Registering profits of DKK933m (US$164.83m) for the year ended 31 December, a result significantly above the previous year’s DKK30m profit despite the Middle Eastern boycott of Danish goods, Arla chairman Knud Erik Jensen said that the result was a positive sign for the dairy co-operative and expressed optimism that Middle Eastern sales will return to pre-boycott levels. 

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“All things considered, and here I’m particularly referring to the widespread and unforeseen consumer boycott in the Middle East, we can take satisfaction in the year’s result,” Jensen said. 


The boycott in the Middle East, which was sparked by the publication of cartoons depicting the prophet Mohammad in a Danish newspaper, had a negative impact on earnings of DKK450m. This, Arla said, was offset by extraordinary income from the disposal of businesses and real estate.


“With regard to the Middle East, the outcome has been slightly worse than expected last spring,” Jensen added. “However, the fact that we’re back in the Middle East and expect to return to previous levels of sales by the end of 2007 gives us grounds for cautious optimism”.


The company said that results were bolstered by a series of cost-cutting measures. However, it did warn that the reduction in the EU’s export subsidies and increasing European competition has had a negative impact on the result.

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“Operating profits were significantly affected, owing to the Middle East boycott and the competitive situation in Europe which viewed in isolation is unsatisfactory. Overall, however, the result is satisfactory. It is gratifying that the company has been able to return to the Middle Eastern market and to implement the strategy as planned. The strategy aims at the continued strengthening of the core business and disposal of non-core activities. Both factors have impacted on the result,” group CEO Peder Tuborgh noted.

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