European dairy group Arla increased turnover by 15% and profits by almost 36% in 2012.

Mergers, acquisitions and strong brands were behind the significant rise in turnover to £6.87bn, with profit rising to a record £207m on the same basis.

Arla’s UK business group finished 2012 ahead of its financial forecast, with turnover of £1.7bn against £1.5bn in 2011. The years saw it become the UK’s largest dairy company as it merged with Milk Link.

Although 2012 was a tough year, the co-op’s performance was at the high end of the European spectrum for dairy companies, said chief executive officer Peder Tuborgh.

“We fully appreciate that the ratio between our members’ earnings from milk production and on-farm costs is, currently, extremely strained.”
Peder Tuborgh, Arla chief executive officer

“We fully appreciate that the ratio between our members’ earnings from milk production and on-farm costs is, currently, extremely strained,” he said.

“Arla is generating as much profit in its operating markets as possible right now, but in 2012 the high cost of energy and feed for the cows meant that, for some, the milk price did not sufficiently cover the cost of operations on the farm. This has the full attention of Arla’s management,” said Mr Tuborgh.

Growth in European markets for food products was low but markets outside the EU were experiencing double-digit growth rates – Arla’s business grew in 28% in Russia and 22% in the Middle East in 2012. The company’s new 1bn litre dairy at Aylesbury in Buckinghamshire will begin production this year.

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