Dairy group Arla Foods UK has revealed that milk volumes to the "challenging middle market" decreased in the first quarter of last year.

However, in a trading update to the City, Arla said that volumes to supermarkets and household deliveries remained on track and that it had partially offset lower volumes by increasing prices.

Arla also warned that although it had passed on increased packaging, utility and energy costs through higher prices, the process had taken longer than hoped.

It therefore warned that the delay would have an impact on first half trading.

Arla also revealed plans for its milk production facility at Sheffield Park near Uckfield, East Sussex, which it recently said would close following the sale of its Express foodservice business last year.

The group said that processing would be transferred to other dairies and that the site would continue to operate as a milk collection and distribution depot.

Arla added that sales since it announced its preliminary results in November had been broadly in line with expectation and its branded products, including Lurpak, Anchor and Cravendale, had all achieved higher volumes than last year.

“We remain confident that trading in the second half-year will be in line with expectations,” Arla said.