Arla first half of 2011 shows growth

The keyword for Arla’s first half-year 2011 is growth, according to the company. Revenue rose by 12%, due to the merger with Hansa-Milch and price increases in the market. Arla also delivered a large increase in the milk price to the cooperative members in Sweden, Denmark and Germany.

In the first half of 2011 Arla paid out DKK 1.2 billion (EUR0.16 billion) more to its cooperative members as payment for milk than in the first half of 2010. This represents an increase of 14% in earnings.

The growth in revenue is related to Arla’s core markets – primarily Germany, where Arla merged with the German dairy Hansa-Milch earlier this year – and to the international growth markets, which also developed very positively during the half-year.

Revenue in the first half-year 2011 totalled DKK 27 billion (EUR3.6 billion), compared to DKK 24 billion in the first half of 2010. The goal for 2015 is a full-year revenue of DKK 75 billion, which is to be achieved via acquisitions, mergers and organic growth.

“We present an interim result with an increase in revenue and overall organic growth for the Group of approximately 7%. While consumers in our key European markets are still exercising restraint due to the new economic crisis, we can note strong growth in our international markets, especially in the Middle East and North Africa, where revenue rose by 18%,” says Arla Foods’ CEO Peder Tuborgh.

Sales of consumer-packaged milk powder are developing soundly in the Middle East and North Africa, as a result of Arla’s focus in recent years on developing a range of products with a high nutritional value, at a price that is affordable for the consumers in the area. Sales of processed cream cheese also show very strong growth. These products are sold to consumers under the Puck brand, which has a strong position in the Middle East, Arla notes.

In the first half-year Arla Foods achieved a breakthrough in the German market, with access to 80 million consumers. This was achieved via Arla’s merger with the cooperative Hansa-Milch. This has expanded Arla’s cooperative ownership to include milk producers in Germany. The dairy in Upahl, Germany, produces mainly milk, cream and yogurt from Hansa-Milch members’ milk. These fresh milk products supplement Arla’s existing activities in Germany, which primarily comprised the sale of cheese (including Arla Buko) and butter and blended products (mainly Arla Kærgaarden), produced in Denmark.

During the first half of the year, Arla’s sales of fresh products and cheese in the Nordic region were still affected by the repercussions of the economic crisis on consumers. In Finland, a price war is still raging in the dairy market, and in Sweden the retail market for dairy products is generally subject to pressure. This also affects Arla, and especially sales of yellow cheese are under pressure. On the other hand, sales of Arla’s lactose-free products are rising, especially to Swedish consumers.