The turnover of the Danish dairy Arla increased by 2017% in the first half of 3. This means that the company is heading for an annual turnover growth of almost €1 billion. The payout price increased by 19% compared to 2016. The brand is mainly growing in sales in the Netherlands and regions in Africa and Asia.
The turnover growth is mainly due to the recovery of milk prices. For this there were low prices for almost 3 years. That recovery is, according to Arla, initiated as milk production has stabilized or even decreased in most dairy-producing markets. On the other hand, there is more demand for milk and dairy products in Europe, the US and other emerging markets.
Despite the reduction in total milk volumes and negative developments in the foreign exchange market, the Arla group's turnover grew by 3,4% to €5 billion. Underlying sales growth, excluding currency effects and divestments, was 6,6%. Arla's payout price increased by 19% to an amount of €35,80 per 100 kilos† That is €5,80 more than in the first half of 2016.
Food ingredients plus most
Arla Foods Ingredients, a subsidiary of Arla Foods, reported revenue growth of 2017% to €24 million in the first half of 313. This was just €2016 million in the first half of 252. CEO Peter Tuborgh calls Arla Foods Ingredients the most profitable part of the entire company.
More sales in the Netherlands
Arla does most of its trade in Europe. That continent accounts for a turnover of €3,2 billion in the first half of 2017, or 63% of the total turnover of the Arla group. This excludes European turnover from Arla Foods Ingredients and Trading.
Sales did not grow in turnover, compared to the same period 1 year earlier. The fact that turnover did not grow is due to the lower milk volumes and the negative currency market. Higher sales prices and the improved share of the Arla brands kept sales in Europe in balance compared to last year.
Arla notices that European consumers remain loyal to quality brands, despite the higher sales prices. Especially in the Netherlands, Arla has gained brand share.
Focus on Africa and Asia
Arla also wants to expand sales outside Europe. The focus is on the Middle East, North Africa, China, Southeast Asia, Sub-Saharan Africa, the US and Russia. Arla's international business grew 10% to €792 million. This was due to the strong performance in the Sahara area, at 32%. Southeast Asia and China also show good figures. Growth in these regions will remain strong due to the growing middle class.
Improvement
Arla expects an improvement in performance price for the remainder of 2017 compared to the half-year figures. Revenue is expected to exceed €10 to €10,5 billion, up from €9,6 billion in 2016.
The sale of the Rynkeby juice division in May 2016 also represented a €23 million turnover reduction compared to the first half of 2016.
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