Arla reports strong profits for 2014

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European dairy giant Arla has reported a strong set of financial figures for 2014.

The performance price, which indicates the value Arla has generated from each kilo of milk supplied by the owners, was 41.7 eurocent per kilo with a total volume of owner milk of 11.7 billion kilos in 2014 (compared to 41.0 eurocent per kilo with a total volume of owner milk of 9.5 billion kilos in 2013).

Arla’s profit in 2014 reached 0.3 billion euro, which corresponds to the set target of three per cent of the total revenue.

The company’s board of representatives will decide how to appropriate profits this week.

“In a rollercoaster year for the global dairy industry, Arla’s strong brands and focus on efficiency and cost control enabled us to make the most of the upturn and to be competitive through the downturn,” said Arla Foods’ CEO Peder Tuborgh.

“The record-high performance price of 41.7 eurocent in 2014 confirms this, however it does not fully reflect the fact that the year ended with much lower milk prices than it began.

“Market conditions and the Russian embargo are making the financial situation difficult for our owners, but we have worked hard to minimise the effects by sticking to our strategy of creating growth outside Europe and strengthening our business across our European core markets.”

Arla posted its highest-ever revenue of 10.6 billion euro, with much of it attributable to organic growth of 6.7 per cent. Given the market situation, the strategic global brands – Arla®, Lurpak® and Castello® – produced satisfactory results in 2014 with a total volume growth of 2.1 per cent.

“We are seeing growth for Arla’s strategic brands and our overall market shares in an otherwise stagnating or declining European dairy market. Throughout 2014 we have worked hard to move more milk into value-added brands, by enhancing our portfolio to our customers through further investment in innovation. Our grip on costs has never been more firm.

“Our owners gave us more milk in 2014, and we managed to absorb the extra volumes without increasing the share of sales to the less profitable commodity category, and we are ready to shift up to 500 million kilo of additional owners’ milk into value-added products in 2015,” explained chief financial officer Frederik Lotz.