Arla Proud of Results in “Turbulent Year”

2007 was a year of unprecedented change in milk sourcing and global demand for milk. Consequently, Arla Foods implemented price increases in all markets, which has had a positive effect on the annual results.

25/02/08 Arla Foods has announced strong annual results for 2007. The profits amount to DKK 938 million - even after the company paid out DKK 1.2 billion more than expected to its co-operative members in the second half year.

2007 was a year of unprecedented change in milk sourcing and global demand for milk. Consequently, Arla Foods implemented price increases in all markets, which has had a positive effect on the annual results. Other factors positively affecting the annual results were the integration of Tholstrup Cheese in Denmark, Arla Ingman in Finland and, in particular, Arla Foods UK in addition to general efficiency measures across the group. Arla Foods' turnover for 2007 totalled DKK 47.7 billion, which is 2,2 DKK billion more than the year before.

"We should be proud of this result," says Arla Foods' CEO Peder Tuborgh. "Never before have we experienced such a turbulent year and such fluctuations in milk prices in global markets. We have succeeded in sustaining last year's excellent level of profit while delivering significant milk price increases to our owners. We have, therefore, succeeded in our two main aims: to secure our owners a high milk price and offer quality products at competitive prices."

Arla Foods' Chairman Ove Møberg is highly satisfied with the result:

"After a year of a rapid increases in the on account price, this is an extremely satisfactory result. The Supervisory Board has prepared a proposal for how the profits should be divided which we believe will represent the appropriate division between supplementary payment and consolidation. The supplementary payment of 2007 is higher than the year before, and the consolidation of owner certificates is on a par with 2006. The Supervisory Board looks forward to a productive discussion of our future business strategy where we are focused on ensuring the company's continued growth," says Ove Møberg.

The annual result of DKK 938 million means that, on average, Arla Foods has generated 247.0 Danish øre per kg milk sourced by the company from its co-operative members. The figure for 2006 was 227 øre per kg. sourced milk.

Arla Foods' Board of Representatives decides on profit distribution. The Group's Supervisory Board has today recommended to the Board of Representatives that profits should be distributed as follows: DKK 503 million for supplementary payments (equating to 8.4 Danish øre per kg. milk supplied), DKK 174 million for consolidation of supplier-based ownership certificates among the approx. 8,500 co-operative members. In addition, it is proposed that DKK 21 million to be allocated for reconsolidation and DKK 140 million to the company's strategy fund.

The Board of Representatives will meet on 28-29 February 2008 in Halmstad, Sweden where the final accounts will be approved.