Milcobel

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Milcobel wants to reorganize after a negative 2023

April 23, 2024 - Klaas van der Horst

Increasing costs, a shrinking milk supply, and a painful loss in 2023 compel Milcobel to reorganize, the company announces. The exact implementation is still subject to discussion with the unions, but the plan includes reducing powder production.

This will be done at the Kallo facility. The most modern powder tower will remain in operation, while two smaller, older towers will either be repurposed or closed. According to Milcobel, they could be used for drying plant-based food or for contract manufacturing. Currently, this is already being done to a limited extent. They will no longer be used for the company's own milk powder production from September onwards, as per the plan. Due to low milk powder prices, continuous production is not profitable.

Milcobel also intends to integrate its dairy units Premium Ingredients and Consumer Products to collaborate more efficiently with a flatter structure.

Almost €12 million loss
The direct reason for the reorganization is the net loss of €11.6 million in 2023, with a €21 million lower turnover than the previous year. The turnover was €1.36 billion last year, with a profit of €4.4 million. It is expected that 130 jobs will be lost during the reorganization.

Milcobel is also implementing other measures to reduce costs, such as not paying out management bonuses for 2023, limiting new job openings, and reducing the number of external consultants.

High one-time setback
Besides powder production, there were other significant costs last year, such as the challenging implementation of an ERP software package (SAP) in the Consumer Products department. This led to a high one-time setback. This incident also highlighted the need to implement a different organizational structure to achieve more synergy. The mandatory 11% wage cost indexation also had a significant impact.

Ysco and Kaasbrik
Not everything went poorly, though. Subsidiary Ysco delivered a strong performance, and the cheese grating activities of Kaasbrik also performed well. Milcobel is considering expanding the cheese grating activities. Additionally, there is a partnership with Arla to increase the valorization of whey from the mozzarella factory in Langemark.

Klaas van der Horst

Klaas van der Horst is a senior market specialist in dairy at DCA Market Intelligence. He also closely monitors developments in politics and agricultural policy.
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