Arla Foods raises full-year outlook despite sales decline and rising commodity prices
28 Aug 2024 --- Arla Foods Group has raised its full-year revenue outlook to land between €13.4 billion and 13.9 billion (US$14.9 billion and US$15.5 billion) despite a sales decline in its first half-year results for 2024.
The outlook has been raised from the initial projection of between €13.2 billion and 13.7 billion (US$14.7 billion and US$15.2 billion). The performance price for the first six months of 2024 was €0.47 per kg (US$0.53 per kg), while the total Arla Group revenue ended at €6.6 billion (US$7.3 billion), down from €7.07 billion (US$7.8 billion) in the same period the previous year.
The company says it still expects to deliver a profit between 2.8 and 3.2%. In the first half of 2024, Arla achieved a net profit of €167 million (US$186 million).
Although price and revenue performance for the first half of 2024 was slightly lower than expected, Arla Foods says it remains optimistic about the second half of the year. It expects to see “the strong market momentum from the first half of 2024 continue into the second half of 2024.”
“We are satisfied that the momentum created by our farmer-owners and employees in 2023 has continued into 2024, and today, Arla is able to announce a robust half-year result with a competitive milk price that paves the way for enhanced sustainability efforts going forward,” says Peder Tuborgh, CEO at Arla Foods.
Rising milk prices
The company shares that the first half-year performance and rising commodity prices have led to a €0.5 per kg (US$0.56 per kg) increase in milk prices compared to the second half of 2023. There will also be a half-year supplementary payment to farmer-owners of €0.1 per kg (US$0.11 per kg) of milk and progress on its sustainability initiatives through its FarmAhead Technology program.
“We are proud that Arla Foods is performing well in a volatile global market. Customers around the world are demanding our products, we are ready to deliver, and we will continue to invest in the company’s future,” adds Tuborgh.
Arla’s strategic brands had volume-driven revenue growth of 4.1% in the first half of 2024, compared to a decrease of 6.0% in the first half of 2023. The growth was due to the performance of its Lurpak, Puck and Arla brands, which respectively grew volumes by 7.9%, 4.4% and 3.8% in the first half of 2024.
Dairy cooperative Fonterra recently revealed a rise in its Farmgate Milk Price midpoint for 2024/25, adding that the move would enable farmers to be paid earlier this season.
