FDBusiness.com

Steady First Half Performance by Arla Foods

 Breaking News
  • Ebro Expands in Pasta With €130 Million Deal Spanish food group Ebro has agreed to acquire a 70% stake in Bertagni 1882, the Italian premium fresh pasta producer, for €130 million. With production plants in Vicenza and Avio in Italy, Bertagni employs 275 people and is known as the oldest brand of filled pasta in Italy. Its gross sales in 2017 will exceed [...]...
  • 100% Green Distillery to Open in Yorkshire A Yorkshire-based gin and whisky distillery is one of only three in England to be run solely on green energy. As England’s smallest and first self-built whisky and gin distillery, Cooper King Distillery will commence production of its juniper-led gin and open its doors to members of the public this spring, the whisky distillation will follow [...]...
  • ULMA Packaging’s Flexible Solution Helps Make Dairy’s Day Dairy Day, a Watford-based specialist in artisan cheeses, has reported a significant increase in production since replacing a manual packing machine with ULMA Packaging Ltd’s TFS 200 Thermoformer – providing the family-run business with the extra capacity it needed to meet the increasing demand from retailers and foodservice customers for its handmade halloumi cheese. Investing in a packaging system is [...]...
  • Wavegrip Introduces New Service WaveGrip, manufacturer of innovative beverage multi-packaging solutions, has launched a dedicated machine manufacturing and engineering support service. Combining all WaveGrip automation, engineering and global servicing capabilities, including its OEM partners, the new WaveTec service will ensure WaveGrip Applicators continue to deliver the best performance to support companies’ multi-packing needs. WaveTec will also give all WaveGrip customers [...]...
  • Riggs Autopack Ltd – British Manufacturer of Depositors & Filling Machines For Food Production Riggs Autopack is a British manufacturer of high quality depositors and filling machines, transfer pumps and automatic conveyor filling lines. They are a UK market leader with an excellent reputation and supply their equipment to the food production industry. Their Model 1000 volumetric depositors and filling machines are one of the most precise and hygienic on [...]...

Steady First Half Performance by Arla Foods

Steady First Half Performance by Arla Foods
September 04
13:35 2012

Arla Foods has increased revenue by 12% to DKr29.9 billion (Eur4.0 billion) in the first half, resulting from a combination of organic growth within core and growth markets and the realisation of merger and acquisition benefits, including those in Sweden and Germany. Major agreements have paved the way for significant opportunities for Arla in Germany, the UK and China, and previous mergers and acquisitions have delivered efficiencies across the organisation. However, these achievements are against a background of a large increase in global milk production putting significant pressure on earnings and consequently on the milk price.

Arla’s key financial measurement is the milk price it pays to its owners and this is under pressure. While revenue is in line with expectations, Arla earnings for the first half of 2012 are below last year’s at DKr2.64 per kg of milk compared to DKr2.74 per kg in 2011.

“We anticipate that we will be able to deliver the three per cent increase in revenue in our annual results as planned, which equates to DKr1.8 billion. However, the milk price currently paid to our owners is not as high as we would like. The world commodity market has proved more unfavourable than foreseen, primarily due to an unexpected increase in world milk production. This is putting pressure on prices and therefore on our earnings from commodity trading and global E-auction sales and affects 25% of our milk,” explains Frederik Lotz, chief financial officer of Arla Foods.

Although there is a general trend, especially among European consumers in Arla’s core markets, to trade down to less expensive products, Arla’s three global brands – Arla, Castello and Lurpak – are all in growth. For example,. globally sales of Lurpak products continue to grow and the brand grew by 13% in the first half of 2012.

Overall, despite tough conditions within Arla’s biggest markets, the company has achieved 2.8% organic revenue growth. In particular, Arla’s strategic growth markets have seen significant sales increases . In the Middle East and North African region, revenue has increased by 20%, while inRussia, growth is 40%. There is also a double-figure growth rate for Arla’s subsidiary, Arla Foods Ingredients (AFI), which produces whey-based ingredients for the food industry. AFI increased its revenue by 14%.

“We are seeing clear, positive developments in profitability on our growth markets. We will maintain a strong focus on our core markets in Europe and in the future will become more active outsideEurope, moving into markets where there is growth and a rapidly growing demand for dairy products. Within our core markets we are looking forward to the new opportunities and sales channels which our impending mergers in Germany and the UK are expected to create,” says Peder Tuborgh, chief executive of Arla Foods. “We have created important top-line growth in the first half year, which in coming years will create new opportunities for us to grow Arla’s bottom-line.”

For the full 12 months, Arla expects to deliver a revenue of DKr60 billion, a figure which excludes the effects of the potential mergers. If the mergers are approved and the effect of them is included, Arla’s revenue is expected to reach DKr62 billion in 2012 (total revenue in 2011 was DKr55 billion).

Arla expects that prices on the global commodity market will improve significantly in the second half of the year and therefore, so will Arla earnings. Furthermore, a series of efficiency improvements implemented during the first half of the year will result in a decrease in the group’s costs from the end of 2012 and into 2013. The company therefore expects to deliver its forecasted three per cent annual increase in revenue, which in 2012 will equate to DKr1.8 billion.

About Author

mike

mike

Related Articles



Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • January 19, 2018International Green Week
  • January 20, 2018Sigep Rimini
  • January 24, 2018International Bulk Wine and Spirits Show (IBWSS)
  • January 28, 2018ProSweets Cologne (Int'l Sweets and Biscuits Fair)
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber





Subscribe Here



Advertisements