Arla Foods notched up an unprecedented year for group revenues but predicts a rise in raw milk volumes will weigh on sales in 2026.
The Denmark-headquartered group today (18 February) reported 2025 revenue increased 9.4% to a “record” €15.1bn ($17.8bn) based on a “record intake” of milk of 14.3bn kilograms.
However, for the new year, Arla provided a group sales revenue outlook of €13bn to €14.1bn, “reflecting the lower market prices compared to the highs of early 2025”.
Meanwhile, the planned merger with Germany's DMK Group, which is still under regulatory review, is still on target to be completed in the first half of 2026. The timely conclusion of the deal would provide an added to boost to revenue.
The cooperative said its total branded revenue rose by 6.9% to €7.03bn as a result of its “ability to maintain rightful price points during a period of inflation”.
Arla added in the commentary: “While these price levels impacted volumes in the first half of the year, the underlying demand remained intact. As purchasing power strengthened, consumers returned to the products they trust.”
Volume momentum accelerated to 1.8% in the second half to deliver a full-year volume-growth print of 0.2 %. Arla’s group net profit rose 3.5% to €415m.
Looking ahead to the new year, Arla said: “While lower price levels will impact total revenue, they are also expected to support consumer purchasing power.
"Consequently, Arla forecasts a return to stronger growth for its strategic brands, with branded volume-driven revenue growth expected in the range of 1 to 3%.”
Those brands, the likes of Arla, Lurpak, Puck and Castello, posted 0.2% growth in 2025.
Arla also anticipates the “volatile market conditions” it saw late last year will persist in 2026 before ironing out as the year progresses as “supply and demand dynamics adjust”.
CEO Peder Tuborgh commented: “We enter 2026 fully prepared for the market conditions ahead. The pressure from high milk volumes will characterise the first part of the year, but we also see the opportunities this brings.
“As prices adjust, we expect consumers to return to the dairy aisle with renewed strength, driving growth for our strategic brands. We are ready to capture that demand while maintaining a strict focus on efficiency to ensure we deliver on our targets.”
Europe accounted for 57.8% of Arla's group revenues last year, rising 7.8% to €8.7bn. The international segment made up 16.3%, with sales up 1% at €2.46bn.
The rest is split between ingredients and global industry operations.
Looking back at the year, Arla said milk supply increased “significantly” in some countries – up 7.7% in the UK and 3.6% in its home market of Denmark, for instance.
“The surplus supply forced global trading prices down, putting immediate pressure on the general value of milk across the industry,” Arla said.
Tuborgh added: “We are seeing a natural market cycle where high milk production brings prices down across the sector. While the abrupt increase creates challenges, our business stands on strong pillars.
"The combination of our brands, our efficiency, and a standout year for our ingredients business has allowed us to deliver a competitive result for our owners."
