Brands and transformation deliver strong 2019 results for Arla
Arla’s branded sales volume grew 5.1 per cent in 2019
In 2019 farmer-owned Arla Foods exceeded expectations for global branded sales whilst simultaneously transforming its business securing cost-savings at the top end of expectations through the Calcium programme. This enabled Arla to deliver a stable milk price to its farmers owners and a strong cash flow further strengthened the company’s investment power in future growth.
In 2019 farmer-owned Arla Foods exceeded expectations for global branded sales whilst simultaneously transforming its business securing cost-savings at the top end of expectations through the Calcium programme. This enabled Arla to deliver a stable milk price to its farmers owners and a strong cash flow further strengthened the company’s investment power in future growth. Arla’s branded sales volume grew 5.1 per cent in 2019, compared to 3.1 per cent in 2018, mainly driven by the Arla brand. Global revenues of the Arla brand grew to EUR 3,033 million compared to EUR 2,875 million in 2018, driven by a series of successful launches across its Lactofree and organic ranges, the introduction of new flexitarian options as well as the rapid growth of Skyr in core European markets. Lurpak performance underlined the resurgent popularity of butter both for cooking and everyday consumption. Innovations such as the Lurpak softest launch in the UK and the new butter box packaging for block butter, with sales of over 100,000 tonnes. Lurpak revenue increased to EUR 588 million, compared to EUR 561 million last year. Puck, the company’s leading brand in the Middle East and North Africa (MENA) grew revenue to EUR 363 million, compared to EUR 352 million last year, driven by the processed and cream cheese business. Castello specialty cheese revenue stayed constant at EUR 179 million, despite a challenging and competitive environment across Europe and selected international markets.Milk based beverage brands increased revenue by EUR 20 million to EUR 207 million, mainly driven by Starbucks, which is sold in Europe, Middle East and Africa. “Arla’s global brands continue to be at the heart of our business and in 2019 we have clearly strengthened consumer trust in our brands. We delivered a range of popular dairy products that capitalized on increasing consumer demand for healthy and sustainable food choices, which helped us exceed our expectations for branded growth in 2019,” says CFO of Arla Foods, Natalie Knight. To build on its position as a leading global dairy business, Arla focuses its activities on four commercial segments. Arla’s Europe segment represents just over 60 per cent of the business, core brands delivered a 2.9 per cent branded volume growth, compared to 2.5 per cent in 2018 with growth across all markets. Especiallyin the UK that delivered 8,8 per cent branded volume growth. However, the overall revenue in the Europe segment decreased by EUR 154 million to EUR 6,353 million, largely as a result of stepping out of unprofitable private label contracts and exchange rates.Arla’s International segment represents 17 per cent of the business. International delivered overall double-digit branded volume revenue growth of 10.3 per cent with growth across all regions except North America. Revenue increased EUR 226 million, to EUR 1,802 million, which is the highest increase in the past 3 years. On top of this, the acquisition of the state-of-the art production facility in Bahrain from Mondeléz International and the long term Kraft brand license for their cheese business in MENA enables Arla to step change its production capability in the region to enable future growth ambitions. Arla Foods Ingredients (AFI) a 100% owned subsidiary of Arla Foods, increased revenue by EUR 58 million to EUR 710 million, driven by higher sales of value-added products within the pediatric, health & performance and food segments, as well as higher prices and the full-year effect from the acquisition of the remaining 50 per cent share of Arla Foods Ingredients S.A. Argentina in 2018. Trading, which is business to business commodity sales decreased revenue by EUR 28 million to EUR 1,662 million compared to EUR 1,690 million last year, mainly due to lower volumes and negative currency effects.
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