Arla details 2013 production plans
During 2013, Arla will invest in a number of dairy expansions and new facilities in order to increase global production of its most profitable products. It also intends to increase efficiencies within production while also reducing its environmental impact, the company says. The plan includes investments totalling over DKK 2 billion (€267m), for capacity expansion, rationalisation measures, environmental improvements, maintenance, quality and innovation.
The 2013 investment level is approximately three per cent of expected revenue, and is also an ambition within Arla’s Group strategy for 2017 (compared with approximately 3.4 per cent in 2012). “In relative terms, this year’s investment plan is a smaller share of our expected revenue than last year’s investment plan,” says vice CEO Povl Krogsgaard. “This year, the largest proportion of our investments will be devoted to expanding the production capabilities of a number of our dairies which manufacture products for export to the growth markets outside the EU.”
Almost 40 per cent of Arla’s total investment plan will be devoted to expanding the production facilities. The second-largest focus area for Arla’s investments in 2013 is production rationalisation initiatives. “Arla’s Group strategy includes the objective to reduce its production costs by DKK 2.5 billion by the end of 2015, via, for example, investing in projects to streamline production at our dairies. This year, we are investing approximately DKK 370 million in such projects,” says Krogsgaard.
The largest single investment for Arla in 2013 will be the construction of a new production facility at Nr. Vium in Denmark, which will manufacture highly-processed whey-based lactose products. These ingredients will be used in products in areas including child nutrition, and will also be sold globally by the company’s subsidiary, Arla Foods Ingredients.
Overall, Arla is investing approximately DKK 900 million (€120.5m) in the new facility, of which approximately DKK 275 million will be invested in 2013 The facility becomes partly operational at the end of 2014, and fully operational in 2016 and 20 new jobs will be created. Among the dairies that will receive the bulk of Arla’s investment in 2013, is Pronsfeld dairy in Germany, where Arla will invest approximately DKK 232 million in initiatives to increase production of milk powder and butter. The expansion of Taulov dairy in Denmark will be completed in 2013 with an investment in yellow cheese production totalling approximately DKK 215 million.
Approximately DKK 140 million will be invested in reducing the environmental impact of production within Arla. Arla currently has 71 dairies globally. Arla’s investments in environmental improvements are also expected to cut the Group’s total energy consumption by 1.5 per cent in 2013, which corresponds to a reduction of 36,863 MWh, which is equivalent to approximately 8,200 households’ annual electricity consumption.
