FDBusiness.com

Arla Foods Delivers a Robust Performance in Difficult Conditions

 Breaking News
  • Deliveroo, Costa Coffee and BrewDog are the UK’s Fastest Growing Brands Deliveroo, Costa Coffee and BrewDog are growing in value faster than any other UK brands, according to the 2019 BrandZ™ Top 75 Most Valuable UK Brands, announced by WPP and Kantar. Vodafone remains the UK’s most valuable brand, worth US$26.5 billion (£21.5 billion), followed by HSBC and Shell. Deliveroo, at no.50 after increasing its value 54% [...]...
  • Arla Foods Ingredients Obtains GRAS Approval For Alpha-lactalbumin in Infant Formula Arla Foods Ingredients has obtained Generally Recognized as Safe (GRAS) approval relating to its use of alpha-lactalbumin in infant formula. The US Food & Drug Administration (FDA) issued the company with a GRAS Notice known as a ‘no objection letter’. It states that it has no questions regarding the safety of fractionated whey protein concentrate [...]...
  • Java Republic is ‘Beverage Company of the Year 2019’ in Ireland Java Republic won the award of Beverage Company of the Year at the recent 2019 Food & Drink Business Awards. These prestigious awards celebrate the very best in food and drink manufacturing, retail, and food service across the island of Ireland. The Awards recognise the very best in the industry across 18 categories. For Java Republic winning Beverage [...]...
  • First Half Profits Fall at Bakkavor Group Bakkavor Group, the leading provider of fresh prepared food in the UK with a growing international presence in the US and China, has reported a sharp fall in operating profit to £29.3 million for the 26-week period ended 29 June 2019, compared to £54.1 million in the prior period. Group revenue was up 1.4% at [...]...
  • Norwegian Salmon Ranked Most Sustainable Among World’s Largest Protein Producers Norwegian aquaculture companies hold four out of the top 10 spots in the 2019 Coller FAIRR Protein Index, ranking 60 of the world’s largest publicly-listed protein producers on how they perform on sustainability. The Index looked at how the world’s largest producers of meat, dairy and seafood performs on various risk factors relating to sustainability. The [...]...

Arla Foods Delivers a Robust Performance in Difficult Conditions

Arla Foods Delivers a Robust Performance in Difficult Conditions
February 18
15:53 2016

Arla Foods has reported a 3.3% decline in revenue to Eur10.3 billion with net profit down almost 8% to Eur295 million for 2015 as increased milk production in Europe coupled with a slowdown in demand in China and the ongoing Russian trade embargo caused world market prices to plummet. The 2015 outcome is fully in line with the dairy co-operative’s expectations.

Owned by 12,700 farmers from Denmark, Sweden, the UK, Germany, Belgium, Luxemburg and the Netherlands, Arla Foods is one of the strongest players in the international dairy arena, with a wide range of dairy products and well-known brands like Lurpak® and Castello®. Arla Foods is also the world’s largest manufacturer of organic dairy products.

“We knew 2015 would be tough on all markets, and it was. Dairy prices have been under pressure worldwide all year, and every dairy farmer has felt the consequences,” says Peder Tuborgh, chief executive of Arla Foods. “It affected Arla’s milk price to our owners and our revenue in 2015. Having said that, Arla has achieved what we set out to do within our business in a year when the entire dairy industry has struggled.”

ArlaFoodsUKFarmersThe performance price, which measures the value Arla has generated from each kilo of milk supplied by the farmer-owners, was 33.7 eurocent pr. kilo with a total volume of owner milk of 12.5 billion kilos in 2015 (compared to 41.7 eurocent pr. kilo with a total volume of owner milk of 11.7 billion kilos in 2014).

Arla Foods has responded to the adverse trading environment by moving even more of its milk into branded dairy products and foodservice, improving market positions and reducing costs. “We have worked intensely to minimise the damage from the negative global trends by reducing costs and by maintaining and improving our market positions in Europe while creating new market positions for our branded products outside the EU,” he explains.

In the past, Arla Foods’ profit target was 3% of company revenue, but in August 2015 it was reduced to between 2.7% to 3.0% in order to facilitate a prepaid milk price to support its farmer-owners in their difficult financial situation in the face of the global decline in milk prices.

ArlaFoods2013Arla Foods recently unveiled its new Strategy 2020 setting out to grow its business in eight global dairy categories and six market regions as the company moves to navigate a dramatically changing global dairy market.

“We are working fiercely to expand our branded business in growth regions outside the EU but also within our European lead markets. We are launching new innovations and have increased the marketing spend to support this. We have gained market shares in most of our markets although the competition is fierce, with everyone competing for their share of the market while global prices are under pressure. We are confident that Arla has the right strategy to take the company and its owners forward as we focus on organic growth within our existing branded business,” says Peder Tuborgh.

Peder Tuborgh, chief executive of Arla Foods.

Peder Tuborgh, chief executive of Arla Foods.

Arla Foods is continuing to pursue its long-term efficiency programmes and achieved its annual savings goal of Eur330 million in 2015 compared to 2012 cost-levels. “Delivering consistently on both agendas – expanding our branded business while reducing costs – has significantly improved the strength of our business. Constantly becoming more cost-efficient is a crucial part of our efforts to create the best value for our farmer-owners in the extremely tough conditions. We have therefore set a new target of delivering additional annual savings of Eur400 million by 2020, starting with the first Eur100 million in 2016,” says Peder Tuborgh.

Looking ahead, Arla Foods anticipates its 2016 revenue to be on par with the 2015 level, and its profit to be within the range 2.8% to 3.2% of the company’s revenue.

“The global dairy industry has rarely been as tough and unpredictable, and 2015 has unfortunately been as challenging as we anticipated. We have an extremely difficult task ahead of us in 2016 as global milk supply still exceeds demand. We do expect that the global market will begin to turn for the better towards the end of 2016,” says Peder Tuborgh.

About Author

mike

mike

Related Articles

Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • October 1, 2019PPMA Total Show
  • October 17, 2019Future Food-Tech
  • November 18, 2019Plastics Caps and Closures Conference 2019
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber

Subscribe Here



Advertisements