24 May 2022 - When Vilofoss Group’s new CEO, Boudewijn Morelissen, started his role on 1 March, he knew he was in for a challenge.
He replaced Jacob Holm who had spent 22 years at the helm of the company. Morelissen, who also joined DLG's Group Management as Executive Vice President of Premix and Nutrition, has many years of experience gained from the vitamin and mineral industry, where among other things, he was part of Cargill's European premix business as Director M&A – EMEA and Business Unit Director Cargill CPN EU; General Manager of Nutriprof, an independent entity created out of Provimi Belgium and acquired by Vilofoss in 2019; and more recently (September 2020 - March 2022), Vice Chief Executive Officer of Vilofoss.
The Group Strategy
A few weeks ago, DLG – Vilofoss’ parent company – began a new group-wide strategy which, according to the Group, will “set the course for the group’s development in the coming years”. This will be defined, among other focuses, by further targeted investments in the sustainable transition.
“The timing was perfect,” Morelissen’s said when commenting on his arrival in the new job. And when asked more specifically about the implications of the group-wide strategy for Vilofoss, Morelissen argued that his company is looking to evolve from making and selling minerals premix and supplements to what he would call a “farm performance engineering company”, in which nutrition of course plays a key role and the door can be opened to even more opportunities.
“If you compare the previous strategic period with how we look at our company now, the previous period was a more result-oriented strategy, and today it is a clear value-based strategy, and of course sustainability plays a key role in that,” Morelissen said, adding that the strategy also reflects better where company efforts are currently focused.
“The three key areas of the DLG strategy are food, energy and housing - markets undergoing some degree of transformation,” he explained. “We call it food not feed, energy and not fuel, and we call it housing, not building materials. We are much more connected to the purpose of what we do.”
For food, where Vilofoss used to see itself playing in a few countries in Europe, the company now views all of Europe as its home turf.
“We believe Europe is a front runner in the drive for sustainability, responsible nutrition, and for transforming the food chain. The European feed sector is very important in the eyes of the rest of the world, mainly for its productivity and high-quality nutrition. We aim to play a key role here,” Morelissen said, adding that a focus will be placed on building alliances with suppliers and key players in the market, notably for the sourcing future raw materials.
“The further strengthening of our position in Europe will help us also extend our position in other regions in the world, where we believe we will play an important role in the in the coming years, and in which we will have a dedicated direction,” he added.
In the meantime, Morelissen and his team are busy rolling out the strategy externally, as well as aligning the business internally with the strategy, looking to create a more functional organisation than purely a regional organisation as it may have perceived itself in the past.
“In this current market context, we cannot afford to double up, but we will be very prudent in not centralising too much as we pride ourselves by being very well connected with the local markets. We believe that proximity is very important. We also believe that we should always be making decisions very close to our customers,” he said.
Inflation and Volatility
Commenting further on the high raw material prices, inflation, and overall market volatility witnessed by the industry right now, Morelissen said: “We need to secure sustainable high performance for our customers. You cannot simply say, ‘let's fill up a warehouse and we'll be fine’. It's a highly volatile market when it comes to raw material prices, and thin margins in our industry do not allow us to simply bulk up inventories. At the same time, you have the responsibility, being part of the feed and food chain, to always be there for your customers.”
“You need to be alert. You need to be decisive, and you should not spend money where you should not be spending it. So very clearly, we believe that agility of our organisation is essential,” he added.
“Our industry has always had disruptions,” Vilofoss’ CEO went on to say. “Unfortunately, but also fortunately, we have the experience of dealing with scarcity of some raw materials we are using. We all remember 2018, when vitamin prices skyrocketed because they were not available. It's not that this industry is unused to disruption, but the pace of it right now is unprecedented and it comes from many directions.”
In times of crises, some businesses naturally have more issues than others. In Morelissen’s opinion, Vilofoss is competitive and well-positioned, thanks to the group umbrella under which it operates, what he describes as a “vital force”, wherein the business in “Spain could help Germany. Denmark could help France. France could help Germany or Germany could help Belgium.”
“They were communicating vessels and that helped us a lot. And now we are going to push that, we are going to organise that,” he said, referring to the new strategy.
Today, Vilofoss employs approximately 500 staff and operates 19 factories globally, either alone or with joint venture partners; most of the plants are located in Europe. Morelissen estimated Vilofoss’ total sales volume of premix concentrates, mixes, and specialties at nearly 500,000 tonnes, with turnover close to €600 million in 2021.
For Vilofoss, the autonomy of its businesses in various countries is also a key aspect of its strategy. At the same time, and as part of the new strategy, the company will seek to carry out operational efficiencies across its network with a view to optimise its existing assets.
“We're going to execute what we call an ‘operational excellence programme’ … Studying our facilities showed us that we can find good operational excellence opportunities that will give us quite some headroom in the coming years,” Morelissen said. “We are letting our assets sweat more than they've ever sweated before for the sake of competitiveness.”
New Factory Project Aborted
In line with the operational efficiency focus, Morelissen disclosed that Vilofoss has only just recently suspended a large expansion project it had in the works in Denmark.
Conceived in 2019, DLG Group had started building a new 50,000 tonne-per-year Vilofoss minerals and premix plant in Braedstrup in late-2021. The new plant would have catered to customers mainly located in Denmark and Sweden but also to other European markets. The start-up of the new plant was expected for next year.
“Everything was ready. We had the land, the plans, the permits. We had literally broken ground. We have now decided to not build it. The project is postponed for undefined amount of time,” he said. “We keep this plant dormant, but not in the archive.”
According to Morelissen, the unprecedented situation with Ukraine prompted the decision. Also, inflation is affecting building costs, and the lack of labour is not only hitting the feed market, but also the construction market – a market DLG Group knows well via different parts of the organisation.
But the Vilofoss CEO remains upbeat. The operational excellence programme provides other opportunities despite the unprecedented situation in Ukraine and the other challenges.
“Our plan is to have a grid of efficient production facilities throughout Europe,” he said. “We also need to avoid as much as possible passing on the higher costs, and that's also one of the consequences of not building a factory now.”
