DENMARK – Arla Foods, headquartered in Denmark, has reported an increase in sales attributed to higher milk prices and a net profit of 2.8% of revenue within its target range in 2017 annual results.
An increase in sales prices to US$1.2 billion and overall business growth was supported by strong performance by Arla Foods’ global brands, international markets, and Ingredients business despite market fluctuations.
Higher sales prices, increased branded share of sales, a better geographical and product mix contributed to 8.1% increase in group revenue to US$12.69 billion.
Arla’s commitment to strengthen growth was driven by the cooperative’s Good Growth 2020 Strategy focus to meet increasing demand for healthier and natural dairy products.
Strong gains were registered in many markets, propelled by organic launches in the Middle East, cream cheese launches in the US, and high demand for Arla’s innovative skyr and protein products in Europe.
“In 2017, we delivered a strong performance built on the good balance of brands, categories, and geographies that we have in our business to drive growth.
Most importantly, this enabled us to pay out significantly higher milk prices to our farmer owners and utilize our balance sheet to enable the substantial capital investments we are making in 2018,” said Peder Tuborgh, CEO Arla Foods.
In 2017, Arla grew its share of branded business to 44.6%, a strategy that enabled it register strong gains for Arla skyr in the German and significant achievement for Arla protein drinks.
Arla Foods also reaped well from its strategic brands Arla, Lurpak, Castello, Puck with Arla brand recording highest sales growth by 10.1% due to higher volumes in most of the markets.
16% of revenue was contributed by International commercial market, with high sales in the international, retail and foodservice.
Growth was enabled by increasing demand for dairy, organic products and foodservice in Sub-Saharan Africa, the Middle East and China respectively.
Europe showed solid performance in 2017 with total revenue increasing by 3.9% to US$8.09 billion owing to demand for natural, whole fat dairy products such as butter and cheese.
Growth in the UK was driven by investment and expansion of Arla’s sales channels through its foodservice division, Arla Pro during 2017 and co-branding of Arla Organic into McDonald’s contributing to a high growth rate on branded volumes and includes the relaunch of the 250mls Happy Meal milk.
In 2018, Arla says its focus remains on Good Growth 2020 Strategy as a key for strengthening brands and businesses.
With recently announced US$649.3 million investment and a strategic market growth in the Middle East and North Africa, China, South-East Asia, Sub-Saharan Africa, and the US, Arla targets US$12-13 million revenue in 2018.