A year of strong performance and accelerated transformation
In 2023 – the year DeLaval turned 140 years old – we achieved our best financial results ever. We continued to innovate to make sustainable food production possible by enabling our customers to do more with less. DeLaval also teamed up with the agricultural machinery company John Deere to develop a digital ecosystem tool aimed at helping farmers enhance the efficiency and sustainability of their operations.
We continued to see strong demand for DeLaval’s products and services in 2023, with the DeLaval Group delivering record sales, profitability, and cash flow. Sales growth for the DeLaval Group amounted to 8.6 per cent at comparable rates.
The demand for milk and dairy products continued to grow along with the demand to produce dairy more sustainably and efficiently. Long-term demand for DeLaval’s offerings, particularly in the areas of automation, digitalisation, and sustainability remain high.
Continuing to support farmers in a challenging market
Inflation and the rising cost of living affected the demand for dairy products in 2023, which put pressure on raw milk prices. Combined with higher milk production costs and interest rates, this reduced farmers’ margins and dampened their investments.
Sourcing continued to be a challenge, which meant that we had to continue to be smart with how we source the raw materials and components we need to manufacture our products. We had a great collaboration between designers, factory personnel, and sourcing professionals to ensure we could deliver on our customer promises – often in very creative ways such as re-designing some products and finding alternative logistical solutions. Lastly, our field personnel showed passion and professionalism to maintain excellent customer service despite market challenges.
Sound strategic progress drove accelerated transformation
Our business strategy is helping us to rationalise our product offering by giving it greater strategic focus. For example, we allocated more R&D resources to drive innovation in more sustainable solutions during the year. Further, we divested the DeLaval Cleaning Solutions unit in the US, which specialised in solutions for processing industries, as it did not fit with our overall strategic direction. Efficiency gains were also made through the closure of our production facility in Argentina, with products to be sourced from other companies within the Group.
Mitigating climate change in the dairy industry
Most emissions from the dairy industry occur at farm level, and we can have a significant positive impact through our products and solutions. To drive impact in this area, we kept a high innovation pace, conducted a double materiality assessment, and made a scope 3 downstream emission calculation to further optimise our customer offering.
We formed a strategic partnership with John Deere to launch the Milk Sustainability Center in an effort to create an opportunity for dairy farmers to manage data more efficiently while unlocking more sustainable and profitable outcomes.
An update on Hamra Farm
Hamra Farm in Sweden serves as our dedicated Research and Development (R&D) and demonstration facility, where we actively engage in the development, testing, and showcasing of our latest agricultural solutions. Commencing in 2022, we initiated a significant expansion, focusing on constructing new barns and increasing our herd size.
This is a strategic investment in the future of dairy farming, with sustainability and animal welfare at its heart. We are looking forward to welcoming customers and visitors to Hamra to see how modern dairy farming can be run more sustainably.
Continued focus on sustainability and animal welfare in our product offering
We introduced several new products that promote sustainability and animal welfare during the year. Animal welfare is an essential part of our sustainability strategy as the more milk produced per cow and the longer that cow remains productive, the lower the environmental impact of every kilogram of milk produced.
New products included the next-generation rotary milking system DeLaval Rotary E500, which achieves 30 per cent more throughput and the OptiWagon autonomous feed distribution robot that promotes animal welfare by providing more frequent feeding. OceanBlu™ teat disinfectant was introduced in different variations as well as in more markets – including Europe – to deliver superior teat conditioning whilst controlling the spread of mastitis-causing pathogens. We also began offering the DeLaval Plus Behaviour Analysis, which is a digital farm management tool that uses sensors and artificial intelligence (AI) to help identify sick cows and cows in heat.
Continuing to lead the dairy industry
Despite milk production and investments constrained by low farmer margins as of early 2024, world dairy demand is expected to gradually increase this year due to higher farm gate milk prices. We will continue to proudly lead the dairy industry just as we have done throughout our long history. By continuing to make sustainable food production possible through innovation in our products and services, we are well positioned to support successful farmers for at least another 140 years.
Paul Löfgren