Arla reports strong business
Arla Foods says its 2013 results have the highest performance price ever in its history. This is as a result of a strong European business and rapid growth in its growth markets outside the EU – at a time when milk has increased in value worldwide. Globally, the demand for dairy products exceeded the supply of milk, which increased the value of milk and the overall price level of dairy products.
The performance price, which indicates how much value Arla has been able to generate from each kilo of milk supplied to the company by the co-operative in Sweden, Denmark, Germany, UK, Belgium and Luxembourg throughout the year. The 2013 performance price amounts to £0.33 pence per kilo (0.44 per kilo) with a total volume of owner milk of 9.5 billion kilos.
Arla’s total revenue rose by over £1.1 billion (1.3bn) to £8.4 billion (€10.2bn) up by 16.6%. The company’s net profit was the planned three percent of the revenue. “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,” says Arla Foods’ CEO, Peder Tuborgh.
By revenue the UK remains Arla’s biggest market, with 26% of group revenue, followed by Sweden (16%) and Germany (15%). Although Denmark is the country that supplies the most milk to Arla, Denmark is now Arla’s fourth biggest market.
Revenue due to the MilkLink merger increased by 22% in the UK. Arla will also supply 30,000 tonnes of cheddar to supermarket Asda starting in April 2014, increasing cheese production by 50%. It has also singed an agreement with coffee chain Starbucks, and started production at its fresh milk facility in Aylesbury.
A landmark decision was made last year when Arla Foods’ board of representatives voted for Arla Foods Milk Partnership (AFMP) farmers to become co-owners of Arla Foods amba. This decision has meant that Arla has increased its British farmer owners to circa 2,800.
Meanwhile, Three strategic growth markets have been prioritised outside the EU for Arla: Russia, China, and the Middle East & Africa. In 2013 Arla’s revenue grew 35 per cent in Russia, 60 per cent in China, and 10 per cent in the Middle East & Africa.
The subsidiary Arla Foods Ingredients increased its revenue by 8% to £273 million (€331.8m) in 2013, and its sales of milk-based ingredients for the global food industry remains one of Arla’s most profitable areas of business. The target is to double the revenue by 2017.
In 2014, Arla expects to reach a revenue of £8.7 billion (79 billion DKK) and a net profit of the targeted three per cent of the revenue, equal to £265 million (2.4 billion DKK).
