Arla Results Good But Warns of Volatile Market

The cancellation of EU export subsidies in the first half of 2007 resulted in the company losing substantial revenues, coupled with foreign exchange rates falling significantly below those for the same period last year.

14/08/08 Arla Foods amba has announced half-year results in line with expectations. Net profit for January to June 2008 was DKK 481 million (£50.63 million).

Despite the good result, the company is operating in a challenging environment with a number of factors impacting on earnings. The cancellation of EU export subsidies in the first half of 2007 resulted in the company losing substantial revenues, coupled with foreign exchange rates falling significantly below those for the same period last year.

In the Middle East consumers are still uncertain about Danish products and this remains a concern. Finally, rising cost inflation and higher energy prices continue to put pressure on earnings for both Arla and its farmers.

Offsetting these challenges, an improvement in earnings has been achieved due to the company working to seek recovery of higher costs from its customer base to offset inflationary pressure on milk and commodities. In addition, the benefits from the extensive rationalisation programmes of recent years are being realised.

Commenting on the half-year results Peder Tuborgh, CEO of Arla Foods amba said: “We anticipate that 2008 will be more profitable than 2007, however the market will be more volatile with frequent price variations – partly due to the elimination of the EU’s regulatory mechanisms. The pressure on the price will be maintained during the second half of the year.“