Message from the CEO

Your expert partner in dairy

We hereby present our 2023 annual report. For the second time in a row, we have integrated our annual financial report with reporting on environment, social responsibility, and corporate governance (ESG). The difference to last year’s report is that this year our reporting is with reference to the GRI standards. 

The Corporate Sustainability Reporting Directive (CSRD) is also coming our way and will become compulsory starting from the 2025 report. Our ambition is to be CSRD ready for the 2024 report. We have already taken the first step towards CSRD compliance: the stakeholder analysis, which results in the double materiality matrix, has been performed in accordance with CSRD guidelines. This fits our mission “to be the best and most sustainable supplier in the dairy industry.”

This report covers the full scope of activities that we undertake as an organization. We do this not only because our stakeholders expect it and legislation will soon require it, but also from our intrinsic drive towards transparency and stakeholder engagement.

Ever since our company was founded more than twelve years ago, we have maintained a high level of transparency towards our stakeholders. This reporting year, we have extended our stakeholder engagement by creating and implementing a stakeholder engagement strategy. Our goal is to continuously improve stakeholder management.

Our aim is to have a positive impact on the world around us, not only in the present moment, but also with an eye to the future. Sustainability lies at the core of our business. We want to maintain and expand our leading position, which is reflected by our being once more awarded the EcoVadis Gold medal in 2023.

In 2019, we became the first global dairy trading company to voluntarily offset its carbon footprint. We not only offset the CO₂ footprint resulting from the activities of our company, but also those from the storage and third-party transportation that we arranged for our customers. In 2023, we took the next step by compensating for the scope 1 and 2 footprint within the dairy supply chain.

Through the Numidia Charity Foundation, Numidia supports children in need around the world by giving them access to better living conditions and decent education. Most of these projects have been selected through connections made by our own employees. This also means we can keep a close eye on how the money is spent.

2023 performance

After the record year of 2022, we achieved a solid financial performance in 2023 in line with our budget. Volume saw significant growth (+16% year-on-year), although, due to lower world market prices, this did not result in turnover growth (-2% year-on-year).

Trading in derivatives has continued to grow over the past years: in terms of volume, it has been significantly higher than the volume of physical products shipped. This makes risk management more important than ever. We have therefore implemented a new specialized software package to take our reporting on Value at Risk and open exposure to a higher level. We have also increased our use of artificial intelligence and business tools to support our decision-making.

World events have an impact on the dairy trade and therefore on us. Supply chain costs – and container costs in particular – have fluctuated enormously in recent years.

As a consequence of the COVID-19 outbreak and its aftermath, we saw a supply chain that was completely out of balance due to high demand and capacity shortages in 2021 and early 2022. However, we saw the opposite trend in 2023. As a result, transportation costs at the beginning of the year were much lower than we had anticipated. However, the situation is far from stable, with the war in Ukraine, Israel's response to the Hamas actions, and the Houthis' recent attacks on international shipping in the Red Sea. These events mean we must remain vigilant when managing financial and logistical risks. All these events are extremely regrettable.

A situation of a different order – but also one with a major impact on the dairy world – is the situation in China, the largest dairy importing country in the world. Due to a weakening economic situation on the one hand and the strong growth of internal dairy production on the other, China's dairy imports have decreased. The result was that dairy products from other countries, in particular New Zealand (a country highly dependent on dairy exports), had to find a home in other parts of the world. This in turn had an impact on other dairy-producing nations and resulted in lower average prices on the world market.

With higher (price) volatility, the role of dairy traders is becoming increasingly important. Our company specializes in mitigating price risk over time, and we can help clients and suppliers with their advanced risk management strategies. The fact that we trade worldwide in both fat- and protein-based products and are now an established name in the futures and options world means that we can offer ample opportunities for further growth.

Numidia is working on further diversifying its market activities. We have had a 50% share in a cheese factory (VCC) in Belgium for a few years now. Burger and cheddar slices are made here for the Food Service market. Since last year, Numidia has set up a separate marketing and sales department (Numifood) for the sale of these dairy products. Numifood will not only sell VCC products, but also other dairy products for the Food Service market.

Outlook

Numidia is active in the dairy market, which is still showing volume growth of about 1.5 to 2.0% per year. For reasons mentioned earlier, the portion of the dairy market that operates through traders is growing even faster.

Therefore, we see plenty of opportunities to continue our journey of continuous growth. Growth is the key for us, not only because it strengthens our company and market share, but also because it offers development opportunities for our employees. This means we can continue hiring the best colleagues for the Numidians. People who make the difference in our business.

With the growing number of Numidians, the need for office space also increases. In 2023 we have already relocated both our Singapore and Montevideo teams into larger offices. The next milestone will be the completion of our Headquarter extension in the Netherlands. The construction works have already begun and we expect to have the new building ready by end of 2024.

Thank you

We wouldn't be where we are today without the hard work, creativity, and dedication of our employees "The Numidians." We are incredibly grateful to them. That is why our priority is to create a safe and inspiring work environment in which sustainable employability is of paramount importance.

We also want to say a word of thanks to all our loyal business partners, who have supported us throughout this incredible development process. The trust they place in us is what makes it worthwhile to commit ourselves 100% (and more) to our work every day.

I hope reading this report will be both enjoyable and inspiring for you. Please feel free at any time to contact me or one of my colleagues with any questions, remarks or ideas that might make Numidia a better company.

Kind regards,

Han van Hagen

CEO