Increased volumes handled helped the Danish milk processing co-operative Arla Foods amba offset falling 2015 revenues and profitability in a difficult year for the global dairy industry. UK revenues were up slightly.
Arla made a net profit of €295 million on sales of €10.26 billion in revenue, a 3.3 per cent revenue decline compared to €314m and €10.61bn year before. During the period, it handled 14.19 billion kilos of milk, 622m kilos up on the year before. The average price in 2015 over 12.5bn kilos of owner supplied milk was €0.34 per kilo, compared to €0.42 per kilo in 2014 over 11.7bn kilos.
“Normally our profit target is 3% of revenue, but in August last year the board agreed to reduce the profit target from 3% to the a range of 2.7% to 3.0% “, says Arla Foods chairman Åke Hantoft. “This reduction was made in favour of the prepaid milk price to support our farmer-owners in their very difficult financial situation, which is caused by the global decline in milk prices.”
Arla Foods chief executive Peder Tuborgh adds: “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. It affected Arla’s milk price to our owners and our revenue in 2015. Arla navigated through the global crisis by, improving market positions and driving down costs.
“Arla has achieved what we set out to do in a year when the entire dairy industry has struggled. We worked intensely to minimise the damage from the negative global trends by reducing costs and by moving even more milk into branded dairy products and foodservice to maintain and improve our market positions in Europe, while creating new market positions for our brands outside the EU.”
The Arla Foods UK business, the group’s largest country market, saw revenues increase slightly to €2.9bn in 2015, from €2.8bn the year before. But Peter Giørtz-Carlsen, executive vice-president, Arla Foods UK warns that despite the strong performance, the UK business isn’t immune to the “headwinds facing the broader business including the increasing supply of milk. While Arla delivered a strong cost control programme and increased its competitiveness in 2015, improved efficiencies will continue throughout 2016 to maintain a strong performance in a challenging market”.
Arla Foods UK grew its volumes sold by approximately 200 million kg in 2015, with higher sales of the Cravendale liquid brand (up 2.1%); 4.6% for Anchor and Lurpack butter and spreads, 6.7% for the Castello cheese brand and a 23% increase in the Lactofree product range.