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January 26, 2012

GLOBAL: Arla outlines 2012 investment plans

Dairy giant Arla Foods plans to invest DKK1.88bn (US$333m) this year to increase capacity, improve efficiency and make the company more competitive.

Dairy giant Arla Foods plans to invest DKK1.88bn (US$333m) this year to increase capacity, improve efficiency and make the company more competitive.

Arla said the money will be spent on improving its processing of whey ingredients and increasing its competitiveness in growth markets, despite the faltering global economy and slow consumer spending in Europe.

“In times of crisis, it’s vital that we maintain our competitiveness. We believe that these investments in increased efficiency and rationalisation will support our long-term competitiveness and growth ambitions,” CEO Peder Tuborgh said.

The company said around half of the money will go to “capacity and rationalisation projects”. Details have yet to be disclosed and, although a spokesman said the changes will result in some job losses, he insisted it eventually result in a net increase in staff.

One of the biggest single areas of investment will be at Arla’s food ingredients division where DKK246m will be invested in various projects, including a new drying tower at its Denmark Protein unit. The tower, which is currently under construction, is an “essential component” in Arla’s whey joint venture with German dairy company DMK.

Vice CEO Povl Krogsgaard, said: “We’ve never invested so much in Arla Food Ingredients before, but we’re doing so now because the subsidiary is performing extremely well and its results are helping to fund strategic initiatives in other areas. AFI is a world leader in its field and our investments will help us build on this.”

The company said growth in demand for high quality infant formulas, which use whey protein, in developing nations is a key component of AFI’s success.

Some of the money will also be spent on Arla’s operations in China and Russia, as well as a project to double capacity at its dairy in Riyadh, Saudi Arabia. In 2012, the company expects to post a turnover of around DKK59bn.

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