Arla Foods UK contributes £1.5bn to Danish parent’s bottom line

Milk processor Arla Foods UK saw sales reach £1.5bn last year, contributing to its Danish parent company’s overall profit of DK971m (£118m).

In its results for the year ending 31 December 2009, Arla Foods amba said its profit figure was DK71m (£8.6m) ahead of expectations.

But turnover fell by DK46.2m to DK3.2bn (£390m) as the recession bit and consumers bought fewer and cheaper dairy products.

Coupled with the price falls for global dairy products in early 2009, Arla Foods amba said weaker exchange rates for sterling and Swedish kroner against the Danish currency and the euro had also dealt a blow to total revenues.

“In a year when the whole of the dairy industry was under huge pressure from the recession, I am pleased that Arla Foods amba fully exploited the earnings potential that, despite the current situation, exists in our markets,” chief executive Peder Tuborgh said.

“As we adhered to our strategy and streamlined and developed our core markets, Arla Foods amba now stands firm as a strong and healthy business.”

Turnover for Arla Foods UK grew slightly to £1.5bn, buoyed by strong performance from its brands Lurpak, Cravendale and Anchor. Its Lactofree brand of non-dairy products grew by just over 40%. Arla does not release profit figures for any of its local subsidiary businesses.

In a statement the company said it would be investing £5m in further developing its UK brands in 2010.

Despite the effects of the economic recession on consumer spending, Arla Foods UK increased its supply of fresh and organic milk and cream to Tesco by 20% and secured a new fresh milk contract with Sainsbury’s. Arla remains the sole supplier of fresh milk, UHT milk and cream to Asda.

Chief executive of Arla Foods UK said: “There is no doubt that 2009 was a challenging year for the business but we still make good progress.

“The UK is a core market for Arla and we have begun planning out new, 1bn-litre dairy [to serve London] which has sent out a clear signal to the industry that we are committed to delivering our strategy of growth.”

Arla said it had made “good progress” against its strategy of sourcing 90% if its raw milk from dairy farmers in its dedicated supply group, the Arla Foods Milk Partnership, in addition to “selectively recruiting” some former Dairy Farmers of Britain members.

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