Strong Brands Contribute To Arla's Growth

UK - In 2010 Arla Foods reported an increase in turnover of three billion DKK and a significant boost in earnings to the company’s cooperative owners.
calendar icon 24 February 2011
clock icon 3 minute read

In 2010, Arla Foods delivered significantly improved earnings compared to 2009 to its owners, Danish and Swedish milk producers. For each kg milk supplied by its cooperative owners, Arla delivered 38 Danish øre more to its owners in 2010 than in 2009.

In total, Arla's earnings for its owners (the Arla performance price) amounted to 252 øre per kg milk in 2010 against 214 øre/kg milk in 2009.

"The result shows that we have put the recession behind us, and that we're in control of our costs," says CEO Peder Tuborgh who, together with CFO, Frederik Lotz, presented the annual accounts to Arla's Board of Directors.

Arla's annual report is to be approved by the Board of Representatives on March 3rd 2011.

Turnover growth of six per cent

For co-operative companies like Arla Foods, the earnings generated to its owners is the main indicator of the company's performance during the past year.

"In 2010, turnover and our earnings increased for our owners," Peder Tuborgh stated.

"Over the past year, Arla has shaken off the effects of the recession without letting go of its tight cost controls. We’ve committed to a number of investments that demonstrate the company's focus in the long-term and our readiness to exploit the opportunities offered by the markets in which we operate. One example is the decision to build the world's largest fresh milk dairy in the UK. Another is that we will continue to streamline and invest in our ingredients business, which is one of the world's leaders within its field," says CEO Peder Tuborgh.

Arla Foods’ turnover totalled DKK 49 billion, close to DKK 3 billion above last year, and equates to an increase of approximately six per cent. Annual profits came in at DKK 1.268 billion against DKK 971 million in 2009. In 2010 Arla's Board of Directors decided that the company would aim for annual profits of 2.5 per cent of the turnover, which was achieved.

Growth in markets and brands

In 2010, Arla Foods delivered overall growth of approximately six per cent, with organic growth accounting for three per cent. An important achievement, comments CFO Frederik Lotz:

"The key issue for us is that we strengthen organic growth in 2011," he says.

"We want to grow through acquisitions, partnerships and mergers - such as the proposed merger in Germany. Nevertheless, organic growth is key to our strategy and it reflects our ability to expand our existing business."

"Our ambition is three strong global brands. The Arla brand generated slightly less revenue compared to 2009, mainly because many Danish consumers preferred discount products to quality brands, and because of tough competition on the Finnish dairy market. Still we succeeded in raising awareness of Arla® and our Closer to Nature™ positioning. Castello® saw six per cent growth in 2010 while sales of Lurpak® increased by 14 per cent," says Frederik Lotz.

"Our ingredients business grew by 23 per cent and increased its market share. Overall our growth markets performed extremely well, growing by 19 per cent. While these are quite small markets and, therefore, modest figures, we believe that they are significant. This is why it is imperative that we have the ability to grow and build platforms in these markets."

Growth has also been aided by general price rises in the market and by foreign exchange rate developments.

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