Arla Foods Sees Revenue Growth Due To 'Rare Stability' In Dairy Market
Arla Foods has said that a period of 'rare stability in the otherwise volatile global dairy market' helped it increase both revenues and profits in the first half of its financial year, however the company reiterated that it is prepared for the 'continued uncertainties' around Brexit.
The dairy group posted revenue growth of 2.0% in the period, to €5.2 billion, compared to €5.1 billion in the same period last year.
Branded Volume Growth
This performance was driven by higher 'strategic branded sales volumes' of 4.6%, it said, as well as an increase in sale prices. In addition, Arla's International division saw branded volume growth of 10.2%.
Net profit share for the first half of the year was 2.3%, up from 2.2% in the same period last year, with the company expecting full-year net profit to be within the 2.8% to 3.2% range.
Commenting on the group's performance, CEO Peder Tuborgh said that while the group has been able to "build on the momentum" of previous years, there are a number of potential hurdles lying ahead, including Brexit.
"We have strengthened our competitiveness relative to our peers and improved our profitability while launching our ambitious climate goal to become carbon net zero by 2050. We are focused on delivering on our ambitious targets for 2019 while remaining alert and prepared for the continued uncertainties around Brexit,” he said.
In Europe, the group's retail and foodservice sales fell 1.5% to €3.15 billion in the first half of the year, which the group said was mainly due to it exiting selected loss-making private label contracts, as well as negative currency developments.
Branded volume growth in Europe was up 2.3%, however, driven by the group's lactose-free, skyr, cheese and milk-based beverage brands.
In its International division, the group's largest global market, Middle East and North Africa (MENA), saw market share increase in all key product categories, Arla said. In China, the group saw more than 50% volume growth in its organic early life nutrition (ELN) business and liquid milk businesses.
Its Arla Foods Ingredients business, meanwhile, saw revenue grow 13.1% to €352 million, up from €311 million last year, due to increased focus on added-value protein segments.
The group said that its transformation and cost-savings programme, Calcium, 'performed strongly' in the half-year period, and has already delivered €97 million of its €100 million full-year target.
Overall the programme aims to reduce costs across the business by €400 million, with €300 million of that going towards improving the milk price it pays its farmers.
“We are now well into the second year of our transformation, and throughout the organisation we have made sustainable changes to the way we work, spend and invest in our business," said Tuborgh. "The hard work across all areas of the Arla is paying off and we have regained our competitiveness and improved our performance as a business."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.