Arla Foods reports higher profits in 'turbulent' year

For the full year ending 31 December, revenue fell to DKK 46,320m (€6,224m) but profits recovered to 2007 levels. Operating profit increased 23 per cent to DKK 1,412m and profit for the year advanced from DKK 137m in 2008 to DKK 660m.

Summarising 2009 in the Arla Foods annual report, CEO Peder Tuborgh said the global recession had made it a very tough year for the industry.

Milk price ​

Although Tuborgh said Arla Foods had come through the year in a strong position, he expressed disappointment that the European dairy giant had been unable to offer its owners, Danish and Swedish farmers, a better milk price.

He said: “The milk price paid to our owners remains a key issue and we did not perform well enough in this area in 2009. The price level that we’re currently seeing for Europe’s milk producers is just not sustainable going forward.”​

Looking back at 2009, Arla Foods gave a breakdown of performance in different European markets.

Leading markets ​

In the UK, the biggest single market for Arla accounting for 26.2 per cent of turnover, the company said 2009 was a challenging year but that key brands – Lurpak, Cravendale, and Anchor – performed well. Arla said Lactofree, a dairy brand without lactose that Arla launched in 2008, grew 41 per cent.

Talking about the future, Arla UK head Peter Lauritzen said: “The UK is a core market for Arla and the announcement of our plans for a new one billion litre dairy has sent a clear signal to the industry that we are committed to delivering our strategy for growth.” ​

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In Sweden, a country that accounts for 20 per cent of turnover, Arla experienced an increase in sales as the business expanded its reach advancing its market share to around 45 per cent of the Swedish dairy market.

Arla said its whole product range is now available throughout the country and high demand for natural and organic products is driving growth.

In nearby Denmark, which makes up 18.6 per cent of turnover, sales growth was harder to come by as customers opted for discount products instead of brands.

Lars Aagaard, head of Arla Foods in Denmark, said: “Price was more important than quality – particularly in respect of fresh milk – and more expensive brands were dropped in favour of cheaper discount products.”​ But Aagaard also pointed out that customers started to show renewed interest in brands towards the end of the year.

In its annual report, Arla also gave full details of progress in other smaller markets for the company including Finland, Germany, the Netherlands, and Poland. To read the full report, please click here.