Our financial year 2024 is characterised by several important developments and events:
The volatility of dairy product prices in 2024 has again impacted our margins and operations. Prices for milk and other dairy products increased significantly throughout the year after having decreased significantly in 2023. Increasing prices will have an impact on higher cost levels affecting, amongst others, working capital. As sales prices are increasing in line with the volatility of milk and other dairy products, we have been able to achieve quite stable margins. However we note that not all cost increases could be passed through towards our customers.
We further note a (significant) increase in labour costs throughout 2024 (mainly due to CLA increases). The impact of these increasing labour costs is directly impacting our operational expenses for the year.
In 2023 we acquired a dairy factory in Spain (Asturias) in order to further continue our growth ambitions. Currently we are rebuilding and renovating the acquired factory and expect to start operations in the third quarter of financial year 2025.
In 2024, further expansion and efficiency improvements took place in both Belgium and the Netherlands. When expanding our activities in Belgium, we are able to gain further access to the Belgian milk pool and further diversify our activities and product portfolio.
Additionally, in 2024, the construction of a cheese factory in Ireland, that we constructed together with a large Irish dairy company through a joint venture, was completed and became operational. After an extended ramp-up phase, the factory is now operating in line with the plan.
In the second half of 2023, we successfully relocated and continued the cheese melting and 'processing' activities to our newly equipped and renovated melt and 'processing’ factory. This has enabled us to carry out these activities from one single location, allowing us to grow efficiently and optimise this part of our business process. In 2024, this new factory became operational and is considered as a ramp-up year. Start-up results are in line with expectations.
On 9 July 2024, Royal A-ware and Dairy Food Group announced the acquisition of the Dairy Food Group, a Belgian dairy company actively involved in manufacturing and sales of fresh dairy products in Europe. We expect the closing of this acquisition to take place in the first half year of 2025 and are currently awaiting approval from the European Commission as competition authority for this acquisition. With this acquisition we continue our growth in Belgium, our second home country, and diversify our (fresh) dairy product portfolio.
In 2024 a new financing agreement was signed to refinance the majority of Royal A-ware's existing debt. With this new funding, we are able to execute growth plans and follow up on potential volatility in future working capital.
In 2024 we transitioned from accounting and reporting standards, under Dutch GAAP, to International Financial Reporting Standards (IFRS). We believe this will result in more transparent reporting on an international level.