Arla Foods heralds recovery despite Danish struggles

23-Feb-2011 - Last updated on 23-Feb-2011 at 10:24 GMT

Related tags Arla foods ingredients Denmark Arla

Arla Foods claims to have put the recession behind it in 2010 despite coming under pressure from discount products in its domestic market.

The Danish dairy co-operative reported that overall turnover grew 6 per cent (3 per cent on an organic basis) last year to DKK 49bn while operating profit recovered 19 per cent to DKK 1.684bn.

CEO Peder Tuborgh said: “The result shows that we have put the recession behind us, and that we’re in control of our costs.”

Ingredients growth

One of the top-line highlights from 2010 was the ingredients business which grew by 23 per cent. Company spokesperson Theis Brøgger said Arla Foods Ingredients sold about 33.000 million tonnes of product last year with growth coming from increased branding and marketing and new product development.

While the overall turnover trend was positive in 2010, Arla said it ran into some problems in the Danish and Finnish markets, resulting in a slip in revenues from its Arla branded finished dairy products.

Arla CFO Frederik Lotz said: “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.”

In order to remedy the situation, Brøgger told DairyReporter.com: “Our aim is to continue our strategic branding in 2011, and we expect this will further increase the Arla brand’s performance.”

Looking forward to 2011, Arla said strengthening organic growth will be a key issue. Areas of focus include investment in the ingredients business and development of three key brands – Arla, Castello and Lurpak.

Acquisition opportunities

But the dairy co-op is also looking to expand through M&A activity. “We want to grow through acquisitions, partnerships and mergers – such as the proposed merger in Germany,” said Lotz.

News on the proposed merger with the German dairy co-operative Hansa-Milch is expected in early March. The owners of the two companies are due to vote on the deal on March 2.

Owned by 7,200 farmers in Denmark and Sweden, Arla is already the seventh largest dairy company in the world, with a 6.5 per cent share of the European market.