European dairy co-op Arla has reported a record revenue of €15.1bn in its annual report for 2025, with a net profit of €415m, hailing a “highly competitive” performance.
The Denmark-based multinational said it set new records across the business, achieving its highest ever milk intake of 14.3 billion kg, high commodity prices in the first half of the year and exceptional growth in the ingredients business.
Arla said it achieved a competitive performance price of 56.4 cent/kg, and is proposing a supplementary payment of 2.2 cent/kg milk to its farmer owners.
“Our historic performance demonstrates that our strategy is working,” said CEO Peder Tuborgh. “We have strengthened our market position, delivered record value for our farmer owners and taken important steps toward a more sustainable future.”
But the co-op said the result comes against a backdrop of market volatility, which often affects the dairy sector. While the year began with a strong demand and a balanced supply, the landscape shifted dramatically in the second half, when exceptional weather conditions and strong feed harvests across Europe triggered a rapid surge in milk volumes.
“I am pleased we can propose a solid supplementary payment after a year that demanded immense agility from our owners,” said chair Jan Toft Nørgaard. “We shifted from tight supply of milk to a sudden abundance, which naturally creates pressure on the market. As a farmer, it gives me confidence to see our co-operative navigate this volatility and once again prove its worth as a strong, competitive home for our milk.”
Towards the second half of 2025, Arla’s report explains, milk supply increased significantly across Europe including key Arla markets like the UK and Denmark (7.7 % and 3.6 % for 2025 compared to 2024, respectively).
“This sudden abundance, one of the sharpest uplifts in recent years, triggered a classic shift in market dynamics,” the report adds. “The surplus supply forced global trading prices down, putting immediate pressure on the general value of milk across the industry.
“Despite this pressure, Arla’s strong business mix ensured stability in the full-year performance. By leveraging a high-performing ingredients business, strong positions in retail and foodservice, and delivering higher than expected efficiency gains of €158m, the co-operative successfully navigated the drop in global market prices.”
Tuborgh said: “It is in volatile times like these that our strategy truly proves its worth. We are seeing a natural market cycle where high milk production brings prices down across the sector. While the abrupt increase creates challenges, our business stands on strong pillars. The combination of our brands, our efficiency, and a standout year for our ingredients business has allowed us to deliver a competitive result for our owners.“
A key factor in the year’s strong result was the exceptional performance of Arla Foods Ingredients (AFI), says the report. The subsidiary delivered a revenue increase of 43.1% to €1,452m, driven by strong global demand for value-added protein and the successful integration of the newly acquired Whey Nutrition business from Volac (now AFI Felinfach).
Despite the challenging market end to the year, Arla says it continued to invest in transformative projects in 2025, committing to a high investment level of €731m, directing capital towards expanding capacity in high-growth categories.
Key strategic decisions included the creation of a UHT Centre of Excellence in Lockerbie, Scotland, to meet rising demand for long-life milk, and a significant expansion of the Holstebro Dairy in Denmark to boost cream cheese production by an additional 16,000 tonnes.
Arla also greenlit expansions for its Puck brand in Bahrain and a new Skyr line at Linköping Dairy in Sweden, reinforcing its commitment to broadening the portfolio across core markets.
“While we navigate the current market corrections, our eyes remain firmly on the long term,” said Tuborgh. “By investing in these key growth engines, we are sending a clear signal: We believe in the future of dairy. We are taking the responsibility to ensure that nutritious, sustainable dairy is available to the world, and we are building the capacity to lead that charge.”
In parallel with its internal investments, Arla says it is continuing work on the planned merger with DMK Group. Approved by the boards of both co-operatives last June, “the merger aims to unite two of Europe’s leading dairy co-operatives with highly complementary portfolios to enhance resilience and drive innovation”.
The merger is currently undergoing regulatory review, which is expected to conclude in the first half of 2026.
Arla says its strategic brands delivered significant value in 2025. Total branded revenue increased by 6.9% to €7,029m, “driven by the co-operative’s ability to maintain rightful price points during a period of inflation”.
In terms of sustainability, Arla reduced Scope 1 and 2 emissions from it operations by a further 5.6 percentage points, reaching a cumulative reduction of 43.6% compared to the 2015 baseline. This was driven by continued energy efficiency measures and the shift to clean energy, culminating in Arla reaching 100% renewable electricity at all European production sites by the end of the year.
“On farm, the data shows that owners are farming more efficiently,” the report adds, with the emissions intensity per kilo of milk decreasing by 0.4 percentage points. Arla has now achieved a total reduction of 9.9% per kg of milk produced compared to the 2020 baseline.
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While efficiency gains were achieved per kilo of milk, the significant surge in milk volumes received by the co-operative led to a small increase in scope 3 flag emissions of 4.4 percentage points.
Looking ahead, Arla warns that the volatile market conditions will persist into the new year, with the supply surge seen in the fourth quarter expected to continue in early 2026, putting pressure on global dairy price levels. But Arla predicts a partial normalisation later in the year as supply and demand dynamics adjust.
While lower price levels will impact total revenue, they are also expected to support consumer purchasing power, says Arla, which forecasts a return to stronger growth for its strategic brands, with branded volume-driven revenue growth expected in the range of 1 to 3%.
Group revenue for 2026 is expected to be in the range of €13.3-14.1bn, reflecting the lower market prices compared to the highs of early 2025. Net profit share is expected to remain within the target range of 2.8 to 3.2%.
Arla says it will continue its “disciplined focus on costs, targeting efficiency gains of €90-110m”.
“We enter 2026 fully prepared for the market conditions ahead,” said Tuborgh. “The pressure from high milk volumes will characterise the first part of the year, but we also see the opportunities this brings.
“As prices adjust, we expect consumers to return to the dairy aisle with renewed strength, driving growth for our strategic brands. We are ready to capture that demand while maintaining a strict focus on efficiency to ensure we deliver on our targets.”
