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Arla Foods Restructures to Cut Costs

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Arla Foods Restructures to Cut Costs

Arla Foods Restructures to Cut Costs
May 16
11:18 2012

Arla Foods has announced measures, including the shedding of 250 jobs, aimed at reducing its annual costs by DKr500 million (Eur67 million) in order to remain internationally competitive. The international dairy group is being organised in a more efficient way to ensure a competitive milk price to co-operative owners and to prepare the organisation for further growth.

The changes aim to reduce the complexity in the organisation, ensuring clear roles and responsibilities and leveraging synergies in scale. Consequently, Arla will discontinue approximately 250 administrative positions globally before the end of 2012, and approximately 150 administrative positions will be restructured within the organisation. Simultaneously, Arla will reduce spending on market research and analysis activities as well as procurement costs on packaging and other materials. In total, the changes are expected to reduce Arla’s annual cost by DKr500 million going forward.

Peder Tuborgh, chief executive of Arla Foods.

“Our turnover is growing, and that growth will continue. We have a responsibility towards all of our co-operative owners and other dairy farmers, who invest their milk and their money in Arla, to make sure that our turnover grows significantly faster than our cost. Our international competitors are able to turn ideas into action quicker than before and, therefore, Arla needs a more simple and structured way of working,” explains Peder Tuborgh, chief executive of Arla Foods.

Arla’s ambition is to continuously play a leading role in the current consolidation of the European dairy industry. A leading position requires that Arla is able to attract and retain raw milk in sufficient volumes, and a prerequisite for this is to deliver a competitive milk price to its co-operative owners.

“It’s a long time since Arla has had the opportunity to really exploit the synergies that always arise when two large companies, each with their integrated production and administration, join forces. Even the most recent mergers with the Swedish Milko and the German Hansa have not been large enough to trigger radical efficiency measures throughout the company. Therefore, this project aims to ensure that Arla stays competitive by reducing costs and complexity of our business model – and thereby prepare ourselves for further growth,” says Peder Tuborgh.

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