News Milk
Arla turnover increases by almost 6 percent
Dairy giant Arla saw its turnover increase by 5,6% last year to €11,2 billion (from €10,6 billion). This was mainly due to higher sales prices and volume-driven revenue growth at strategic brands. The milk price paid increased from €36,50 to €39,70 per 100 kilos. The supplementary payment is set at €1,60 per 100 kilos.
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Chairman Jan Toft Nørgaard and CEO Peter Tuborgh expressed their satisfaction with the results achieved, but at the same time made it clear what a challenging year 2021 was. Tuborgh specifically mentioned the enormous volatility in the markets - unprecedented in his opinion - but also the situation with dairy production. "In the seventeen years that I have had a managerial position here, I have never experienced a flat or declining milk production worldwide."
Battle for 2022
Arla does not actually want to make very clear statements about 2022. For the time being, the aim is for a fairly flat development of turnover and returns, but the company is keeping a tight rein because so much is uncertain. Tuborgh takes into account further rising prices for dairy raw materials, but also foresees tough negotiations with major retailers, among others. There will also be a drop in demand. On the other hand, global milk production may also lag behind for a longer period of time. The big question is therefore where the new balance will lie, he and cooperative chairman Nørgaard indicated.
In the past year, Arla said it paid a competitive milk price, which increased by 23% compared to 2020. However, costs for members also rose very quickly.
Slowdown in growth of branded products
Sales of branded products and other consumer dairy products continued to rise steadily, but were faced with a slowdown in growth. Arla International performed relatively slightly better, but the strongest results were achieved in the ingredients division and sales of basic raw materials, which was in line with market developments.
Arla Europe increased its turnover to €6.621 million (from €6.413 million) and continued to gain market share in most European markets thanks to a strong range of branded products. The market share grew by 0,3% compared to last year. The division achieved total volume growth for branded products of 2,3%, with the Starbucks licensed brand even growing by almost 40%.
Arla's European foodservice operations delivered volume-driven sales growth of 7,8% for branded products. Arla International achieved volume-driven sales growth for branded products of 9,15, partly due to higher prices.
Mainly earned on ingredients and bulk
Arla International increased turnover from €1.975 million in 2020 to €2.101 million. To support its growth plans for the Middle East and North Africa, Arla expanded its production capacity for processed cheeses, Starbucks on the go and Puck cooking cream and sauces at its factories in Bahrain and Saudi Arabia.
At Arla Foods Ingredients, the value of the ingredients business increased by 14,5% and the company achieved an increase in turnover to €794 million (from €716 million). Sales to the international food industry increased from €1.541 million to €1.686 million, despite lower sales volume.
Extra earnings for the members
Arla did strengthen its underlying financial position. The power is good. Any higher than expected results in the coming years will first go to the members, not to the company. “We can afford (to do that),” said CEO Peter Tuborgh.