Arla absorbs boycott loss

By staff reporter

- Last updated on GMT

Related tags: Middle east, Islam, Denmark

Profits were better than predicted for Scandinavian dairy group
Arla Foods last year, prompting optimism about the firm's ability
to bounce back from a consumer boycott in the Middle East.

Knud Erik Jensen, Arla chairman, said a net profit of £85m in 2006 was significantly better than expected​ following a year of turmoil in the Middle East. Muslim consumers there boycotted Arla products early last year in protest against the firm's home country, Denmark. Cartoons of the prophet Muhammad published in a Danish newspaper sparked anger across the region. "All things considered, and here I'm particularly referring to the widespread and unforeseen consumer boycott in the Middle East, we can take satisfaction in the year's result,"​ said Jensen. The group, which was forced to shut down production and throw out dairy products that would not sell because of the boycott, said it had managed to offset losses by selling off property and interests in other companies. "With regard to the Middle East, the outcome has been slightly worse than expected last spring,"​ added Jensen. "However, the fact that we're back in the Middle East and expect to return to previous levels of sales by the end of 2007 gives us grounds for cautious optimism." ​ The Middle East was a key emerging dairy region for Arla Foods, which has strong positions there with its Lurpak butter and Puck cheese brands. Elsewhere, Arla's chief executive, Peder Tuborgh, said the group's performance in Europe in 2006 had been "unsatisfactory"​ on its own. "The continued reduction in the EU's export subsidies and increasing competition in home markets and in Europe have impacted negatively on the result,"​ the firm said.

Related topics: Manufacturers, Arla Foods

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