Arla's investment plans demonstrate ambition

Thanks to sales of branded dairy products, Arla saw its turnover increase slightly to €10,5 billion last year. To shape its growth ambitions, the Scandinavian dairy cooperative will invest hundreds of millions in extra production capacity this year.

Arla's result remained stable in 2019. In recent years, Arla's turnover has increased by €100 million each time, to €10,5 billion in 2019. At the bottom of the line, more than €300 was left in profit (3%). Of the turnover, €319 million is realized in the market cluster of the Netherlands, Belgium and France. 

The cooperative's barely 10.000 member dairy farmers could count on an average performance price of €36,60 per 100 kilos. This is almost the same as last year. How much supplementary payment they can count on will be announced shortly. The Members' Council of Arla will consider this next week. Last year, the profit was fully distributed to shareholders as compensation for the drought. 

According to the dairy cooperative, there is particular potential in the sale of branded products, such as Arla Lactofree and Melkunie. In its own words, Arla Organic is the market leader in this segment in the Netherlands. Last year, sales of this grew by almost 8% compared to the previous year.

€619 million in additional capacity
Arla clearly has a taste for branded dairy products. The intention is to launch several new products on the market in 2020. The dairy cooperative also wants to grow in extra production capacity in the growth sectors. A total of €619 million will be made available for this, which will significantly increase Arla's investment budget. Never before has so much been invested. Of this, €12 million will be put into the factory in Nijkerk in Gelderland. 

The intention is that the new powder tower in Pronsfeld, Germany, will become operational this year. Additional capacity is also being built in the home country of Denmark. Turnover for this year is estimated to be between €10,4 and €10,8 billion. The net profit share is likely to be between 2,8% and 3,2%.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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