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Arla Foods UK Sees Revenue Growth in H1/2018

30 August 2018

UK - Despite globally challenging market conditions including the impact of a continued weak pound and changes in fat and protein prices, Arla Foods UK delivered a steady start to the first half of the year.

A 6.7 per cent volume driven branded growth contributed to an overall net revenue growth of 2.3 per cent, comparative to the first half of 2017, increasing revenue to £961m1 (€1.093bn).

The 6.72 per cent strategic branded sales volume for Arla Foods UK was supported by the core Arla® brand at 9.32 per cent growth, as well as Lurpak® at 2.22 per cent growth and Castello® at 8.82 per cent growth in the UK. Within the Arla portfolio, Arla’s foodservice range Arla Pro grew by 52.82 per cent whilst sales of B.O.B (Best of Both) grew at 38.12 per cent.

Arla Foods UK Managing Director, Ash Amirahmadi comments, "Year on year, Arla’s portfolio continues to lead the way in driving growth across the UK dairy sector. Our decision to invest to build capability in the growing channels of foodservice, online and convenience is paying off and will continue to do so as we further develop the UK business."

At a Global level across the farmer owned cooperative, total Arla Group revenue grew by 2.2 per cent to €5.1 billion, supported by higher strategic branded sales volumes, which were up 3.0 per cent due to strong performance by the Arla® brand, Lurpak®, Puck® and Castello®.

Each year, Arla targets an annual net profit share in the range of 2.8 to 3.2 per cent of revenue. This allows the company to balance its retained capital for future investments and provide a supplementary payment to farmer owners, while continuing to pay out the highest possible share of our ongoing profit to our farmer owners via the prepaid milk price throughout the year.

In the first half year of 2018, Arla delivered a net profit share of 2.2 per cent, up from last half year’s profit share of 2.1 per cent. The company expects to reach its full year net profit share to be within the 2.8 to 3.2 per cent target range.

Calcium begins to deliver

Early in 2018, the three year transformation and efficiency programme Calcium was announced by Arla’s management to reduce cost by €400+ million across the Group. For the full-year of 2018, Arla expects Calcium to deliver a positive contribution of at least €50 million, up from the initially forecasted €30 million.

"It was a tough start to 2018 as we took urgent action to repair our bottom line. This urgency delivered a positive result as we were able to improve our profitability and the performance of our milk price over the period. However, there is more work to be done as we continue to relentlessly execute our transformation programme, Calcium, which will further improve our performance," says CEO of Arla Foods, Peder Tuborgh.

"I'm pleased to say that Calcium is starting to deliver – every week we see steady progress across the programme. Our top management, leaders and employees are working adamantly on each initiative that will enable us to pay a more competitive milk price to our farmers, compete more effectively in the markets and categories we operate in worldwide, and boost the strategic investments that will sustain our long term profitable growth," says CFO in Arla Foods, Natalie Knight.

Of the €400 million Calcium is expected to deliver by 2021, Arla aims to direct €300 million to its farmer owners via the prepaid milk price while reinvesting €100 million into areas that fuel growth.

Full year expectations

For the full year, Arla will remain focused on balancing branded growth in a higher retail price environment. Continued execution of the transformation programme Calcium will be the company’s other key priority.

Arla’s revenue outlook for the full year 2018 is expected to be €10.0-10.5 billion and Arla’s branded growth is expected to be at the high-end of the previously communicated target range of 1.0 - 3.5 per cent.

Net profit share for 2018 is expected in the targeted 2.8 - 3.2 range.

The trademarks Arla, Castello and Lurpak are registered trademarks of Arla Foods amba

1 – Net revenue growth – H1, 2018 compared to H1, 2017. Currency conversions are calculated using the average standard conversion rate across the relevant half year period. For the first half of 2018 this rate is 0.8797.

2 – Volume driven revenue growth – H1, 2018 compared to H1, 2017 (internal Arla data)

TheCattleSite News Desk



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