Arla Foods reports positive half-yearly results but warns about hard Brexit impact

Arla argues that external factors that could negatively impact its full year expectations

Multinational dairy co-op Arla Foods has managed to increase its revenue and profits during the first half of its financial year.  

Revenue for Arla – owned by 10,300 dairy farmers in Sweden, Denmark, Germany, the UK, Belgium, Netherlands and Luxemburg – increased to £987m for the first half of 2019, 3% more than the same period in 2018.

During the six months, Arla was also able to provide its farmer-owners the same milk price. Revenue increased for some of its brands such as BoB (46%), Lactofree (6%), Organic (12%) and Arla Pro (48%), helping to drive the total Arla strategic branded revenue growth by 7%.

The co-op said the positive results had been determined by decreased market volatility, the success of its transformation programme, a strong branded agenda and a co-operative mindset.

Natalie Knight, group CFO, said: “We have continued to build engagement and relevance of our brands through innovative products, brand activation and digital content. Consumers are pushing for more nourishing and sustainable food choices, which is why our intensified climate agenda will help increase both the understanding of our farmer owned co-operative model and our competitive advantage”.

In October 2018 Arla launched its UK 360 programme, which aims to develop an animal welfare and farm management standard for its farmer members. The co-op is working with retailers to support farmers during the transition.

Also in 2018, Arla started a three-year transformation programme called Calcium which has delivered €97m of the €75-100m full year target for 2019.

The co-op believed the programme could deliver at €100m in 2019 although it admits that savings will be significantly lower in the second half of the year compared to the first half.

In terms of full-year expectations, Arla warns that external factors that could negatively impact these, along with the volatility of the global milk markets. The co-op’s revenue projections for full year 2019 are €10.2-10.6bn with the net profit share at 2.8-3.2% of the revenue. 

A potential no-deal Brexit could however negatively impact the outlook, warns Arla.