Dairy giant Arla Foods reports record results

By Anita Jaynes on 23 February, 2014

International dairy firm Arla Foods which owns Westbury Dairies in Wiltshire has reported a bumper year for growth in 2013. Arla Foods is the company behind household brands such as Lurpak, Castello and Cravendale.

The firm  is owned by 12,600  farmers from Denmark, Sweden, The UK, Germany, Belgium and Luxemburg.

Arla Foods reported a £1.1bn rise in revenue, largely down to a series of mergers in 2012 including a merge with Bristol based firm Milk Link.  Another factor is that the demand for dairy products exceeded the supply of milk, this increased the value of milk and the overall price level of dairy products.

Arla Foods CEO Peder Tuborgh said:  “Milk has become a more valuable commodity globally, and that naturally has a positive effect on our results. With this tailwind we have driven our business forward in 2013 – with a strong efficient base in Europe, promising growth rates in Russia, China, the Middle East and Africa as well as a very profitable ingredients business in Arla Foods Ingredients. Our main focus is to create the best possible milk price for our owners, and the 2013 results confirm that we have the right strategy to achieve this,”

The dairy economy is strengthening which is great news for farmers with the performance price up by 12.5%

Measured by revenue the UK remains Arla’s biggest market followed by Sweden and Germany. Although Denmark is the country that supplies the most milk to Arla, Denmark is now Arla’s fourth biggest market.

“In Europe our focus has been on integrating the companies that we merged with in 2012, and that has already made us more efficient and given us a more complete product portfolio. European consumers are still among the most price-focused in the world, and that means tough competition between discount products and quality brands. Our organic growth on our European core markets in 2013 reached 3.5 per cent, which is reasonable given the pressure from discount,” says Arla Foods’ Chief Financial Officer, Frederik Lotz.

“Our three global brands – Arla®, Castello® and Lurpak® – have been pressed by discount trends and private labels in 2013. All three brands are performing well on the growth markets outside the EU, but the volumes in Europe has not grown the way we wanted them to. In 2014 we will continue to focus on creating global growth with all three brands,” continues Frederik Lotz.

In 2014, Arla expects to reach a revenue of £8.7bn and a net profit of £265 million.