VK Muehlen AG: reports further losses

Hamburg / DE. (vkm) German VK Muehlen AG published its annual financial statement for the 2010/2011 financial year this week. With milling volumes of approximately 2,1 million tonnes, Europe´s largest milling enterprise processed year-on-year approximately nine percent less grain, rice and legumes during the financial year just ended. Nevertheless, the Group was able to increase total revenue by 150 million EUR to 680 million EUR as a result of higher prices (prior year: 530 million EUR). Due to the continuation of difficult market conditions and a very competitive environment – especially in Germany – the Group concluded the 2010/2011 financial year with a significant loss. In this respect, consolidated earnings before taxes amounted to minus 30 million EUR (prior year minus 19,8 million EUR). The loss resulted from large operating losses generated by the Kampffmeyer Muehlengruppe as well as principally from an anti-trust fine which was fully reflected in earnings during the financial year just ended. By contrast, the business lines Kampffmeyer Food Innovation and Mueller´s Muehle as well as foreign business generated positive results.

«These poor results have made a significant mark on our balance sheet», stated Management Board spokesman Christoph Kempkes. As a result, «intense» efforts are underway among shareholders to generate interest in subscriptions for new shares. The company already announced the corresponding capital measures on 12 December 2011. According to Kempkes, the company is reviewing additional measures in the near term to «on the one hand reduce high debt levels and, on the other, shore up the equity base».

However, sustainable recovery of the operating business is of primary importance. «We must get to the point that flour prices again cover our full costs and that we are able to share risk management costs with our customers which is unavoidable in light of the highly volatile commodities markets. Our facility development plan with whose assistance we are optimising our production processes and reducing our costs, needs to be implemented quickly and consistently at this point», said Kempkes in summarising the priorities during the coming months. «Returning to profitability remains our goal for the 2012/2013 financial year».

However, VK Muehlen does not anticipate satisfactory margins for the current 2011/2012 financial year. In the current market environment, a decline in price quotes for wheat immediately starts a negative price spiral. «As a milling company, we are forced to reduce flour prices in relation to developments in the markets, whilst at the same time when actually purchasing raw materials we are forced to accept ever more expensive surcharges or ‘premiums’ with respect to quoted prices. This trend represents a disastrous development for the entire sector. We will only be able to operate profitably if we can change this in the long-term», stated Kempkes. The VK Muehlen Management Board continues to anticipate a loss for the 2011/2012 financial year despite expected improvements in operations.

VK Muehlen AG, based in Hamburg (DE), combines two independent business divisions under one roof. The division «Mills» produces milled products – in particular for the food and baking industries. The business division «Food» includes the production and processing of flour for household purposes, semolina, baking mixtures, rice, legumes and prepared foods.