A mixed year for Arla

Related tags Denmark

Dairy giant Arla Foods has posted slightly increased profits of DKK
1,094 million (€147m) for the 2002/03 financial year - but it's not
been all plain sailing. Facilities have been closed and the Swedish
vote against the Euro has cast doubt on long term stability.

Nonetheless, the group is content to have recorded a small advance on last year's profits of DKK 1,085 million. In general however, the financial results indicate that this year's performance almost exactly corresponds with the company's performance in 2002.

Shareholders should be satisfied. The result, which exceeds the forecast prepared at the half year stage, corresponds to earnings per kg milk in Denmark of 256.44 Danish øre and in Sweden of 313.48 Swedish øre. Although Danish co-operative members receive 5 øre less than in 2001/02 (when they received 261.14 Danish øre per kg milk), the Swedish co-operative owners saw a small advance on 2001/02 when earnings were 311.28 Swedish øre per kg milk.

"Despite the slowdown in the international economy and declining exchange rates, we achieved a satisfactory result,"​ said Arla Foods' managing director Jens Bigum. "The strategy aimed at further dairy product processing has once again proved its worth."

On the basis of the year's result, the group's supervisory board has recommended that the Danish co-operative members receive an additional 5.5 per cent of the basic price corresponding to 11.77 Danish øre per kg milk. It has been recommended that Swedish co-operative members receive 11.80 Swedish øre per kg milk. The board will also recommend that 5 Danish øre per kg milk be consolidated (6.15 Swedish øre per kg) over and above a reconsolidation of 1.97 Danish øre per kg (2.42 Swedish øre per kg).

The reconsolidation is a consequence of the payments from the personal accounts that were established in connection with the mergers with Kløver Mælk and Arla.

Arla​ has encountered a number of difficulties this year. In August, the company announced the closure of its økoMælk and Snejbjerg dairy plants because of restructuring and over-supply of organic milk. And in September, Arla complained that the Swedish vote against joining the euro would jeopardise long term stability.

In addition, the company has courted controversy in recent months for its refusal to supply milk to German discounter Lidl​, which is attempting to expand its operations across Scandinavia. The supermarket group, which operates around ten stores in Sweden, wanted to sell milk under its own label, but Swedish dairy firms have refused to cooperate.

As a result, customers will find milk from Germany in Lidl stores throughout the country. According to the Swedish press, Lidl now ships German milk to the chain's central warehouses in Halmstad from where it is distributed to Lidl stores.

Related topics Manufacturers Arla Foods

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