Arla reports record year and recovery in branded dairy

A total of €292 million in dividends will be paid to Arla's dairy farmers, the highest payout in the company's history.  

As close together as possible
CEO Peder Tuborgh of Arla felt it necessary to put the level of the performance price into perspective, because the price seems to be poor compared to that of FrieslandCampina. "Our price cannot be compared one-on-one with that of FrieslandCampina, because it is listed at completely different levels, but I can assure you that our cash payouts on a comparison basis are as close as possible." Incidentally, the performance price of Arla excludes a back payment of €2,20, while at FrieslandCampina the performance price includes everything. 

Like FrieslandCampina, Arla suffered from currency fluctuations in a number of markets, particularly in Nigeria and Bangladesh. However, good volume growth was also recorded there, the company says.

Brands and Whey
Overall, Arla is therefore signalling a strong recovery of markets, especially in the second half of 2024. Cheese and milk fat in particular performed well, but also the branded products that are so important to Arla. In addition, whey makes an important contribution to the earnings.

In this context, the importance of the acquisition of the British Volac last year was underlined. It also came up in a critical question about the return on mozzarella. According to Tuborgh, the return on mozzarella production is generally fine, but 'the combination of mozzarella and whey more than pays back the milk price'.

The Netherlands
In the Netherlands, Belgium and France, Arla Foods recorded a 4,1% increase in turnover, bringing the cluster turnover to €509 million. This was mainly driven by strong growth of the strategic brands. Within the cluster, the turnover of the Dutch company increased by 1,6% to €407 million and the brands grew by 5,4%. The market share of Arla Foods Netherlands increased to 2024% in 11,5, it reports.

The CEO also notes strong demand for Arla's dairy products as a whole, which has helped to generate a good margin.
In Europe, Arla’s turnover increased by 1% to €8.066 million. The main driver was brand-driven volume growth of 4,1%. This growth was driven by strong brand positions, strategic growth and increased consumer purchasing power, due to decreasing inflation and rising wages. The Netherlands, Belgium and France made a significant contribution, with branded volume growth of 7,4%.

CO2 emissions
Major steps have also been taken to reduce emissions in 2024, resulting in a 4% reduction in the company's emissions.
Thanks to the FarmAhead program, CO2 emissions from members also continued to decrease, despite challenges due to the weather and uncertainty around future legislation. This led to a net reduction of 1 percentage point. This figure was negatively influenced by the additional purchase of milk and especially whey. The emissions from our own farmers alone decreased by around 4%. 
According to Tuborgh, 4 billion kilos of milk now falls under the Farm Ahead Program.

Less supply and battle for farmers
According to Arla, the outlook for this year is still good, especially in the first half of the year. Turnover is projected to increase by around 8%, but there will still be pressure on milk supply. According to Tuborgh, this is a concern for the whole of Europe. He expects an annual supply decrease of 1% for the entire region. 

The declining milk supply increases competition for dairy farmers. Arla sees this particularly in Germany, but also elsewhere. However, the cooperative will not, as in the Netherlands with FrieslandCampina and Cono, relax the admission policy, according to chairman Jan Toft Nørgaard.