Arla’s Profits Dip Amid Dairy Price Pressure

18 Feb 2016 --- Arla Foods, the dairy co-operative, has reported that its profits have dipped from €320 million ($356 million) to €295 million ($328 million) in 2015 amid a tough dairy market.

Arla is in the process of cutting 500 jobs across Europe, as it looks to streamline its organisation and help combat difficult trading amid price pressure in dairy farming.

Revenues for the year came in at €10.3 billion ($11.4 billion), which Arla said was in line with expectations.

Peter Tuborgh, chief executive, said: “We knew 2015 would be tough on all markets, and it was. Dairy prices have been under pressure worldwide all year, and every dairy farmer has felt the consequences. It affected Arla’s milk price to our owners and our revenue in 2015. Having said that, Arla has achieved what we set out to do within our business in a year when the entire dairy industry has struggled.”

“We have worked intensely to minimise the damage from the negative global trends by reducing costs and by maintaining and improving our market positions in Europe while creating new market positions for our branded products outside the EU.”

Earlier this year, Arla lost part of a key contact to supply Tesco. 

However, it is hoping that its ‘Good Growth Strategy 2020” will help it increase its revenue growth from two percent to at least four percent by 2020.

Turborgh added: “We are working fiercely to expand our branded business in growth regions outside the EU but also within our European lead markets. We are launching new innovations and have increased the marketing spend to support this.”

“We have gained market shares in most of our markets although the competition is fierce, with everyone competing for their share of the market while global prices are under pressure. We are confident that Arla has the right strategy to take the company and its owners forward as we focus on organic growth within our existing branded business.