Arla Foods launches programme to deliver over US$479m savings by 2020

UK – Arla Foods, a European dairy cooperative, has launched an internal transformation programme called “Calcium”, which is set to deliver over US$479 million of savings by the end of 2020 through improved efficiency in all areas of the company.

The programme looks to boost Arla’s performance to the benefit of its farmer-owners and further strengthen the company’s investment capability.

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The programme is also part of the on-going efforts of Good Growth 2020 strategy, that Arla initiated in the three-year transformation programme called “Calcium”, which will change the company by creating significant efficiencies.

Good Growth 2020 strategy was first launched in 2015, with an aim to create maximum value for increased volume of milk by excelling in its 8 dairy categories, in the next 5years.

“We are launching a new strategy.

In Strategy 2020 we will focus even more on organic growth and growing our brands through innovation that focuses on what consumers and customers want and need.

This will help us create the most profitable growth with our farmer owners’ milk,” said CEO of Arla Foods, Peder Tuborgh during the launch.

According to Arla, it has a strong strategy in place that has been growing the company’s business successfully and remains right for the trends that are driving the global food and dairy market, with the Good Growth 2020.

The internal Calcium programme, which is already underway, will deliver a run-rate of at least 400 million euro of savings by the end of 2020, and the profit impact will build throughout the life of the programme.

“At Arla Foods we have always had a culture and strong track record of creating efficiencies and removing costs for the benefit of our farmer owners, customers and consumers, so in that sense nothing is new,” said Peder Tuborgh.

“What is new, however, are two unexpected developments that have hit us, both of which are outside of our control.

These are the currency impact of Brexit on our actual performance and the impact of the reversal in commodity prices on fat and protein on our relative performance against our international peers.

These developments have negatively impacted our profitability, and as a responsible business we have to act to remove the impact of these new developments.

The action we are taking is a three-year transformation programme which cuts across our whole business and sets out to restore our profitability,” he said.

The Calcium programme will cover activities throughout Arla, covering production, products, procurement, promotional marketing and people.

It aims at unleashing the full potential in Arla’s organisation by transforming ways of working, reducing bureaucracy and complexities, and cutting costs.

“Calcium has a high level of involvement amongst our employees and is galvanising and energising our people to deliver better returns for our farmers, and I am incredible proud of them,” said Peder Tuborgh.

Whilst the Calcium programme is already underway, it is too early to disclose publicly what the specific consequences will be within specific areas of the company, including what number of jobs that will be affected by the on-going work.

Arla expects to communicate openly about the process over the course of the programme.

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