Red meat sector battles on
It's a bloody tough year for sheep farmers, but the worst may be over, and the future looks optimistic.
Total revenue lifted 5.6% to $19 billion, driven mainly by higher sales prices and strategic branded sales growth of 4.5%.
Arla's performance price - which measures the value created per kgMS for farmer shareholders - was 67c in 2021 compared to 62c in 2020.
The co-op, owned by nearly 13,000 European dairy farmers, says shareholders were again challenged throughout 2021 due to rising costs and additional requirements on their farms.
Arla says it maintained a competitive pre-paid milk price that increased by 23% throughout the year.
Arla Foods chairman Jan Toft Nørgaard says 2021 was a tough year on farms as both members and the company were impacted by the continued effects of the pandemic and rapidly rising production costs.
"As such, I am proud that our company has been able to deliver a performance price that puts Arla among the market leaders in Europe and that supports our farmer owners.
"Thanks to the dedicated efforts of farmers, employees and management, we successfully navigated this challenging environment and secured a high value for our milk."
To support farmers, Arla unveiled a new policy, increasing supplementary payments to farmer owners to 2.6c/kgMS instead of 1.7c/kgMS, provided the company achieves an annual net profit of at least 2.8% of revenue.
Retail sales in 2021 again reached the top end of expectations: strategic brands delivered 4.5% branded volume growth.
Arla met the continued high consumer demand for in-home dairy products seeing Arla, Castello and Starbucks brands exceeding their unprecedented branded growth in 2020 and butter brand Lurpak gaining market shares in both Denmark and UK.
Online sales soared 17%.
Arla chief executive Peter Tuborgh says its strategic brands performed exceptionally well in 2021 as consumer appetite for high quality, natural nutritious dairy products remained strong around the world.
"Month on month, we managed sales and operations firmly to maintain product availability amidst fluctuating demand between in-home consumption, dining out and on-the-go as lockdowns eased and we returned to the workplace," says Tuborgh.
All-Around Top Returns
Arla divides its business into four commercial segments and all reported growth in sales and revenue.
Arla Europe continued to gain market shares in the majority of the European markets with a strong branded portfolio, delivering a year-on-year market share improvement of 0.3% across categories and despite fewer in-home meal occasions as lockdowns lifted.
The company says its European Foodservice business captured the opportunities with strong delivery, key account management and agility as the hospitality sector re-opened in many countries and delivered 7.8% branded volume growth.
Arla International delivered branded volume driven growth of 9.1% on top of the previous year's 11.6%.
Arla Foods Ingredients (AFI), a 100% subsidiary of Arla, grew its value-add segment by 14.5%. However, significant increases in raw material and energy prices challenged margins.
