Annual Report 2023

Annual Report 2023STRONG RESULTS IN A CHALLENGING YEAR In 2023, we saw again how global challenges impacted our business. The geopolitical situation fuelled fluctuations in world markets, the price of capital rose, and inflation pushed up costs. Germany, our largest market, was hit by an economic slowdown, livestock production and the demand for feed declined, while harvest yields in Northern Europe fell to the lowest level since the drought of 2018. Despite all this, we have delivered the second-highest operating profit in the history of the DLG Group, while at the same time further consolidating our business. This is very much thanks to our strategic efforts over a number of years to improve our earnings capacity and financial metrics, which are the foundation for future growth. At the same time, our business model is based on the fundamental strength that we deliver goods and products that meet fundamental needs in society. Crisis or no crisis, we all need food on the table, electricity, energy to power our cars and a roof over our heads. This ensures a stable underlying demand for our products and services, enabling the group to balance any challenges we may encounter. The saying goes that you should spend your time in calm waters preparing for the rapids ahead. We expect 2024 to be yet another year in which the global economy will be challenged by the ongoing geopolitical turmoil. Thanks to our strategic platform, we are well prepared and well equipped to dealing with this. SOLID EFFORTS IN BUSINESS AREAS In the Food business area, the agribusiness had a good year, and despite certain fluctuations, trends were positive in the form of a more normal price environment in the international markets combined with stable demand. The trend of declining pig production continued in 2023, which had an adverse impact on the demand for feed, vitamins and minerals. As a result, from the beginning of the year, we exercised due diligence by adjusting our production capacity accordingly. While the energy market in Germany was characterised by strong demand and high prices in 2022, it returned to a more normal level in 2023. This was due to a combination of several factors, including greater price awareness among customers and lower demand due to a slowdown in the German economy. The sales organisation has worked tirelessly to capture market share and managed to achieve good results in the Energy business area, despite the challenging market conditions. The economic slowdown in Germany and especially the higher interest rates also affected the construction industry in the second half of the year, where we began to see signs of a slowdown and a declining level of activity in the construction and renovation of homes. However, the overall results in the Housing business area were balanced by impressive results in the first half of the year and continued stable demand for materials for public infrastructure projects and commercial buildings. The strong results across business areas enabled us to declare a profit of DKK 184 million to our owners – the second-highest profit declaration in the company’s history. THE RIGHT FOCUS Across business areas and countries, we have created a strong market position for our core business, which is crucial for our ability to develop our business in line with our Creating the Future 2030 strategy. Therefore, we are constantly working to strengthen the company’s competi- tiveness, and as competition in the markets intensifies, we will further sharpen our focus on the commercial side of our business and our relationship with our customers. We have an ambition to commercialise sustainable solutions within all three business areas, and thanks to our strategic partnerships we are well on our way to achieving that goal. In 2023, we invested in BioCirc which, in addition to being Denmark’s second-largest producer of biogas, is also working to establish circular energy clusters on land. The inauguration of the insect protein factory Enorm marked a breakthrough in alternative and more sustainable proteins. In both Germany and Denmark, we have helped to expand the charging station infrastructure. Our climate targets were validated by the Science Based Targets initiative. In February, the Board of Representatives decided that up to 15 % of the profit distribution can be allocated to products contributing to the sustainable transition. 8 DLG ANNUAL REPORT 2023Side 7Side 9