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February 20, 2013

DENMARK: M&A, emerging markets boost Arla in 2012

Acquisitions and growth in markets outside the EU have helped dairy giant Arla Foods report higher annual sales and profits.

By Dean Best

Acquisitions and growth in markets outside the EU have helped dairy giant Arla Foods report higher annual sales and profits.

The company said today (20 February) its consolidated net profit jumped by more than a third in 2012 to DKK1.9bn (US$341.2m). Turnover was up 15% at DKK63.1bn. Arla said the results were “in line with expectations”.

In 2012, Arla made a number of mergers and acquisitions, including the combination of its UK business with local co-op Milk Link.

Arla, which owns brands including Lurpak butter and Castello cheese, saw growth in a number of markets outside the EU, where demand is under pressure. It pointed to a 28% increase in turnover in Russia last year.

“It became clear in 2012 that future opportunities lie in new growth markets. We have never experienced such a positive development in our profits outside the EU,” Arla CEO Peder Tuborgh said.

Arla said its “global” consumer brands, which include its namesake label and Lurpak, enjoyed rising sales. Castello sales fell as European consumers shied away from “slightly more expensive brands”, Arla said.

However, Arla admitted the “performance price” – or dividend – for its farmer-members fell in 2012. Tuborgh pointed to “market pressure” but said Arla’s farmers received a price “at the high end of the European spectrum for dairy companies”.

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