Arla pre-tax profits up during first half of 2022

European dairy co-operative Arla recorded a rise in pre-tax profits during the first half of 2022.

Pre-tax profits for the group totalled €230m (£196m) during the first six months of the year, up by €19m (£16m) on the first six months of 2021.

Arla Foods amba’s share of the profit was €192m (£164m).

See also: Milk prices rise for September as costs fall marginally

The co-operative is owned by more than 8,600 dairy farmers across seven countries in Europe. This year, as the cost of producing milk rises significantly, Arla Foods will make its first half-year supplementary payment to its farmer owners (see box: Supplementary payment).

Arla Group’s total revenue in the first half of 2022 increased by 17% compared to the same period last year, to total €6.382bn (£5.45bn).

Net revenue for Arla Foods UK in the first half of 2022 was £1.15bn (€1.4bn), a growth of 8.3% on the same period in 2021.

This uplift in revenue was driven by price increases at retail outlets and in food service.

The outlook for the remainder of 2022 is expected to be challenging, with further declines in milk production contributing to continued high dairy prices, which could further diminish consumer confidence and consumption, according to Arla.

Arla Foods chief executive Peder Tuborgh said: “2022 continues to be characterised by volatility and inflation, exacerbated by Russia’s invasion of Ukraine. Changes in consumer behavior continue to be multifaceted and difficult to predict, and we expect our branded growth will slow down further.

“As a co-operative, we remain committed to be in a position to pay out the second instalment of our planned full -year supplementary payment of 1.5 euro cents/kg of milk to our farmer owners.”

UK focus

Milk prices have increased by more than 30% for Arla farmer owners during the first half of 2022 to cover rising on-farm costs.

Ash Amirahmadi, managing director of Arla Foods UK, said: “We are facing extraordinary times in food production as both our farmers and the company face high levels of exposure to inflationary pressures and costs increasing right across the supply chain.

“We are now seeing the impact of these rising costs in reduced milk volumes. This presents a significant challenge in balancing the price consumers pay with the need to ensure our farmers are paid enough to continue producing milk and protect security of supply.”