with the use of grassland. Permanent grassland
stores large volumes of carbon in the grass plants and in
the soil, and commonly used pasture systems promote
the formation of humus in the soil. An important contribution to climate protection and to maintaining biodiversity is made by managing grassland and maintaining
balanced crop rotation on the land that farms use for
animal feed.
Combined annual report and sustainability report 2014
38 Milk production and processing
Milkmaster Programme
Milkmaster Programme
The Milkmaster Programme plays an important role in realising the DMK 2020 Sustainability
Strategy. Many of the strategy’s goals can only be reached in collaboration with the DMK dairy
farmers, because the goals affect the farmers directly and the latter’s contributions are essential
to the goals’ successful achievement. The Milkmaster Programme published in 2014 is the
answer to a shared challenge.
The modules of the Milkmaster Programme
Public Relations
Codex
Research
projects
Report
Expert
panel
Confirmation Advice Bonus
Milkmaster for a successful future
The Milkmaster Programme is an initiative by dairy farmers,
for dairy farmers to promote working and production
methods in agriculture that are in harmony with the
highest standards of responsible milk production. The
implementation programme for the years 2015 to 2020
that has been developed by dairy farmers and DMK
employees creates an incentive to review the routine
work of the farms regularly, to improve it and to further
develop it in the interests of all dairy farmers.
The Milkmaster Programme’s holistic approach takes
all aspects of milk production into account, strengthens
the farms and the cooperative alike and secures a leading
role for DMK. The programme is intended not only to
improve the company’s external image, but also to positively influence the farms’ business position by delivering
economic benefits, for example through the bonus
system, or improved animal health as a result of on-site
consultancy.
Milk production and processing 39
Milkmaster Programme
“Milkmaster sets standards for
responsible milk production – as
a result, we are always thinking
one step ahead.”
Bernd Pils, dairy farmer
Ambitious implementation programme for dairy farmers
The different elements of the Milkmaster Programme
build on one another and are interlinked. The foundation
is the Milkmaster Code, from which the Milkmaster
Report is derived, providing the platform for the implementation of confirmation, advisory and bonus systems.
The Programme is supported by public relations work
with a variety of communication campaigns. In addition,
DMK conducts research projects that examine novelties
and trends critically for relevance and practicality: the
Expert Panel is made up of scientists and business
experts, provides continuous feedback on the contents of
the Milkmaster Programme and picks up on ideas and
trends from the dairy industry at an early stage.
Implementation launched
At the beginning of 2015, all dairy farmers received a
Milkmaster File containing the most important information and materials about the programme. From April
onwards, they will be able to complete the Milkmaster
Report which describes their current situation. Auditors
will compare the Milkmaster Report with the actual situation on the farms in QM-Milch audits every two years,
starting in 2016. Initial pilot audits will be conducted
in 2015 to guarantee smooth procedures from 2016
onwards. If necessary, concrete improvements will be
developed within the advisory system, with consultants
answering questions about milk quality and milking
hygiene. DMK is building a Milkmaster network of specialists and institutions for special advice on specific topics relating to hoof and udder health, cowshed architecture, environmental protection and resource efficiency.
Specialist forums and online seminars will serve as information platforms.
DMK will collect all the relevant service data at www.
webmelker.de. Farms with improvement potential will
be able to develop with the help of Milkmaster. The
programme therefore represents an opportunity for every
single farm and will launch an optimisation process
for all concerned.
The development of the Milkmaster Programme
2012: A dairy farmers’ committee, DMK Sustainability
Management and the Agricultural Affairs department
work on possible solutions to ensure optimum safety,
quality, animal health and environmental compatibility. The More Sustainable Milk Production Working
Group names the DMK 2020 fields of action cow
comfort, animal health, feed cultivation and feeding.
2013: The shared goals and focal points in the area
of Agriculture are set forth in the DMK 2020 Sustainability Strategy. 50 percent of DMK dairy farmers take
part in a voluntary survey of welfare, feeding and
animal health.
2014: The working group is expanded to 24 dairy
farmers and develops the key points of the Milkmaster
Programme together with DMK Sustainability
Management and various corporate sectors.
2015: Following presentation of the programme to
the dairy farmers and the executive bodies of the
cooperative and discussion with them in the autumn
of 2014, implementation on the farms starts at the
beginning of 2015.
Combined annual report and sustainability report 2014
40 Milk production and processing
Animal welfare and environmental impact
Animal welfare and
environmental impact
Milk as a valuable natural resource remains the foundation of DMK GROUP’s entrepreneurial
success. Since only healthy cows give high-quality milk, DMK is concerned with ensuring the
cattle’s well-being. At the same time, the environmental impact of farming has to be reduced
by good farm animal welfare, systematic health management, feed cultivation that is economical
in its use of resources and appropriate feeding.
Proactive animal welfare as a foundation of our business
Animal welfare has taken on added importance in the
social debate. Proactive animal welfare has always been
part of the basic foundations of DMK’s business. Healthy
cows are crucial for high-quality milk. To achieve this,
farming systems that offer the cattle comfortable cubicles, sufficient light, clean air and the right temperature
are important. Every cow should have enough space and
exercise and access to animal-friendly lying spaces in the
cowshed. Both proper loose housing and pasture feeding
can have a positive impact on animal health and welfare.
DMK has included these points in the sustainability strategy and the Milkmaster Programme and offers farmers
incentives to improve animal welfare further. The fields
of action in the Agriculture area of the sustainability programme – cow comfort, animal health, feed cultivation
and feeding – contribute to animal welfare and other
issues of modern, sustainable dairy farming.
Animal health as a key to success
Animal health is a key to the successful management of
any farm. Routine activities include, for example, regular
hoof care, cleaning the cubicles and replacing the bedding. Other important areas where animal health can be
influenced are the rearing of young cattle, calving and, in
particular, feeding.
DMK 2020
AGRICULTURE
Our aspiration
We will improve the
conditions in which our cattle
are kept and reduce their
environmental impact.
Fields of action
Cow comfort
Animal health
Feed cultivation
Feeding
By 2020, we want to drive forward
sustainability in the area of
Agriculture with 12 concrete goals
in fields of action.
The goals behind the fields of action and the status of goal
achievement in 2014 are to be found on pages 72 – 73.
Selected activities in 2014
Milkmaster Programme
Methane-reducing feeding experiment
Intensive dialogue with dairy farmers
Further information on the sustainability area
of Agriculture is to be found at
w
ww.dmk.de/en/responsibility/
sustainability/agriculture/
Milk production and processing 41
Animal welfare and environmental impact
Methane-reducing feeding experiment
Methane is one of the most significant greenhouse gases
worldwide. In Germany, agriculture – especially farming
with ruminants – accounts for a share of around 8 percent
of total emissions. In the year under review, DMK conducted a feeding experiment aimed at reducing methane
in dairy farming.
Several feedstuff manufacturers and 23 dairy farms
participated in the multi-month field experiment
on the connection between feeding and methane
production.
The new form of feeding reduces the formation
of methane in the cow’s rumen. The project’s tasks
included improving feed efficiency and optimising
special feed recipes.
Methane production per litre of milk was reduced
to varying extents on the farms. The experiment
revealed not only the great importance of feeding
management, but also the fact that a higher milk
yield reduces the average methane output per litre
of milk.
Responsible use of feedstuffs
Responsible feed cultivation is one of the DMK 2020 fields
of action, as a central pillar of sustainable dairy farming.
For dairy farmers, this means growing and feeding
high-quality forage and also using more sustainable
alternatives when employing imported feedstuffs.
DMK engages intensively with the highly complex problem area of feeding. Some DMK dairy farmers currently
depend on imported feedstuffs to provide their cows
with the nutrition they require. There is as yet a lack of
solid, cross-regionally valid experience about alternative
feeding strategies and reliable practical recommendations on growing protein sources (e.g. legumes, peas, field
beans etc.) under the given location-specific and climatic
conditions in Germany. DMK participates in the discussion on imported feedstuffs through forums, contributes
to round-table discussions and is in dialogue with representatives of the feedstuff manufacturers. In addition,
DMK has among other things initiated its own research
projects with the University of Giessen.
A cow’s diet consists mainly of fibre-rich roughage (grass
silage, maize silage, grass and hay). The remainder consists of energy-rich, low-fibre concentrates (grain, grain
maze, rape) which is grown almost entirely in Germany
with only a small share of imports. Imports of high-protein forage crops such as soya beans from the continent
of South America are coming increasingly under fire from
non-governmental organisations and food retailers.
Combined annual report and sustainability report 2014
42 Milk production and processing
Environmental protection at the production sites
Environmental protection
at the production sites
Environmental protection at the production sites is considered to be particularly important.
DMK GROUP has defined four fields of action through which the company aims to improve
its eco-balance: energy, water, waste and logistics.
The basis: the environmental
and energy management system
With an environmental management system certified in
accordance with DIN EN ISO 14001, DMK has established
a standardised, recognised basis for continuous improvements in its environmental protection at the production
sites. All production sites are also certified in accordance
with DIN EN ISO 50001 and therefore have functioning
energy management systems. The independent certifying
body DQS audited and renewed the environmental
management and energy management system in the
year under review. In addition, DMK was awarded the
“Green Company” certificate for its exemplary environmental and energy management system.
DMK developed and introduced a special programme in
the year 2012 to assess environmental aspects and measure its environmental performance. This programme
made it possible to systematically record virtually all
direct and indirect environmental aspects at the production sites and their impact, thereby ensuring continuous
improvement of the company’s environmental performance. DMK underpins the potential environmental
impact with preventive risk assessment and takes appropriate, effective protective measures.
DMK has trained and appointed environmental and
energy officers and personnel responsible for water and
immission protection, hazardous goods and explosion
protection as well as safety and fire protection officers
and external company coordinators at its sites. A total of
approx. 600 officers in the areas of occupational health
and safety, environmental protection and energy and
approx. 100 internal auditors qualified and/or received
further training in 2014.
DMK 2020
ENVIRONMENT
Our aspiration
We will improve
the eco-balance
at our sites.
Fields of action
Energy
Water
Waste
Logistics
By 2020, we want to drive forward
sustainability in the area of the
Environment with 11 concrete goals
in the fields of action.
The goals behind the fields of action and the status of goal
achievement in 2014 are to be found on pages 72 – 73.
Selected activities in 2014
Certification according to
DIN EN ISO 14001 and 50001
Recyclable waste management at DMK sites
Optimisation of the sewage treatment
plants at the Nordhackstedt and Zeven sites
Further information on the sustainability area
of Environment is to be found at
w
ww.dmk.de/en/responsibility/
sustainability/environment/
Milk production and processing 43
Environmental protection at the production sites
“The introduction
of the energy management
system at all sites was
a great success. Now we
have to implement the
ambitious energy goals
in a joint effort.”
Torben Hinck, Energy Manager
Activities in energy management
Milk processing requires energy – for example, for drying
in the production of milk powder, for homogenisation
and ensuring products are sterile, for cleaning machinery
and for cooling the products. The use of energy fluctuates,
because it depends on various factors such as temperature,
volume and product-specific parameters. For example,
producing milk powder takes more energy than manufacturing dairy products. Energy consumption in relation
to the volume of milk rose slightly in the reporting period
because the production portfolio shifted towards more
energy-intensive products. Energy efficiency improved
slightly compared to the previous year.
Direct energy consumption (kWh)
At present, DMK is reviewing a number of projects about
climate-neutral energy generation, including the use of
combined heat and power plants at the Altentreptow,
Zeven and Strückhausen sites. In the 2013 report, DMK
estimated that the goal of increasing its in-house power
supply with regard to the volume of gas used to at least
50 percent by 2018 had been reached ahead of schedule.
Because of a change in the method of calculating the
goal, it was classed as "in implementation" in the current
progress evaluation. Particular attention is paid to raising
employees’ awareness and giving them training. The rules
published in the year 2013 and repeated training courses
on energy-saving provide guidance for staff members.
2013
2014
Change
(%)
Total direct energy consumption 1
1,696,480,130
1,837,106,855
8.3
of which, direct energy from non-renewable energy sources 1
1,659,606,896
1,800,500,598
8.5
324,878,945
345,391,103
6.3
1,224,369,481
1,237,293,027
1.1
130,064,599
137,476,466
1,843,011
82,414,928
36,873,234
36,606,257
– 0.7
616,672
542,123
– 12.1
36,873,234
36,064,134
– 2.2
Electricity
Natural gas
District heating
Heating fuels refined from crude oil
of which, direct energy from renewable energy sources 2
Hydro power
Biomass
5.7
4,471.8 1
DMK + subsidiaries in which it has an interest of at least 75% (excluding Rosen Eiskrem), basis for the gathering of data on direct energy from non-renewable energy
sources are the volumes of energy purchased; basis for the gathering of data on direct energy from renewable data sources is the purchase/conversion
of wood consumption for biomass
1
2
From 2014 includes milk collection vehicles and the passenger car pool (diesel) and liquid gas, therefore no comparison with the previous year’s figure is possible
Hydro power at the Rimbeck site, biomass at the Waren and Bad Bibra sites
Combined annual report and sustainability report 2014
44 Milk production and processing
Environmental protection at the production sites
Water management: focus on cleaning equipment
Water is needed in the manufacture of dairy products
for cooling, cleaning and processing purposes. In the context of DMK 2020, DMK GROUP undertook to improve its
specific water efficiency by 20 percent by the year 2020
compared to 2012 and to raise employees’ awareness of
water issues. The use of fresh water has increased slightly
since 2012 partly because the company has changed
and expanded some production areas. It is much more
water-intensive to produce fresh products than cheese,
and the production of fresh products increased in the
year 2014. Further efforts are needed to achieve the goals.
Water efficiency measures were successfully implemented at a number of sites.
One focus in 2014 was on taking a structured approach
to the issue of cleaning-in-place equipment (CIP), which is
one of the biggest water consumers across the company.
New technical processes offer opportunities to improve
the efficiency of CIP systems’ water consumption. In order
to tap these potentials to the full, around 55 CIP specialists were trained in four specific areas of application in
2014/2015. This means that CIP specialists are now available at all sites. In addition, two Master’s dissertations
are being written for DMK on the subject of CIP optimisation, and further improvement potentials are expected
from these projects. DMK also upgraded the sewage
pre-treatment plants at the Nordhackstedt and Zeven
sites to the state of the art and expanded the sewage
treatment capacities.
Logistics as a core lever
DMK aims to keep environmental pollution as low as possible on the long path from collecting the raw milk from
the farmers to delivering the finished dairy products to
the customers. Our employees in milk collection, raw
materials planning and logistics are primarily responsible
for this. In route planning, DMK uses software to review
and optimise efficiency and capacity utilisation in collecting the milk. Every day, the company calculates the most
Fresh water (m3)
2013 2,427,008
5,124,078
2014 2,713,961
5,034,898
7,551,086
1.03
Water/
7,748,859 milk ratio 1 (m3/t) Own water (well) External water 2
Sewage (m3)
2013 2,614,965
2014 2,624,379
4,379,434
4,705,396
6,994,399
0.97
Sewage/
7,329,775 milk ratio 1 (m3/t) Direct supply Indirect supply
(DMK + 100% subsidiaries (excl. sanotact and Rosen Eiskrem)
1
DMK + 100% subsidiaries (excl. sanotact, Rosen Eiskrem and dp supply)
2
Water from the municipal water supply or other suppliers
efficient route and gives the drivers of the 800 milk
collection tours precise instructions in order to reduce
environmental pollution, time and costs. Another lever is
to reduce fuel consumption, which is recorded every day
per shift and per driver. Drivers are instructed to pay
attention to low fuel consumption and adapt their driving styles. They receive training in foresighted, fuel-saving
driving.
DMK not only wants to be a reliable partner for retailers
and food manufacturers in terms of quality, but also aims
to set standards in safe and fast deliveries to its customers. The customers’ requirements as well as economic and
ecological aspects play a role in the decision as to whether
DMK products are transported directly to the customer
from production warehouses, or whether combined deliveries are made via the company’s central warehouses.
Milk production and processing 45
Environmental protection at the production sites
Expansion of recyclable waste management
In the year under review, DMK further expanded its
recyclable waste management. The emphasis in recyclable waste management is on avoiding waste as far as
possible and optimising the recycling of recyclable waste.
In the year 2014, DMK carried out analyses of
co-mingled groups as part of the work on optimising
the recycling management system.
DMK pursues these goals equally at all sites while
taking the different conditions at the production
sites into account.
DMK works on increasing the sorting quotas
and therefore optimising recycling with an
established container system, colour coding
system and logistics system.
In order to tap into the technological developments
on the market, the company cooperates closely with
the recycling companies.
Waste by handling method (%)
Waste by type (t)
3.0 Recyclable packaging
2.6 Disposed of
Disposed of
Separators non-hazardous
Residual waste/household waste
Construction and demolition waste
2013
2014
97.0 Recycled
Hazardous waste
97.4 Recycled
Destroyed files
Other
0 300 600 900 1,200 7,100
DMK + 100% subsidiaries (excl. sanotact, sunval and Rosen Eiskrem), waste life cycle analyses of factories, excl. animal by-products and sludge
To ensure optimum delivery, DMK regularly checks the
storage and transportation structure and adapts it to
current conditions. The central warehouse in Zeven and
the cheese warehouse in Georgsmarienhütte were
expanded for this purpose, the cheese warehouse in
Dargun is currently being expanded and a central powder
warehouse is currently under construction in Zeven.
Extensions to the warehouses in Erfurt and Edewecht are
at the planning stage.
The DMK 2020 goals also include the use of resourcefriendly technologies in transport vehicles by the year
2019. In the reporting period, DMK has continued to work
on switching over to weight-optimised milk collection
vehicles throughout the fleet and driving forward the
use of Euro 6 standard vehicles in its own fleet and at
freight forwarders.
Combined annual report and sustainability report 2014
46 People and commitment
47
48
50
54
56 Values and opportunities
Employees
Dairy farmers
Region and responsibility
A partner for employees,
industry and society
A sense of fair community with employees and with partners in industry and
society stems from the company’s traditional links with the regions where
DMK GROUP is at home. The trust and security to be found in that community
are owing to our obligations as a cooperative and are embodied in many ways
by DMK – including outside its German home markets.
DMK practises a partnership-based community:
DMK cultivates its regional roots and close links with agriculture.
The company secures and develops jobs in the rural area, not only in the
DMK factories but also on the shareholders’ farms and for its business partners.
DMK is a modern employer offering its employees development opportunities
and a positive and secure working environment.
DMK gives young people the chance to gain qualifications and pursue
careers in an international environment.
DMK engages in research along the milk value chain.
48 People and commitment
Values and opportunities
Values and opportunities
DMK GROUP is a values-based company. Respect and consideration are defining characteristics
of our day-to-day community. As a dynamic and growing company, DMK champions equality of
opportunity for the diverse group of people who work for the company.
Pillar of our entrepreneurial success
A good 7,400 people work at DMK. More than 8,900 dairy
farmers ensure that the company is supplied with raw
milk. These people form DMK’s team. In the DMK 2020
Sustainability Strategy, the company deliberately chose
the term “team” to emphasise the united force of the
groups of employees and dairy farmers behind our entrepreneurial success. Without the farmers there would be
none of the valuable resource that is milk, without the
employees at the DMK sites the high quality and product
safety could not be produced for the customers. In the
Team area of sustainability, four fields of action have
been defined that centre on employees and dairy farmers:
satisfaction, training, diversity and elected office.
Corporate culture anchored in the vision
For a company like DMK GROUP that has developed with
a cooperative structure out of several companies over the
years and is still dynamically growing, a unified direction
is of major importance. It is therefore one goal in the
satisfaction field of action to further expand the valuesbased, sustainable corporate culture by the year 2015.
The vision that was introduced in 2013 and systematically further implemented in the reporting period points
the way to the future with the core values entrepreneurial,
fair and innovative. It illustrates the entrepreneurial
mission in a clear and visionary way, that is, to make the
best from the milk for the shareholders.
DMK 2020
TEAM
Our aspiration
Together we will do
our utmost to attain
long-term success for every
individual and for DMK.
Fields of action
Satisfaction
Training
Diversity
Elected office
By 2020, we want to drive forward
sustainability in the area of the Team
with 14 concrete goals in the fields
of action.
The goals behind the fields of action and the status of goal
achievement in 2014 are to be found on pages 72 – 73.
Selected activities in 2014
Top employer
SMETA audits
Membership of Alliance for YOUth
Further information on the sustainability area
of Team is to be found at
w
ww.dmk.de/en/responsibility/
sustainability/team/
In order to integrate the vision further within the company, vision meetings have been held successively for all
sites from October 2014 onwards. Vision meetings were
successfully conducted at four sites in the fourth quarter
of 2014.
An average of 10 to 15 people attend the vision
meetings and exchange views about the core values
and the vision.
The meetings are 60 minutes long. Employees
have the opportunity to give feedback and to ask
questions about the vision.
Social standards at an internationally recognised level
The SMETA audit is now of major importance in international business. More than ten years ago, a group of
British retailers developed the SMETA (Sedex Members
Ethical Trade Audit) guidelines for ethical audits specifically for retailers and their first and second tier suppliers
in order to achieve uniformity in their suppliers’ social
standards.
Sedex (Supplier Ethical Data Exchange) is an organisation
of companies that have committed to the continuous
improvement of ethical conduct in their value chains.
International food manufacturers number among these
companies. They expect their global suppliers to accept
being audited according to the SMETA standard, which
embraces topics of importance to employees such as
working guidelines and hours, occupational health and
safety, and also the environment and corporate ethics in
general. Two sites were re-audited and audits of six more
successfully completed in the reporting period.
ial
ur
i nn
ir
fa
Actively embodying the vision’s core
entreprene
People and commitment 49
Values and opportunities
ova ti v e
The vision meetings help to anchor the vision more
firmly within the company. They are intended to build
a fundamental understanding among DMK colleagues
and to connect the core values and the vision with the
actual corporate processes. By this means the core
values will be integrated and actively incorporated
into daily working routines.
Diversity and equality of opportunity in the company
In 2014, DMK made an agreement on the full integration
of severely handicapped employees. The legislator sets
the quota of disabled or equivalent employees at five
percent. DMK voluntarily raised this to seven percent in
its integration agreement. The company has increased
the quota gradually over the past years – most recently
from 5.8 percent to 6.3 percent in 2014. In addition, DMK
runs several programmes in which it actively works to
increase equality of opportunity for various groups of
employees: young talents and older employees, women
in executive positions and mothers or fathers on parental
leave.
Combined annual report and sustainability report 2014
50 People and commitment
Employees
Employees
Motivated employees are crucially important to the business success of DMK GROUP. The company
sees long-term engagement on behalf of the employees as part of its corporate responsibility. It
places a high priority on giving employees the opportunity to develop continuously. DMK is addressing the impending shortage of management employees with training measures at various levels.
The company offers good career opportunities and at the same time makes sure that its employees
are committed and happy. The result of such efforts is proven high job satisfaction.
Top employer: aspiration and obligation
DMK wants to offer its employees individual development
opportunities, room for personal development and a
good working environment. The workers’ satisfaction has
risen steadily over the last few years and was confirmed
once again in the period under review: in addition to its
low turnover rate, DMK achieved more than satisfactory
results for the third time in Focus magazine’s ranking of
top employers. DMK is the industry leader among the
best employers in the category of groceries and luxury
foods, animal feed, drugstore articles and medical consumer products. The company also achieved a leading
position in the overall ranking. Focus asked employees
at 2,000 firms to assess their employers on the basis of
surveys in 2014 for the study published at the beginning
of 2015.
In view of demographic change, an attractive working
environment and satisfied employees are crucial elements of a company’s competitiveness. DMK recognised
this fact early on and developed appropriate measures on
a targeted basis. Its winning position among the large
corporate groups in the groceries and luxury foods industry documents the success of its activities. One of the
reasons for the excellent rating is the fair, partner-like way
in which people are dealt with at the company. This stems
to a large extent from its cooperative background, which
makes partner-like dialogue with employees and the
acceptance and implementation of their ideas into guiding principles. Another central factor in long-standing
employee loyalty is the career prospects that DMK has
to offer. The company develops the individual potential,
personal satisfaction and motivation of every single
employee with specific training and continuing professional development programmes.
Young talent and executive development
Developing young talents is a key area. Here, DMK
offers a broad range of opportunities for school-leavers,
university graduates and emerging in-house talents.
School-leavers, for example, can take apprenticeships in
14 different jobs, thus laying the foundations for professional careers. In future, DMK is to expand the range of
possible apprenticeships to 18 professions. The spectrum
will not only be widened in the commercial and technical
fields, but further trainers will be added as well. In the
year under review, 260 apprentices were employed at
DMK, corresponding to a trainee quota of 4.2 percent.
DMK joined the Alliance for YOUth in 2014. More than
200 companies, schools and policy-makers work together
in this organisation to create jobs throughout Europe for
young people under 30.
People and commitment 51
Employees
“DMK GROUP has a lot of exciting
and individual opportunities for
continuing professional development,
particularly for young talents.”
Christina Erke, Purchaser
Famous companies are included in the ranks of the initiative’s partners. The initiative aims to help young people
in their search for work and offers application training
and other facilities for this purpose. In the context of its
commitment, which continues until the year 2016, DMK
is planning to hire more employees under the age of 30.
Basis of the work
DMK sets forth the company’s shared values and principles
in its code of conduct. These are based on clear ethical and
social rules for interpersonal conduct and compliance with
social and environmental standards. They apply without
exception to management and every employee. The company expects the actions of its business partners and suppliers to be based on guidelines that are compatible with
the DMK Code. DMK will not tolerate any form of acceptance of benefits, granting of benefits, bribery or corruption. Should infringements by colleagues or managers
nevertheless occur, intentionally or through negligence,
employees can turn to the Works Council or the internal
complaints office which DMK has set up in accordance
with the general legislation on equality.
DMK Starter Academy
DMK offers the student talents it supports internships
and degree projects that run parallel to their studies. The
company also set up the DMK Starter Academy in 2013
to train young executives. This special basic training is
open to both young in-house talents and trainees and
focuses on the individual development of interpersonal
skills. For this purpose, DMK offers two-to three-day
training courses over a period of 18 months and expands
participants’ knowledge of the company with information
events and factory tours. The programme also encourages networking and expands horizons. 34 employees
took part in the Starter Academy in the year under review,
another group began in January 2015. In the light of
increasing internationalisation, DMK is currently considering implementing a bilingual programme.
Combined annual report and sustainability report 2014
52 People and commitment
Employees
Employees by type of employment contract
2013
2014
Change
(%)
Total workforce
5,913
6,179
4.5
of whom, permanent
5,022
5,354
6.6
of whom, temporary
891
825
– 7.4
Permanent employees
5,022
5,354
6.6
of whom, full time
4,673
4,946
5.8
of whom, part-time
349
408
16.9
Employee turnover (%)
4.0
4.9
22.5
Total workforce by gender (%)
32.7 Apprentices
32.7 Women
2013
Women
2013
243
2014
+ 6.9%
260
2014
67.3 67.3 Men
Men
Severely disabled persons and equivalent
2013
342
2014
Age structure of employees
2013
2014
1,023
2,918
1,113
under 30 3,020
30 – 50 over 50
DMK + 100% subsidiaries (region: Germany and Netherlands)
As of 31.12.2014
+ 13.5%
388
Employees on parental leave
1,972
2,046
2013
93
2014
89
Women Men
41
36
134
125
– 6.7%
People and commitment 53
Employees
In addition, employees have an impartial external contact
available to them in the form of an ombudsman who is
bound to secrecy.
An important element in the implementation of the Code
of Conduct is the whistle-blower system, which enables
DMK to pick up on possible infringements of the law early
on and prevent damage to the company’s assets and
image in good time.
For security and health at the workplace
Occupational health and safety occupy a prominent
position in company policy, the Code of Conduct and the
DMK 2020 Sustainability Strategy. DMK works together
with its employees to ensure safety during work and
healthy workplaces. The statutory accident insurance
company for the food industry and related sectors (BGN)
records accidents from 3 days’ absence upwards. DMK
keeps stricter statistical records and performs stricter
analysis of workplace accidents than is generally the
norm and records accidents from one day of absence
upwards. The goal within DMK 2020 is to reduce the
number of accidents to zero by the year 2020.
To achieve this, occupational health and safety experts
have worked out the key areas where accidents occur. Five
working groups analysed the causes of accidents and
prescribed measures for preventing accidents in future.
By rigorously implementing these measures, DMK has
been able to reduce the number of accidents in the
reporting period by just under eight percent compared to
the previous year. The accident figures have fallen in precisely those areas which had previously been identified
as key areas. The managers’ contributions were particularly important in the stringent implementation of the
measures, primarily because of their role model function,
praise for exemplary conduct and the way that they drew
attention to unsafe actions. The majority of accidents in
production are behaviour-related. Employees at all locations therefore have to be involved in a company-­wide,
comprehensive safety culture.
Total accidents
2013
252
2014 1
232
– 7.9%
Accidents per 1 mill. working hours
2013
2014 1
36
30
– 16.7%
DMK + 100% subsidiaries (excl. sanotact, sunval, dp supply and wheyco),
accidents from 1 day’s absence upwards
1
DMK + 100% subsidiaries (excl. sanotact, sunval, dp supply and Rosen Eiskrem)
The process for changing attitudes and behaviour in
occupational safety is now established at four locations
and will be extended step by step to the whole company
by 2020.
DMK introduced a hazardous substances management
system in 2012 which now covers 98 percent of all hazardous substances and underpins them with operating
instructions and safety data sheets. For sites where milk
powder is handled in big bags and sacks, the company
implemented a loading safety concept with associated
online trainings in the year under review which is based
on an expert report specifically prepared for DMK. In
addition, the company-wide skin protection plan and
the gauntlet concept was revised, high-quality hand
protection products to protect people’s skin are used as
standard at DMK.
DMK employees have the opportunity to contribute ideas
on improvements in operational processes in the context
of a company suggestions system. Employees and the
company share the benefits of these ideas.
Combined annual report and sustainability report 2014
54 People and commitment
Dairy farmers
Dairy farmers
With a good 8,900 dairy farmers, DMK GROUP is one of the major dairies in Europe organised on
a cooperative basis. The dairy farmers are the backbone of the cooperative and the business. DMK
supports the dairy farmers in important issues and at the same time makes efforts to improve the
attractiveness of farming as a profession. DMK places a high priority on continuing professional
development for the dairy farmers.
Shoulder to shoulder with the dairy farmers
The dairy farmers identify with DMK to a high degree. For
example, a survey in which more than 2,200 dairy farmers
participated in the year under review confirms that they
are highly satisfied with DMK. Almost three quarters of
DMK members feel that they are kept well informed and
agree with such statements as: “I am proud to be a DMK
dairy farmer,” “DMK looks after its dairy farmers,” and
“DMK is a fair partner”.
Annual average
2020 Sustainability Programme in a committed and
professional manner – successful implementation is only
possible together with those same dairy farmers. The
launch of the Milkmaster Programme took priority in the
reporting period (see pages 38 – 39). The Milkmaster Production Code serves the dairy farmers as a guideline for
their actions. It must be taken into account here that the
members of the cooperative make the decisions for their
farms individually in accordance with their different
needs and under their own responsibility. DMK encourages all dairy farmers to adopt sustainable production
and supports them in implementing it. Change requires
not only time, but also incentives, and it has to be carefully thought through. For example, the dairy farmers
themselves bear the cost of changes – for example, conversion to modern cubicles – and have to plan for financial risks. At the same time, in the public debate, which is
often marked by a highly romanticised image of agriculture, the farmers’ efforts are often criticised from the
start as inadequate or too slow. However, the guiding
thought of sustainability demands that processes should
be designed for future-proofing, and that changes should
not stop at immediately visible cosmetic improvements.
The DMK 2020 Sustainability Programme and the support for implementation by the farmers represented by
the Milkmaster Programme are focused on such significant and meaningful long-term changes.
From the German fertiliser ordinance to the animal
husbandry ordinance, agriculture features a wide range
of regulations with which DMK’s dairy farmers have to
comply. The dairy farmers are helping to shape the DMK
Good milk prices: crucially important to dairy farmers
Milk prices are a crucial guideline for DMK: the milk prices
determine the dairy farmers’ income and DMK GROUP’s
business success. This is why one of DMK 2020’s goals
is to generate competitive milk prices every year. At
Dairy farmers (number)
77
DMK contract suppliers
8,826
Deutsches
Milchkontor e G
2014
Avg. volume of
milk per farm
(1,000 kilos)
Deutsches Milchkontor eG
DMK contract suppliers
664
2,208
People and commitment 55
Dairy farmers
Intensive dialogue through various channels
In the year 2014, DMK continued its intensive
dialogue with the dairy farmers and enabled an
exchange of views through a variety of channels:
36.86 eurocents per kilo of milk, the average milk price
was in line with that paid by comparable dairy companies
in 2014. However, decent milk prices do not only determine the income of the farmers and their families. They
are also the relevant benchmark for the farms’ capital
investments and the basis for further value added in
the regions. These factors explain the DMK 2020 goal of
paying a competitive milk price every year. In addition, a
key issue in the Milkmaster Programme is to improve the
cost-efficiency of the different farms in such a way that
the milk prices provide a good income today and enable
forward-looking investments.
Top priority for dialogue
The intensive dialogue between the dairy farmers and
DMK contributes to optimised cost-efficiency on the
farms. The exchange of views about production con­
ditions and working methods on the farms is a fixed
element of the cooperative. It supports the further development of all dairy farmers and makes it possible to continue to meet society’s requirements on responsible dairy
63 DMK vor Ort (“DMK on site”) events were used
to provide information and conduct a discussion
about relevant topics.
Votes on important issues were conducted at
35 District Assemblies.
The weekly magazine Milchwelt (“Milk World”)
once more provided a reliable information platform.
Dairy farmers can download and update their farms’
delivery data and keep up to date with developments
at DMK on a daily basis on the Webmelker
(“Web milker”) internet portal.
The Regional Managers and consultants support the
farms individually on business and agricultural issues.
farming in the future. In the period under review, DMK
distributed the 80-page Milkmaster File with the Production Code and other information to all 8,900 dairy farmers
for the launch of the Milkmaster Programme. As a supporting feature, the regular information events offered
the opportunity to exchange thoughts about the new
requirements.
DMK also explored the possibility of increased training
using new media in 2014. The Young Dairy Farmers’ Working Group trialled an online format: the young farmers
met virtually for a two-hour seminar about internationalisation, listened to a speech and were able to discuss
with colleagues all over Germany. The format enjoyed
major resonance. The important area of continuing professional development needs to have a good effort to
benefit ratio in the dairy farmers’ daily working routine.
Webinars are easy to integrate. Against this background,
DMK would like to expand such formats in future.
Combined annual report and sustainability report 2014
56 People and commitment
Region and responsibility
Region and responsibility
DMK GROUP is closely integrated with society. Particularly in the regions in which it has production
sites and where its dairy farmers are based, the company and its employees engage with society.
For DMK, one important element of taking social responsibility is the formats of its dialogue with
different stakeholder groups. Promoting research into dairy industry issues also plays a major role.
In dialogue with stakeholders
The dialogue with stakeholders is of major importance
to DMK. In the reporting period, DMK employees took
positions in the discussions about sustainability and
other issues of importance to the dairy industry. For
example, DMK was represented at the DLG Winter Conference in Munich with a presentation on “challenges and
complexity along the milk value chain”. DMK employees
gave speeches at professional events on the development
of the milk market after the end of the quota system and
on the practice of quality management. The company
contributed to the 20th International Summer Academy
of the German Federal Environmental Foundation (DBU)
on sustainable agriculture with a speech on “practical
answers to what customers want”. DMK presented the
Milkmaster Programme at a conference held by a German
retail company. DMK is in dialogue with environmental
organisations and feedstuff manufacturers at a number
of round tables.
DMK makes a real difference in the regions
DMK has always engaged with the regions in which it has
production sites and where the dairy farmers are based.
With DMK 2020, more projects to strengthen regional
attractiveness are planned for the future. At the moment,
the focus is on the “Freiwillig und unbezahlbar” (“voluntary
and beyond price”) campaign, which supports employees
in their voluntary commitments. The intention is to support twelve employees and their organisations every year.
Last year, for example, this included an employee who has
espoused the cause of supporting seriously ill people.
She does voluntary work for a hospice which invested the
DMK 2020
SOCIETY
Our aspiration
We will support
the regions
we operate in.
Fields of action
Dialogue
Dairy competence
Research
Engagement
By 2020, we want to drive forward
sustainability in the area of Society with
11 concrete goals in the fields of action.
The goals behind the fields of action and the status of goal
achievement in 2014 are to be found on pages 72 – 73.
Selected activities in 2014
DMK Scholarship Programme
Promoting research
“Freiwillig und unbezahlbar”
(“voluntary and beyond price”) project
Further information on the sustainability area
of Society is to be found at
w
ww.dmk.de/en/responsibility/
sustainability/society/
People and commitment 57
Region and responsibility
Supporting research
As a large German dairy company, DMK participates in
research projects to develop the dairy industry further
and in sustainability projects. Our research support
focuses particularly on feeding, good farm animal welfare and resources and the climate as well as sustainability management and dairy industry issues. DMK
also supports Bachelor’s and Master’s dissertations in
these areas. In the year under review these included:
Research projects: “Energy and climate efficiency
in the dairy industry through the intelligent coupling
of energy flows”, “Sectoral and national economic
effects of EU strategies to limit high-protein imported
feedstuffs or to switch to non-genetically modified
feedstuffs of domestic origin”
Master’s projects: “Sustainability in the German
dairy industry, with particular consideration
for the integration of the raw milk producers”,
“Dynamic capabilities and sustainable supply
chain management”
Bachelor’s projects: “Analysis of the sources of the
occurrence of B-grade goods (“seconds”) in the area
of food manufacturing, particularly in the production
of dairy products, and problem-solving approaches
to preventing them”, “A new DMK Eis manufacturer
brand in the international ice cream market – analysis
of the most suitable positioning and brand strategy”
donation in employee training. Another employee works
on behalf of under-age refugees. The association champions their rights and the mentors each help one person
to arrive in the city and integrate into everyday school life.
DMK welcomed the first scholarship holders in 2014.
Three young woman and one man from Russia completed
the six-month programme – four months’ practical work
on DMK dairy farms and two months’ work at a production
site and at administrative headquarters. The scholarship
holders were able to take away valuable impressions of
the modern, responsible dairy industry in Germany for
their agricultural education in Russia.
Good start to DMK Scholarship Programme
In 2013, DMK initiated a scholarship programme for
international young talents in the dairy industry, to
enable young people to get practical insights into dairy
farming and milk processing which they can apply in their
home countries. Its partner in this initiative is DEULA
Nienburg, which offers a comprehensive training programme specialising in agricultural subjects.
Four scholarship holders from outside Germany are now
to complete the programme every year. Another scholarship holder every year will receive support in taking a
Bachelor’s degree at the Jacobs University in Bremen,
combined with practical internships at DMK’s head office
in Bremen, DMK production sites and the Milk Innovation
Center (MIC).
Combined annual report and sustainability report 2014
58 Financial information and key figures
Group Management Report 2014
Extract from the Deutsches Milchkontor eG
Group Management Report 2014
Industry development
According to figures from the Federal Office for Agriculture and Food (BLE), consumption of drinking milk fell in
2014 year on year by – 0.6 percent to 5.0 million tonnes.
While dried milk (+9.2%) and yoghurt products (+8.3%)
achieved significant growth, the production of butter and
cheese rose only slightly, at 1.9 percent and 1.3 percent
respectively. The manufacture of buttermilk products fell
sharply, by – 8.7 percent. The higher volumes of milk delivered are attributable to rising milk yield and growing
dairy herds. The dairy industry’s sales rose in 2014 year
on year by 2.1 percent. Around one quarter of these sales
were earned outside Germany. The average price of conventionally produced cow’s milk with a fat content of
4.0 percent and a protein content of 3.4 percent (ex farm)
was at the previous year’s level on an annual average
according to our own estimates, but fell significantly over
the period, from 40.22 eurocents per kilo in January to
31.04 eurocents per kilo at the end of the year.
Group development
During the reporting period, DMK completed the factory
structure concept which was launched in 2011. Following
the relocation of plain curd production to Zeven and the
construction of a new cheese factory in Georgsmarienhütte, DMK took targeted measures to upgrade dessert
production in Erfurt and plain and herb curd production
in Zeven. DMK started to increase production and productivity with the “Total Productive Management” project at
the fresh cheese-making plant in Zeven and the butter
factory in Edewecht. Total Productive Management, as a
holistic, process-oriented management system, aims to
improve all business processes and will be rolled out
successively at all production sites.
In 2014, DMK realigned its baby food subsidiaries and
formed the DMK BABY subgroup. DMK Baby GmbH acts
as the subgroup parent for all subsidiaries involved in
making or trading in baby food. These include not only
HUMANA GmbH but also Sunval Holding GmbH, which
was acquired in 2012.
DMK’s milk intake rose slightly by 51,000 tonnes. The raw
milk delivered had a protein content of 3.4 percent and a
fat content of 4.0 percent on average. The company succeeded in earning a comparison price of 36.86 eurocents
per kilo (previous year: 37.40 eurocents per kilo), which it
paid through Deutsches Milchkontor eG (including an
average logistics bonus and dividend). As a result, DMK
achieved a competitive milk price which fell by only
1.4 percent in the second half of the year despite the market upheavals. For 2015, the company expects much
lower milk prices, but assumes that it will continue to see
a positive trend compared to competitors.
DMK created a purchasing control department and a
cross-purchasing project management function in the
central controlling section in the autumn of 2014. These
new units will actively support central purchasing in
implementing the optimum merchandise group and
supplier management and will secure the maximum
savings potential through defined ratios, analyses, and
planning optimisation. Despite a variety of price increases,
purchasing costs fell significantly in 2014.
The total sales of the subsidiaries of DMK EIS rose in the
reporting period by 11.8 million euros to 299.8 million
euros. Sales in the baby food segment also saw an upturn,
rising to 252.0 million euros. Group sales stagnated
because of falling prices for a number of dairy products.
In total, the Group ’s revenues rose compared to the previous year by 13.4 million euros to 5,323.0 million euros.
The share of foreign sales was around 40.2 percent in
2014 (2013: 44.5%).
Investments/human resources/research and
development/quality management
The Group’s investment budget (mainly that of Deutsches
Milchkontor GmbH) came to around 202 million euros
in 2014 (2013: 118.0 million euros), and was mainly
devoted to the strategic realignment needed in order to
meet market requirements in a targeted way. The focus
was on investments in increasing value added in whey
Financial information and key figures 59
Group Management Report 2014
derivatives, skimmed milk powder and whole milk powder.
Additional expansion and maintenance investments consisted of measures to increase the availability and safety
of equipment, improve quality, comply with occupational
health and safety and environmental protection regulations and optimise the infrastructure.
customer standards (EU regulation on organic farming,
Q&S, SMETA, halal, kosher) confirm that the company’s
processes are compliant. At the request of the company’s
own brand customers, unannounced IFS food checks on
hygiene were carried out for the first time by external
auditors at all sites, successfully in every case.
The workforce of 7,440 employed Group-wide was once
more a central success factor for the company in 2014.
Their satisfaction is demonstrated by the fact that DMK
was once more honoured as a top employer by Focus
magazine. The company won first place in the large companies, food, drink and tobacco category (2013: second
place).
Aspects of the net assets, financial position and
results of operations in 2014
The DMK Group’s net asset position is in good order.
80.2 percent of the fixed assets are backed by long-term
finance. The financial and liquidity position is appropriate
in view of the foresighted financing policy. The objectives
of financial management are to optimise the Group’s
existing financing structures, ensure the availability of
sufficient financial resources and use financing instruments to optimum managerial effect.
DMK successfully continued the Starter Academy young
talents programme, which was launched in 2013, with
double the participant numbers in 2014. The focus of the
concept is on interpersonal and leadership skills.
In research and development (R&D), the company worked
on approximately 350 projects in 2014 (2013: approx.
300) and also published seven technological patent specifications (2013: four) (yield improvement, filtration, powder technology, hypo-allergenic foods and basic curd).
A further focus was on fast, focused problem-solving in
the context of essential optimisation projects at individual sites. R&D also ensured additional quality and cost
improvements in product value engineering. Furthermore, the R&D departments Brand, Whey Products,
Process Development and Packing Development provided
intensive support for the production sites. The Group’s
quality management is present in all areas. It starts with
the dairy farmers and suppliers, intervenes in the production processes and is integrated in marketing activities.
This function protects and measures product quality and
customer satisfaction. As a supplementary measure,
certification processes affirm that standards are complied with. Successful audits at all sites in accordance
with the International Food Standard (IFS) or BRC and
in accordance with ISO 22000 and other industry and
The consolidated equity totals 573.9 million euros
(2013: EUR 543.0 million ) with a net income for the year
of 42.3 million euros. The equity ratio is highly satisfactory at 37.5 percent, with a balance sheet total slightly
lower than last year’s.
Outlook and strategy for 2015
The Group’s main focus of attention continues to be competitive milk prices for the dairy farmers. The business is
intended to grow primarily organically within the framework of the forecast increases in milk volumes in the
company’s milk collecting area. DMK has already initiated
investments required for the growth strategy. Targeted
acquisitions will complement organic growth. DMK aims
to achieve further growth through the export business
and has created the structures for this by the formation
of Group companies in regions with growing consumption of dairy products.
For 2015, DMK expects a further improvement in its business performance capabilities. The Group wants to further
expand its earning power and secure it for the long term
with cooperative ventures and participating interests in
strategic partners.
Combined annual report and sustainability report 2014
60 Financial information and key figures
The complete annual and consolidated financial statements and the Group Management Report have all already
received an unqualified audit opinion from the Genossenschaftsverband Weser-Ems e.V. They will be published in
the German Federal Gazette.
The printed financial statements are in abridged form.
Deutsches Milchkontor eG Group and
Deutsches Milchkontor eG 2014
Financial information
Deutsches Milchkontor eG Group profit and loss account Deutsches Milchkontor eG Group balance sheet Deutsches Milchkontor eG Group cash flow statement 61
62
64
Deutsches Milchkontor eG profit and loss account Deutsches Milchkontor eG balance sheet 65
66
Financial information and key figures 61
Deutsches Milchkontor eG Group profit and loss account
Deutsches Milchkontor eG Group profit and loss account
for the period from 1 January 2014 to 31 December 2014
  1.Sales revenues
2014
in EUR million
2013
in EUR million
5,323.0
5,309.6
  2.Increase or decrease in finished goods inventories and work in progress
8.9
0.3
  3.Capitalised cost of self-constructed assets
0.8
0.6
88.2
46.6
5,420.9
5,357.1
4,320.8
4,278.6
  4.Other operating income
Subtotal
  5.Cost of materials
a)Cost of raw materials, consumables and supplies,
and of purchased materials
b)Cost of purchased services
GROSS PROFIT OR LOSS
24.3
20.7
4,345.1
4,299.3
1,075.8
1,057.8
321.2
285.2
  6.Personnel expenses
a)Wages and salaries
b)Social security and other pension costs
68.7
62.2
389.9
347.4
  7.Depreciation of intangible assets and tangible assets
126.5
121.8
  8.Other operating expenses
475.1
477.4
84.3
111.2
  9.Income from associated companies
0.2
0.0
10.Income from participating interests and capital contributions
1.4
0.9
11.Income from transfer of profits
1.0
0.6
12.Income from other investments and long-term loans
0.1
0.1
13.Other interest and similar income
0.4
0.6
3.1
2.2
Subtotal (1. – 8.)
Subtotal (9. – 13.)
14.Write-downs of financial assets and investments held as current assets
0.0
0.0
15.Interest and similar expenses
21.4
22.9
16.RESULTS FROM ORDINARY ACTIVITIES
66.0
90.5
17.Extraordinary income
0.3
0.0
18.Extraordinary expenses
5.2
0.0
19.EXTRAORDINARY INCOME
– 4.9
0.0
20.Taxes on income
15.1
34.7
21.Other taxes
1.6
2.1
22. Payment for participatory capital
2.1
2.0
42.3
51.7
23.CONSOLIDATED NET PROFIT FOR THE YEAR
Combined annual report and sustainability report 2014
62 Financial information and key figures
Deutsches Milchkontor eG Group balance sheet
Deutsches Milchkontor eG Group balance sheet
as at 31 December 2014
Assets
31.12.2014
in EUR million
31.12.2013
in EUR million
13.1
33.7
4.8
51.6
11.1
51.9
4.2
67.2
239.7
336.8
33.7
106.8
717.0
237.4
325.3
29.4
36.1
628.2
11.5
0.2
11.0
6.7
0.4
0.7
0.0
2.7
33.2
801.8
11.6
0.0
0.0
17.7
0.5
0.7
0.0
2.5
33.0
728.4
68.1
24.7
229.7
0.2
322.7
68.2
26.0
206.9
0.7
301.8
272.5
4.7
5.4
104.5
387.1
347.7
3.9
1.7
146.7
500.0
0.3
0.3
A. FIXED ASSETS
I. Intangible assets
1.Concessions, industrial property rights and similar rights and values,
as well as licences thereto
2.Goodwill
3.Payments on account
Total intangible assets
II.
Tangible assets
1.Land and leasehold rights and buildings, including buildings on third-party land
2.Plant and machinery
3.Other fixtures and fittings, tools and equipment
4.Payments on account and tangible assets under construction
Total tangible assets
III.Financial assets
1.Shares in associated companies
2.Loans to associated companies
3.Participating interests in associated companies
4. Participating interests
5. Loans to companies in which a participating interest is held
6. Capital contributions to cooperative societies
7. Investments held as fixed assets
8. Other loans
Total financial assets
Total fixed assets
B. CURRENT ASSETS
I. Inventories
1.Raw materials and supplies
2.Work in progress
3.Finished goods and goods for resale
4.Payments on account
Total inventories
II. Accounts receivable and other assets
1.Accounts receivable (trade debtors)
2.Due from associated companies
3.Due from companies in which a participating interest is held
4.Other assets
Total accounts receivable etc.
III. Investments
1.Other investments
IV.Cash in hand, cash on deposit with Deutsche Bundesbank,
cash in other bank accounts and cheques
16.8
20.1
C. PREPAYMENTS AND ACCRUED INCOME
1.9
2.3
D. DEFERRED TAX ASSETS
1.2
0.9
E. DIFFERENCE DUE TO CAPITAL ACCOUNT
0.1
0.0
1,531.9
1,553.8
Total assets
Financial information and key figures 63
Deutsches Milchkontor eG Group balance sheet
Equity capital and liabilities
A. EQUITY CAPITAL
I. Capital contributions
1.of remaining members
2.of withdrawing members
3.from cancelled shares
Total capital contributions
II. Capital reserve
III.Revenue reserves
1.Statutory reserve
2.Other revenue reserves
Total revenue reserves
31.12.2014
in EUR million
31.12.2013 in EUR million
171.8
6.0
0.4
178.2
167.5
7.3
0.1
174.9
72.1
71.1
114.5
138.5
253.0
113.3
77.4
190.7
IV. Participatory capital
V. Consolidated profit
1.Total consolidated loss/consolidated profit carried forward
2.Consolidated net profit for the year
3.Allocations to reserves
4.Profit/loss attributed to other shareholders
Total consolidated net profit
44.9
42.5
– 16.2
42.3
– 12.4
– 4.3
9.4
1.4
51.7
– 2.0
– 10.5
40.6
VI.Minority interests
Total equity capital
16.3
573.9
23.2
543.0
0.8
0.7
B. DIFFERENCE DUE TO CONSOLIDATION OF CAPITAL
C. SPECIAL ITEM FOR INVESTMENT SUBSIDIES
14.8
15.4
D. ACCRUED LIABILITIES
1.Provisions for pensions and similar obligations
2.Provisions for taxation
3.Other provisions
Total accrued liabilities
110.5
39.6
104.6
254.7
108.6
37.8
139.2
285.6
E. LIABILITIES
1.Due to banks
2.Advance payments received
3.Accounts payable (trade creditors)
4.Due to associated companies
5.Due to companies in which a participating interest is held
6.Other liabilities
Total liabilities
349.4
1.5
229.1
3.9
0.8
90.8
675.5
302.6
5.7
308.9
4.1
0.2
74.7
696.2
0.1
0.0
12.1
12.9
1,531.9
1,553.8
F. DEFERRED INCOME
G.DEFERRED TAX LIABILITIES
Total equity capital and liabilities
Combined annual report and sustainability report 2014
64 Financial information and key figures
Deutsches Milchkontor eG Group cash flow statement
Deutsches Milchkontor eG Group cash flow statement
for the period from 1 January 2014 to 31 December 2014
2014
in EUR million
  1. Consolidated net profit for the year
42.3
  2. +/– Depreciation/write-ups of fixed assets
128.1
  3. –
Reduction in provisions
– 31.8
  4. –/+ Other non-cash income/expenses
– 7.1
  5. –/+ Gain/loss from disposal of fixed assets
– 4.2
  6. –/+ Increase/reduction in inventories, accounts receivable and other assets which
cannot be allocated to investing or financing activities
112.1
  7. +/– Increase/reduction in accounts payable and other liabilities which
cannot be allocated to investing or financing activities
– 65.3
  8. =
Cash flow from operating activities
174.1
  9. +
Payments from disposal of tangible assets
10. –
Investments in tangible assets
11. +
Payments from disposal of intangible assets
12. –
Investments in intangible assets
13. +
Payments from disposal of financial assets
14. –
Investments in financial assets
15. –
Acquisitions of consolidated companies
16. =
Cash flow from investing activities
17. +
Changes in capital contributions (net)
18. +/– Inpayments/outpayments for participatory capital
4.3
– 191.0
1.3
– 6.2
3.1
– 3.8
– 12.1
– 204.4
3.3
2.3
19. –
Dividends to members and minority shareholders
– 13.8
20. –
Change in cash and cash equivalents from sales of receivables
– 26.8
21. +
Change in cash and cash equivalents from stock repo transactions
22. +
Changes in amounts due to banks
46.8
23. =
Cash flow from financing activities
25.0
24. Changes in cash and cash equivalents (items 8., 16. and 23.)
– 5.2
25. +
Changes in cash and cash equivalents due to consolidation
26. +
Cash and cash equivalents at beginning of period
20.1
27. =
Cash and cash equivalents at end of period
16.8
13.2
1.9
Financial information and key figures 65
Deutsches Milchkontor eG profit and loss account
Deutsches Milchkontor eG profit and loss account
for the period from 1 January 2014 to 31 December 2014
  1.Sales revenues
  2.Other operating income
  Subtotal
2014
in EUR thousand
2013
in EUR thousand
2,266,397.0
2,269,515.4
2,657.9
2,271.2
2,269,054.9
2,271,786.6
  3.Cost of materials
a)Cost of raw materials, consumables and supplies, and
of purchased materials
GROSS PROFIT OR LOSS
2,238,334.6
2,248,434.3
2,238,334.6
2,248,434.3
30,720.3
23,352.3
408.3
439.2
  4.Personnel expenses
a)Wages and salaries
b)Social security and other pension costs
  5.Depreciation of intangible assets and tangible assets
0.0
0.0
408.3
439.2
16.7
424.9
  6.Other operating expenses
11,832.3
11,657.0
18,463.0
10,831.2
Subtotal (1. – 6.)
  7.Income from participating interests and capital contributions
  8.Income from other investments and long-term loans
  9.Other interest and similar income
Subtotal (7. – 9.)
10.Interest and similar expenses
2.8
2.5
975.8
967.6
635.8
618.3
1,614.4
1,588.4
35.4
113.3
20,042.0
12,306.3
12.Taxes on income
– 0.9
– 241.9
13.Other taxes
17.3
91.5
830.7
1,138.5
19,194.9
11,318.2
11.RESULTS FROM ORDINARY ACTIVITIES
14.Payment for participatory capital
15.NET PROFIT FOR THE YEAR
Combined annual report and sustainability report 2014
66 Financial information and key figures
Deutsches Milchkontor eG balance sheet
Deutsches Milchkontor eG balance sheet
as at 31 December 2014
Assets
31.12.2014
in EUR thousand
31.12.2013
in EUR thousand
289.2
305.6
A. FIXED ASSETS
I. Tangible assets
1.Land and leasehold rights and buildings,
including buildings on third-party land
2.Other fixtures and fittings, tools and equipment
Total tangible assets
1.3
1.6
290.5
307.2
II. Financial assets
1.Shares in associated companies
335,411.1
335,373.4
2.Loans to associated companies
15,000.0
15,000.0
3.Participating interests
47.1
47.1
4.Capital contributions to cooperative societies
13.9
14.7
5.Investments held as fixed assets
6.Other loans
Total financial assets
Total fixed assets
0.6
0.6
2,672.8
2,510.3
353,145.5
352,946.1
353,436.0
353,253.3
B. CURRENT ASSETS
I. Accounts receivable and other assets
1.Accounts receivable (trade debtors)
2.Due from associated companies
3.Other assets
Total accounts receivable etc.
II.Cash in hand, cash on deposit with Deutsche Bundesbank,
cash in other bank accounts and cheques
Total assets
262.9
230.8
166,241.3
205,926.1
8,047.5
12,423.4
174,551.7
218,580.3
11.2
48.2
527,998.9
571,881.8
Financial information and key figures 67
Deutsches Milchkontor eG balance sheet
Equity capital and liabilities
31.12.2014
in EUR thousand
31.12.2013
in EUR thousand
171,823.1
167,543.9
5,969.2
7,292.1
A. EQUITY CAPITAL
I. Capital contributions
1.of remaining members
2.of withdrawing members
3.from cancelled shares
Total capital contributions
II. Capital reserve
416.7
31.3
178,209.0
174,867.3
35,412.8
35,412.8
114,477.2
113,345.4
III.Revenue reserves
1.Statutory reserve
2.Other revenue reserves
Total revenue reserves
IV. Participatory capital
74,735.1
63,169.2
189,212.3
176,514.6
10,698.0
16,604.0
V. Net profit
1.Profit brought forward
3,069.3
0.0
2.Net profit for the year
19,194.9
11,318.2
3.Allocations to reserves
– 11,000.0
0.0
Total net profit
11,264.2
11,318.2
424,796.3
414,716.9
8,516.8
Total equity capital
B. ACCRUED LIABILITIES
1.Provisions for taxation
7,996.2
2.Other provisions
1,485.0
2,416.1
9,481.2
10,932.9
89,541.3
141,344.4
Total accrued liabilities
C. LIABILITIES
1.Accounts payable (trade creditors)
2.Due to associated companies
3.Other liabilities
Total liabilities
1.0
1.0
4,179.1
4,886.6
93,721.4
146,232.0
527,998.9
571,881.8
Total equity capital and liabilities
Combined annual report and sustainability report 2014
68 Financial information and key figures
DMK Deutsches Milchkontor GmbH 2014
Financial information
DMK Deutsches Milchkontor GmbH profit and loss account DMK Deutsches Milchkontor GmbH balance sheet 69
70
Financial information and key figures 69
DMK Deutsches Milchkontor GmbH profit and loss account
DMK Deutsches Milchkontor GmbH profit and loss account
for the period from 1 January 2014 to 31 December 2014
  1.Sales revenues
  2.Increase or decrease in finished goods inventories and
work in progress
  3.Capitalised cost of self-constructed assets
  4.Other operating income
Subtotal
2014
in EUR million
2013
in EUR million
3,926.3
3,931.2
– 6.1
25.6
0.8
0.6
87.8
59.8
4,008.8
4,017.2
3,321.6
3,306.8
  5.Cost of materials
a)Cost of raw materials, consumables and supplies, and
of purchased materials
b)Cost of purchased services
GROSS PROFIT OR LOSS
61.1
56.7
3,382.7
3,363.5
626.1
653.7
185.7
171.1
  6. Personnel expenses
a)Wages and salaries
b)Social security and other pension costs
  7.Depreciation of intangible assets and tangible assets
41.1
38.6
226.8
209.7
66.2
65.7
297.4
308.2
35.7
70.1
  9.Income from participating interests and capital contributions
8.2
5.2
10.Income from transfer of profits
4.5
3.6
11.Income from other investments and long-term loans
0.8
0.7
12.Other interest and similar income
4.8
4.6
18.3
14.1
13.Write-down of financial assets and short-term investments
0.0
0.0
14.Expenses from transfer of losses
2.1
1.9
15.Interest and similar expenses
18.7
19.3
16.RESULTS FROM ORDINARY ACTIVITIES
33.2
63.0
  8.Other operating expenses
Subtotal (1. – 8.)
Subtotal (9. – 12.)
17.Extraordinary expenses
0.5
0.5
– 0.5
– 0.5
19.Taxes on income
2.7
18.2
20.Other taxes
0.5
0.5
21.Payment for participatory capital
2.2
1.7
27.3
42.1
18.EXTRAORDINARY INCOME
22.NET PROFIT FOR THE YEAR
Combined annual report and sustainability report 2014
70 Financial information and key figures
DMK Deutsches Milchkontor GmbH balance sheet
DMK Deutsches Milchkontor GmbH balance sheet
as at 31 December 2014
Assets
31.12.2014
in EUR million
31.12.2013 in EUR million
10.6
9.0
A. FIXED ASSETS
I. Intangible assets
1.Concessions, industrial property rights and similar rights and values,
as well as licences thereto
2.Payments on account
Total intangible assets
4.8
4.2
15.4
13.2
II. Tangible assets
1.Land and leasehold rights and buildings, including buildings
on third-party land
148.2
146.5
2.Plant and machinery
191.4
175.9
3.Other fixtures and fittings, tools and equipment
19.8
15.8
4.Payments on account and tangible assets under construction
93.8
25.5
Total tangible assets
453.2
363.7
III.Financial assets
1.Shares in associated companies
215.0
209.5
2.Loans to associated companies
23.1
34.3
3. Participating interests
3.4
2.8
4. Loans to companies in which a participating interest is held
0.4
0.5
5.Capital contributions to cooperative societies
0.6
0.6
6.Other loans
0.0
0.1
Total financial assets
242.5
247.8
711.1
624.7
30.6
Total fixed assets
B. CURRENT ASSETS
I. Inventories
1.Raw materials and supplies
29.5
2.Work in progress
15.6
19.5
3.Finished goods and goods for resale
126.9
125.7
Total inventories
172.0
175.8
II. Accounts receivable and other assets
1.Accounts receivable (trade debtors)
172.2
229.4
2.Due from associated companies
122.4
123.1
3.Due from companies in which a participating
interest is held
4.Other assets
Total accounts receivable etc.
0.3
1.1
75.7
91.3
370.6
444.9
III.Cash in hand, cash on deposit with Deutsche Bundesbank,
cash in other bank accounts and cheques
1.6
7.5
C. PREPAYMENTS AND ACCRUED INCOME
1.2
1.4
1,256.5
1,254.3
Total assets
Financial information and key figures 71
DMK Deutsches Milchkontor GmbH balance sheet
Equity capital and liabilities
31.12.2014
in EUR million
31.12.2013 in EUR million
I. Subscribed capital
150.0
150.0
II. Capital reserve
193.6
193.6
III.Revenue reserves
50.5
8.4
IV. Participatory capital
49.2
40.9
V. Net profit for the year
27.3
42.1
470.6
435.0
0.4
0.7
102.6
100.3
A. EQUITY CAPITAL
Total equity capital
B. SPECIAL ITEM FOR INVESTMENT SUBSIDIES
C. ACCRUED LIABILITIES
1.Provisions for pensions and similar obligations
2.Provisions for taxation
14.4
14.1
3.Other provisions
68.5
100.6
185.5
215.0
283.8
242.1
Total accrued liabilities
D. LIABILITIES
1.Due to banks
2.Advance payments received
3.Accounts payable (trade creditors)
4. Due to associated companies
5.Due to companies in which a participating interest is held
6.Other liabilities
Total liabilities
0.3
5.0
60.7
73.0
186.4
226.1
0.1
0.1
68.7
57.3
600.0
603.6
1,256.5
1,254.3
Total equity capital and liabilities
Combined annual report and sustainability report 2014
72 Financial information and key figures
Goal status of DMK 2020 sustainability strategy
Area
Field of action
AGRICULTURE
Cow comfort
Animal health
Feed cultivation
Feeding
ENVIRONMENT
Energy
Water
Waste
Logistics
MILK
Value added
Quality
Product safety
Packaging
TEAM
Satisfaction
Training
Diversity
Elected office
SOCIETY
Goals 2020: To achieve this goal at DMK, we want to …
maintain and promote sufficient exercise for our cows
maintain and promote proper rest areas
continuously promote our cattle’s well-being
continuously improve animal health
promote veterinary care for all cattle
further develop preventive health care with modern measuring methods and professional herd management
support sustainable cultivation even for imported feeds
reduce nitrogen and phosphate deposition from farmyard manure
promote biodiversity in our regions
implement feeding that matches the cows’ needs
support professional feed management
establish optimum feeding and drinking conditions for all cattle
improve energy efficiency by 15 percent compared to 2011
constantly encourage all DMK employees to reduce energy consumption
increase our internally produced energy supply to at least 50 percent compared to 2011
initiate projects for climate-neutral energy generation
improve our specific water efficiency by 20 percent compared to 2012
continuously raise DMK employees’ awareness of using water responsibly
reduce the volume of residual waste at DMK by increasing the sorting quotas
put in place a comprehensive waste flow optimisation concept at all DMK sites
optimise our transportation network and make it more efficient
in deliveries to our customers, we will reduce the share of logistics errors to less than 0.5 percent
use economical technologies in transport vehicles
include DMK suppliers in taking responsibility for compliance with social and environmental standards
purchase important basic raw materials from sustainable agriculture
introduce innovative product concepts with a high value contribution
have at least 20 percent of innovation projects related to sustainability
continue external auditing of all dairy farmers by QM-Milch
agree on standardise quality assurance at all locations with all subsidiaries
standardise quality management and quality assurance at all our sites
have an external annual inspection of quality and product safety processes
constantly increase product safety across the value chain
develop innovative environmentally friendly and modern packaging concepts
reduce pollution and increase environmental compatibility in packagings
give end consumers targeted information about sustainable packagings and their recycling
achieve competitive milk prices on a long-term basis
make DMK a top employer in the food industry
further expand the values-based, sustainable corporate culture
have no accidents at DMK sites
embed a behaviour-based safety culture at all our sites
further develop key topics in milk production
offer annual sustainability workshops for all dairy farmers
enable all employees to pursue regular and targeted development
raise awareness of key DMK topics continuously and at all sites
promote the dairy industry as an attractive professional field for all ages and cultural groups
offer career starters sound training that ensures good prospects
promote the dairy farmers’ role as elected officers in the cooperative’s executive bodies
increase the ratio of young dairy farmers among our cooperative’s elected officers
support voluntary organisations in which our employees are engaged
give consumers transparent information about the path milk takes
hold an annual meeting with relevant stakeholders
Dialogue
make a real difference to important issues in the agricultural and food industry
open farm gates in all DMK regions every year
set up 16 farms of competence in the DMK regions
Dairy competence establish a DMK scholarship programme for international young talents in the milk and dairy
be an active shaper of sustainability in the milk value chain
support research across the milk value chain
Research
promote young scientists with research projects for the milk industry
establish a school farm programme in regions close to cities
Commitment
support projects to promote regional attractiveness
All these goals are part of the DMK 2020 sustainability strategy and were defined and developed in 2012.
Financial information and key figures 73
Goal status of DMK 2020 sustainability strategy
Goal status of DMK 2020 sustainability strategy
2013
Status of goals: = not yet started, = planned goal achievement
All goals are reviewed annually.
2014
= planning has started, 2015
2016
= implementation has started, 2017
= goal achieved, 2018
2019
2020
= goal not achieved.
Combined annual report and sustainability report 2014
74 Financial information and key figures
GRI Content Index – abridged version
GRI Content Index – abridged version
DMK GROUP reports in accordance with GRI-G3
Chapter in report
Page
DMK GROUP – our strategy
About this report
DMK in brief
Global success with German quality/Contents
Foreword by the DMK GmbH Management Team
Foreword by the cooperative’s elected officers
Highlights 2014
Business and responsibility
1
4–6
7
8–9
10 – 15
Cooperative
Stakeholder relations
Brands and products
16 – 17
18 – 21
24 – 27
Internationalisation
Product responsibility
30 – 31
32 – 33
Business environment and background
Animal welfare and environmental impact
36 – 37
40 – 41
Environmental protection at the production sites
42 – 45
Values and opportunities
48 – 49
Employees
50 – 53
Region and responsibility
Group Management Report 2014
DMK Deutsches Milchkontor GmbH
profit and loss account
DMK Deutsches Milchkontor GmbH balance sheet
Goal status of DMK 2020 sustainability strategy
56 – 57
58 – 60
69
GRI Content Index – abridged version
Executive bodies
Sites
Structure of executive bodies
Group structure
74 – 75
76
Full GRI Content Index with additional
comments as online version
70 – 71
72 – 73
Standard disclosures included
1.1
3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.9, 3.10, 3.11, 4.14, 4.15
2.1, 2.2, 2.4, 2.5, 2.6, 2.8
2.5, 2.7, 4.8
1.1, 1.2, 4.1, 4.8, EC1, EN14, LA13, SO1
1.1, 1.2, 4.1
2.10
1.2, 2.2, 2.3, 2.10, 3.5, 3.8, 4.8, 4.9, 4.10, 4.11, EN14, SO1, SO2,
Management approaches: Economy, ecology,
working environment and working conditions,
human rights, society, product responsibility
1.2, 2.6
1.2, 4.13, 4.14, 4.15, 4.16, 4.17, SO1
2.2, 2.7, 2.10, 3.8, PR1, PR3, Management approach:
Product responsibility
2.7, 3.8
1.2, 4.13, SO1, Management approaches: Human rights,
product responsibility
1.2, EN14, SO1
4.12, EN26, Management approach: Ecology
2.10, EN3, EN5, EN6, EN8, EN18, EN21, EN22, EN26,
Management approaches: Ecology, working environment
and working conditions
2.10, 4.8, LA3, Management approaches: Working
environment and working conditions, human rights
2.10, 4.4, 4.6, 4.8, 4.11, 4.12, LA1, LA2, LA3, LA7, LA8, LA11,
LA13, HR2, HR4, SO3, SO4, Management approaches: Working
environment and working conditions, human rights
4.12, SO1, Management approach: Society
2.8, 2.9, EC1
EC1
EC1
EN6, EN14, EN18, EN26, Management approaches:
Ecology, working environment and working conditions,
human rights, society, product responsibility
3.12
2.3, 2.6, 4.1, 4.2, 4.3, 4.6
2.3, 2.4, 3.4, 3.8
2.3, 2.6, 4.1
2.3, 2.6, 3.8
Additional: 3.12, 3.13, 4.1, 4.2, 4.5, 4.6, 4.7, 4.13, 4.14, 4.15,
4.16, 4.17, EC2, EC3, EC7, EN3, EN5, EN9, EN16, EN28, LA3,
LA6, HR1, HR2, HR4, HR6, HR7, HR9, SO3, SO4, SO7, SO8, PR5
Only those chapters are listed which contain standard disclosures (report profile, management approaches, performance indicators).
Financial information and key figures 75
GRI Content Index – abridged version
GRI application level
C+
B
B+
A
A+
Report externally confirmed
Optional
Externally
examined
Report externally confirmed
Selfassessment
Report externally confirmed
Mandatory
C
Examined
by GRI
DMK GROUP’s combined reporting is based on the G3 Guidelines of the Global Reporting Initiative (GRI).
The self-assessment of Application Level B was also examined and confirmed by the GRI.
You will find the detailed version of the GRI Content Index
with additional comments and the GRI Application Level Service icon
as well as the Combined Annual Report and Sustainability Report for 2014 at
www.dmk.de/en/responsibility/sustainability/strategy/
Combined annual report and sustainability report 2014
76 Further information
Executive bodies
Executive bodies
Deutsches Milchkontor eG
Board of Management
Supervisory Board
Management Board/
Management Team
Alfons Kerlfeld
Chairman
Otto Lattwesen
Chairman
Dr Josef Schwaiger 2
Chief Executive Officer
Thomas Stürtz
Deputy Chairman
Dr Herbert Grimberg 1
1st Deputy Chairman
Reinhard Garbade
(until June 2014)
Adolf Oehlmann
2nd Deputy Chairman
Detlef Horstmann
Dirk Baus
Franz-Josef Krechtmann
Mohamed Boudih 1
Reiner Lübben
Uwe Boye
Christian Mülker
Udo Eckhoff
Harald Nitschke
Benedikt Langemeyer
Henner Pape
Franz Morgret
Jörg Pape
Dr Bernd Nix
Dirk Schröder
Frerk Osterndorff
Dr Klaus Wagner
Meyk Wendekamm
Michael Feller 2
Marketing/Sales
Dr Dirk Gloy 2
Chief Operating Officer
Ingo Müller 2
Ingredients/
Central Quality Management/
Research & Development
Volkmar Taucher 2
Chief Financial Officer
Sönke Voss 2
Agricultural Affairs/Raw Materials
Ines Krummacker
Director Human Resources
1
2
Representative of the NGG trade union
Management Board members
As of 31.12.2014
Sites
Nordhackstedt
Bergen
Hohenwestedt
Waren
Strückhausen
Edewecht
Neubörger
Dargun
Altentreptow
Zeven 1
Bremen
Prenzlau
Holdorf
Beesten
Recke
Georgsmarienhütte
Münster
Coesfeld
Everswinkel
Herford
Rimbeck
Bad Bibra
Waldfeucht-Haaren
Publication
details
Erfurt
Published by
DMK Deutsches Milchkontor GmbH
Consultancy on sustainability content
Anke Steinbach, Hamburg
Waghäusel
Nuremberg
Concept, design and editing HGB Hamburger Geschäftsberichte
GmbH & Co. KG, Hamburg
Printing and fi nishing
Hartung Druck + Medien GmbH,
Hamburg
1
Registered address, registered office
Production sites as at 31.12.2014 and Bremen administrative headquarters
of DMK Deutsches Milchkontor GmbH as well as production sites in Germany
as at 31.12.2014 of subsidiaries in which the Deutsches Milchkontor eG Group
holds a minimum share of 75%
Photos Sebastian Vollmert, Hamburg
Andreas Dittmer, Heeslingen
Structure of executive bodies
Deutsches Milchkontor eG
represented by the
Board of Management
Partners’ Meeting
6 people
Employees
Supervisory Board
Management Board
DMK Deutsches Milchkontor GmbH
6 people
Group structure
of Deutsches Milchkontor eG Group
Deutsches Milchkontor eG
92.22 %
100 %
DMK Baby GmbH
100 %
100 %
Sunval Holding
GmbH
100 %
100 %
MIG GmbH & Co. KG
90 %
NORLAC GmbH
100 %
NORDMILCH
Beteiligungs GmbH
DMK Eis GmbH
100 %
HUMANA
SPAIN S.L.
55 %
60 %
MILTE ITALIA S.p.A.
Molkerei Niesky
GmbH
100 %
100 %
40 %
HDT GmbH
100 %
indoc milk GmbH
sanotact GmbH
HUMANA
Italia SpA
100 %
DP Supply GmbH
TURM-Sahne GmbH
75 %
EXIMO AG
100 %
66.66 %
HUMANA GmbH
100 %
D.P. Supply B.V.
Euro Cheese
Vertriebs-GmbH
100 %
Fude + Serrahn
GmbH & Co. KG
100 %
100 %
Sunval Nahrungsmittel GmbH
51 %
wheyco GmbH
Zentralkäserei
MV GmbH
100 %
35 %
100 %
Müritz Milch GmbH
10 %
7.78 %
DMK Deutsches Milchkontor GmbH
100 %
5%
Milchwerke Thüringen GmbH
99.69 %
Rosen Eiskrem
Süd GmbH
50 %
ArNoCo
GmbH & Co. KG
100 %
Rosen-Eiskrem
GmbH
75 %
25 %
HUMANA Pharma
International SpA
Number
Subsidiaries, fully consolidated (see above): 30
Subsidiaries, associated companies (see above): 1
Other subsidiaries and associated companies (without fig.): 28
As of 31.12.2014
Registered offi ce Industriestrasse 27 · D -27404 Zeven · Germany
Tel +49 4281 72-0 · Fax +49 4281 72-58297
[email protected] · www.dmk.de
Combined annual report and sustainability report 2014
DMK Deutsches Milchkontor GmbH