Wednesday, 15 September 2021 12:55

Solid result for Arla despite Covid

Written by  Sudesh Kissun
Peder Turborgh Peder Turborgh

European co-operative Arla Foods says it has delivered financial results and branded sales volumes at the top end of expectations, despite challenges posed by Covid-19.

The farmer-owned business has released its results for the first half of 2021, with total revenues up 1.2% to almost NZ$9 billion.

High branded sales volume grew 5.6% across all dairy categories, particularly in the retail sector.

The cooperative's performance price - which measures the value Arla creates for every kg of milk - was 64c compared to 62c for first half of 2020.

Arla says it paid a competitive pre-paid milk price, with increases over four consecutive months leading to a first half average of 60c/kg, nearly 3c higher than the same time last year.

However, it says many farmer shareholders are challenged by increased production costs as global prices for fuel, energy and feed are going up. On average, feed prices have increased by 13% per cow in the first half of 2021.

 Arla Food chief executive officer Peder Tuborgh says global consumer demand for dairy has remained strong over the first half of 2021 as people continue to value the taste, nutritional quality and variety that dairy brings to their diets.

"Our strong positions across the retail sector and commitment to innovation, together with the resilience of our operations and farmer owners, has meant that we have delivered a solid result for first half of 2021 and delivered good returns to our owners through an improved milk price,” says Turbogh.

Arla says its trusted brands remain among consumer favourites globally.

High demand for dairy across all categories and a strong operational execution resulted in Arla’s global brands delivering total sales volume growth of 5.6% in the first half of 2021. The Arla brand grew 6.9%.

Arla’s stable of licensed brands also performed well, led by its ready drink Starbucks portfolio, which grew 43% in volume across Europe, the Middle East and Africa. Growth was seen in all markets but, among others, the UK and Denmark witnessed fast growth, driven in part by significant distribution gains in retail channels and the introduction of new products.

Arla’s Food Service business saw a boost in sales in the spring as the hospitality sector re-opened.

Turbogh says sales are not fully recovered due to prolonged global Covid-19 disruptions, but a re-balancing of demand between retail and the hospitality sector continues to play out.

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