News Milk
Arla raises outlook for 2021 after strong half-year figures
Dairy cooperative Arla has presented solid figures for the first half of 2021 despite the ongoing impact of the corona pandemic. Volumes sold showed strong growth, the net result rose slightly and the company, in its own words, was able to pay a 'competitive' milk price to its suppliers.
Arla has revised its expectations for the full year upwards, despite soaring costs that could affect results. According to CEO Peter Tuborgh, international consumer demand for dairy was strong over the first 6 months of the year, he said at an online press conference on Thursday morning (August 26). Arla was able to sell a 5,6% increase in volume to consumers.
Ordering online remains the same
Partly because the company is well positioned in retail, according to Tuborgh. The reopening of the catering industry in many countries this spring also boosted the results. Although sales from the 'food service' branch that serves the catering industry are still below pre-corona levels. Tuborgh is pleased to see that more and more consumers are also ordering dairy products from electronic web stores. Despite the gradual opening of restaurants and cafes in many European countries, online sales remain "good" according to him.
The company's revenue eventually grew 1,2% to €5,441 billion. The net result increased from €166 million to €172 million, an improvement of 3,6%. According to the company, the financial performance is therefore at the higher end of expectations.
All branches are performing strong
All 4 commercial units of the Arla organization contributed to the results. Both the European and international consumer branches showed growth, as did the Food ingredients branch. The company was able to sell a larger part of its milk supply as dairy products in the retail channels. In addition, the volume of milk powders, such as whey, that was sold to the processing industry did fall slightly. Nevertheless, the turnover of this flow of milk powders also increased, because the quotations for this product were at a higher level this spring.
According to the company, the strong figures have not been at the expense of the milk price it pays its suppliers. The cooperative paid its farmers an average of €38,60 per 100 kilos of milk. That is €1,60 more than in the first half of 2020.
Outlook adjusted
Due to the strong results, the company has revised its outlook for the remainder of the year upwards. It now expects to achieve 2021 revenues of between €10,6 and €11,0 billion. In 2020, the turnover was €10,6 billion. Rising costs throughout the chain for energy and feed, among other things, could put some pressure on margins. According to Tuborgh, the dairy chain cannot avoid the fact that these rising costs also have to be passed on in consumer prices. “Inflation is strong in various links in the chain, from raw materials, logistics, and so on.”
In addition, the effects of the corona pandemic will remain an uncertain factor for Arla in the coming months, emphasizes Tuborgh. "The pandemic is far from over. An open society is gradually being restored in many western countries, but in many parts of the world that is absolutely not the case yet. In Asia, where we also have various offices, it is getting worse," says the CEO. "So our organization is still on standby."
Steve Wissink
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