Arla brand range

Lactofree, Big Milk, and Protein saw significant growth

Arla Foods has hailed the impact of turnaround plan Project Calcium after it helped the dairy giant deliver cost savings “far beyond targets”.

The efficiency drive, launched last April in a bid to cut €400m (£347m) of costs from Arla’s global business by 2021, had helped the dairy co-op “regain its competitiveness” it said in its annual results this week.

Savings of €114m in 2018 had dwarfed its initial target of €30m, Arla said. Its performance had been buoyed - despite a “difficult first quarter” - by group sales growth of just under 1% to €10.4bn (£9bn) for the year, driven by a 3.1% increase in branded sales volumes. A net profit of €290m also allowed it to pay out a one-off bonus to farmers, worth the equivalent of 2p per litre.

Arla’s largest market, the UK, also contributed to a solid year for the global business, with total revenues from retail and foodservice exceeding £2bn for the first time as it climbed by 3.3% to reach £2.01bn, compared with £1.94bn in 2017.

Read more: Arla to end cheese production in Wales and close its Llandyrnog creamery

Sales had been underpinned by 8.6% value growth for products under the Arla masterbrand, with its Best Of Both milk seeing sales rise by 39.2%, and Arla Organic up 80%.

Arla said other brands such as Big Milk, Arla Protein and Lactofree also saw significant growth. Meanwhile, its branded portfolio delivered a 6.8% increase in sales, with Lurpak up 5.8% and Anchor up 3.5%. 

Elsewhere, sales into foodservice through the Arla Pro division grew by 49.3%, with revenues from its long-term partnership with Starbucks growing by 17.8%.

“We continue to face major challenges, such as volatility in the global milk market and on-going uncertainty about Brexit,” said Arla Foods UK MD Ash Amirahmadi. 

“But despite these factors, we have delivered a strong performance and have been able to return all of the net profit for 2018 to our farmer owners, showing the benefits of our cooperative, farmer-owned model.”