Arla introduces cost-cutting program, ‘Calcium’ to save 400m euros

DENMARK – Arla has unveiled a new program, ‘Calcium’, a transformative cost-cutting initiative which it said will enhance efficiency, thus saving more than US$492 million for the next three years.

Based on Good Growth 2020 Arla strategy that aims to create value for farmer owners, the company remains committed to strong sustainable growth as it focuses on the trends that are driving the global food and dairy market.

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Cost savings and improved efficiencies are part of the strategy and ‘Calcium’ is a perfect match to create efficiencies with a long term goal of improving returns, maintain competitive milk price and reinvest into business areas that fuel growth.

Arla said the ambition to launch the program was pushed in line with external challenges it faces including impact from British pound and unfavourable developments in commodity markets.

“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,” said CEO of Arla Foods, Peder Tuborgh.

“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.”

Cost-saving initiatives will be implemented across its production processes, products, procurement, promotional marketing and people.

Arla believes by transforming ways of working, reducing bureaucracy and complexities, it will be able to save 400m Euros, 300m of which will go to farmers through the farmgate milk price.

This works to foster growth and improve profitability in eight of its dairy categories.

“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,” added Peder Tuborgh.

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