Arla’s UK income hits £961 million

Arla Foods’ UK arm has seen its revenue grow by 2.3% in the first half of 2018 with a net revenue of £961 million.

Across the group, 2018 savings from its Calcium transformation project are also expected to exceed its €30 million target.

Growth areas

The 6.7% boost to branded sales volume was supported by the core Arla brand at 9.3% growth, Castello at 8.8% and Lurpak at 2.2%.

Within the Arla portfolio, the firm’s foodservice range Arla Pro grew by 52.82%, whilst sales of B.O.B (Best of Both) grew at 38.12%.

It comes despite globally challenging market conditions, including the impact of a continued weak pound and changes in fat and protein prices.

Arla Foods UK managing director, Ash Amirahmadi said: “Year-on-year, Arla’s portfolio continues to lead the way in driving growth across the UK dairy sector.

Our decision to invest to build capability in the growing channels of foodservice, online and convenience is paying off and will continue to do so as we further develop the UK business.

At a global level across the farmer-owned cooperative, total group revenue grew by 2.2% to €5.1 billion.

Profit share

Each year, the group targets an annual net profit share in the range of 2.8-3.2% of revenue.

In the first half year of 2018, Arla delivered a net profit share of 2.2%, up from last half year’s profit share of 2.1%. The company expects to reach its full-year net profit share to be within the 2.8-3.2% target range.

Calcium delivering

Early in 2018, the three-year transformation and efficiency programme, Calcium, was launched to reduce cost by more than €400 million across the Group.

For the full-year of 2018, Arla expects Calcium to deliver a positive contribution of at least €50 million, up from the initially forecasted €30 million.

Arla Foods chief executive Peder Tuborgh said: “It was a tough start to 2018 as we took urgent action to repair our bottom line.

“This urgency delivered a positive result as we were able to improve our profitability and the performance of our milk price over the period.”

“However, there is more work to be done as we continue to relentlessly execute our transformation programme, Calcium, which will further improve our performance.”

Of the €400 million Calcium is expected to deliver by 2021, Arla aims to direct €300 million to its farmer-owners through the pre-paid milk price while reinvesting €100 million into areas that fuel growth.

Full-year expectations

A spokesman said the firm will remain focused on “balancing branded growth in a higher retail price environment” throughout the year ahead.

Continued execution of the transformation programme will be the company’s other key priority.

Arla’s revenue outlook for the full year 2018 is expected to be €10.0-10.5 billion and Arla’s branded growth is expected to be at the high-end of the previously communicated target range of 1.0-3.5%.

Net profit share for 2018 is expected in the targeted 2.8-3.2 range.