Arla predicts success in interim report
Globally declining milk prices are currently causing problems for Arla Foods, but its 2015 interim report projects success for the future. The downward turn in world dairy prices affected Arla’s revenue and performance price significantly, bringing an overall revenue drop of 3.8% to €5.13 billion in the first half of 2015.
However, the company hopes that its new initiative to stay focused will allow them to have a more successful 2016.
Since the start of 2014 the global market commodity price for whole milk powder has dropped 53.1% and the current price levels were last seen in 2009. Despite these challenges being expected, the significant drop in global price levels was not.
Peder Tuborgh, CEO of Arla Foods, explains, “We are doing everything we can to minimize the effects of the general global market situation, however it cannot change the fact that out farmer owners are in a tough situation right now.
“In the past year Arla has been working very actively to buffer the market situation without damaging our market positions. This proves we have the right strategy, however no strategy can remove the current world market slump.”
The company says increasing milk volumes and a performance price under pressure will build strong brands and move volumes into valuable retail positions. Accelerating growth outside European core markets is also vital in ensuring that Arla can increase profit.
Tuborgh adds, “With the expectation of Russia that is still opting not to import quality products from the EU, our business in growth markets outside the EU is progressing according to plan.
“Our branded sales in China will double this year, and out volume-driven revenue growth in the Middle East and Africa of 15% is strong and contributes to our international business being a highly profitable business group in Arla.”