Strong revenue growth for Arla UK in 2017

Arla Foods UK announced an 8.4% revenue increase in 2017 to £1.94bn (€2.21bn) in what is the European dairy co-op’s largest market.

The co-op’s overall European revenue increased by 7.3% to £9.02bn, returning the figure to the same level seen in 2015.

Increased revenues were not sufficient to deliver a higher gross profit however, dropping 5% to £2.01bn.

See also:  Hard Brexit best for UK milk prices

Volumes

The milk price Arla’s 12,500 farmer-owners received jumped significantly on the year, averaging 38.1 euro cents/kg, 29.2% up on the year, but still 6.7% behind the highs of 2014.

Behind Denmark, the UK was Arla’s second-largest producer of raw milk in 2017, delivering 3.2bn kilogrammes, down 0.2% compared to the previous year, accounting for 23% of the processor’s total deliveries.

Producers

Arla UK producer numbers have continued to shadow national trends, declining by 3.6% (90 producers) to 2,395 in 2017, 15% below the level seen five years ago.   

Producer numbers for the seven countries that supply Arla all fell in 2017, with the total number down 5.5% to 11,262 farmer-owners, 10.8% below its level in 2013.

Revenue

The financial results coincide with the company’s recent announcement of a £72m investment in its UK business.

“Arla was both the fastest-growing FMCG (fast-moving consumer goods) brand in the UK and the only leading dairy company delivering branded growth,” said Arla UK managing director, Tomas Pietrangeli.

“We also saw significant wins in both foodservice and own label offerings in 2017 such as the Morrisons’ fresh milk tender win.”

Mr Pietrangeli said the results put Arla in a strong position to deliver on its Good Growth 2020 strategy.

“Making innovative and inherently natural dairy products, produced responsibly and sustainably, enables us to continue to deliver in an ever-increasing consumer-driven grocery market,” he added.

Arla UK’s growth was burgeoned by the strong performance of its branded products, with Lurpak, Anchor and the Arla brand growing by 9%, 16% and 18% respectively.

Revenues were further helped by new products launched in the last three years, which accounted for 10% of branded net revenues.

“We welcome this positive news from Arla, which signals the strength of farmer-owned co-operative models and their ability to be able to drive growth while faced with a volatile global market, a weak currency and uncertainty surrounding Brexit negotiations,” said NFU National Dairy Board chairman and Arla supplier, Michael Oakes.

“As the UK’s biggest milk buyer, it is reassuring to the industry as a whole that Arla is committed to remaining in the UK market and investing to create future growth.”

Mr Oakes added: “Increased revenue should also help mitigate Arla farmers from the more severe effects of volatile milk prices and prevent a return to 2016 lows.”