Covid-19 retail surge drives £1bn revenues at Arla UK

Arla Foods UK achieved revenue of £1bn in the first six months of 2020 despite the impact of Covid-19 on the food service sector.

The co-operative processor reported revenues were up 4.7% to the end of June compared with the same period last year.  

But the company warned that the performance may not be sustained across the rest of the year because the 2020 figure to date masked changes in profitability, operating costs and temporary demand.

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Arla Foods UK managing director Ash Amirahmadi explained that lockdown measures saw a dramatic shift from food service to retail business for most of the half-year.

The shift was driven by an increase in dining in and a boom in home baking.

This caused a spike in retail demand for the firm’s products such as Cravendale milk and butter from the Lurpak and Anchor brands.

Sales for Cravendale grew 22%, Lurpak 20% and Anchor 17% between 1 January and 30 June 2020 compared with the first half of last year.

These brands drove a 16% increase in demand across all of the firm’s products compared with the same period in 2019.

The Arla Group performance price – which measures the value Arla creates per kilogram of owner milk – was at €0.37/kg (33p/kg) compared with €0.36/kg (32p/kg) for the first six months of 2019.

Overall, Arla Group warned that the easing of lockdown measures and reopening of food service sector outlets would slow down its financial performance for the second six months of 2020.

Despite this, the group forecast it would still meet revenue targets for the full year of €10.4bn-€10.8bn (£9.3bn-£9.6bn), with net profit of 2.8-3.2% of revenue.

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