Arla reports modest results

For the first six months of the 2004/05 financial year, Arla Foods posted a profit of DKK 323 million which represents an advance of DKK 33 million.

10/05/05 Arla Foods reported what it is calling a modest advance in the first half year, with uncertainty dawning for the second. Although Arla Foods’ result for the first half year was slightly better than expected, the estimate for the full year result remains uncertain. For the first six months of the 2004/05 financial year, Arla Foods posted a profit of DKK 323 million which represents an advance of DKK 33 million on 2003/04’s figure of DKK 290 million. The increase derives in part from the lower milk price paid to the Group’s co-operative members.

“During the first six months of 2003/04, the milk price was ten (Danish) are higher than now,” said Group Financial Director Jørn Wendel Andersen. “In the main, the fall in the milk price paid to co-operative members is a consequence of the EU agricultural reform where the restructuring of the EU subsidy schemes has meant that co-operative members receive less money for their milk from their dairy company. Instead they receive compensation as a direct subsidy.”

The uncertainty surrounding the full year result stems from the tough competitive pressures in the Group’s domestic markets and the impact of the low dollar on earnings. At its current rate of DKK 5.75, the dollar remains approximately 50 øre below the budgetted rate and there seems little likelihood of an early recovery. As approximately 25% of Arla Foods’ exports are settled in USD the Group is particularly exposed to fluctuations in the USD rate. Last month the proposed merger between Arla and Campina fell through.