Arla Invests Heavily in Dairy Infrastructure

Arla’s Board of Directors has approved the Group’s investment plan for 2012, amounting to $317 million. The investments will primarily aim at improving dairy structure and increasing capacity.

Jan 26 2012 --- In 2012 Arla will invest in a stronger dairy structure, the processing of whey ingredients and more focus on growth markets, with the aim of increasing Arla’s international competitiveness. At the same time, many of the investments will generate CO2 and energy savings.

Arla’s Board of Directors has approved the Group’s investment plan for 2012, amounting to $317 million. The investments will primarily aim at improving dairy structure and increasing capacity.

Speaking to FoodIngredientsFirst Arla's Chief Press Officer, Theis Brøgger said: "Whey is the best single product investment for us for the year ahead. It is performing best for us, it is a very growing business, the past couple of years the turnover has doubled."

Brøgger said that environmental efficiency and financial efficiency are increasingly intertwined: "We are looking mainly at trucks with more energy efficiency, as fuel use is increasingly expensive. Investing in our dairy sites also allows for more efficient production and energy use. We are finding as we go through our sites there are great savings to be made by cutting emissions, in addition to reducing our climate impact."

The investments are being made at a time of economic crisis and slow consumer spending in the US and Europe.

“In times of crisis, it’s vital that we maintain our competitiveness. We believe that these investments in increased efficiency and rationalisation will support our long-term competitiveness and growth ambitions,” says CEO Peder Tuborgh.

Of the total investment forecast of $317 Million, approximately half has been allocated to capacity and rationalisation projects, explains Vice CEO Povl Krogsgaard, who oversees Arla’s overall investment plan.

“We have prioritised investments aimed at simplifying our dairy structure and increasing capacity as well as investments with a quick pay-back. Our aim is efficiency and lower production costs.”

One of the biggest single investment areas in 2012 will be at Arla Foods Ingredients (AFI) where $43 million will be invested in various projects, including a new drying tower at Denmark Protein in Videbæk. The tower, which is currently under construction, is an essential component in Arla’s joint-venture with the German dairy company, DMK.

"We have plans for further development in the Danish area. We are currently developing plans for a joint production site in northern Germany. We have just started work on our new milk and dairy facility just outside London. That is one of the major investments for 2012 and it will cost around £500 million" Brøgger said.

In 2012, the Arla group expects to post a turnover of approx. $10.4 billion.

By Michael Holt