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Arla Foods has posted what it calls “robust” annual results today, with the UK market a key factor in driving improved group performance.
Arla saw a group-wide 3.3% decline in revenues to €10.3bn, which the company said was inline with expectations as milk supply in Europe combined with China’s slowdown in demand and the Russian embargo have sent world market prices down.
The net profit of the Arla Group in 2015 accounts for €295m, of which the profit share of Arla Foods amba is €285m, corresponding to 2.8 per cent of group revenue - under its usual profit margin target of 3%.
CEO of Arla Foods, Peder Tuborgh said: “We knew 2015 would be tough on all markets, and it was. Dairy prices have been under pressure worldwide all year, and every dairy farmer has felt the consequences. It affected Arla’s milk price to our owners and our revenue in 2015. Having said that, Arla has achieved what we set out to do within our business in a year when the entire dairy industry has struggled.”
Arla’s overall volume of milk grew by approximately 622 million kilos in 2015 to 14.19 billion kilos.
In the UK the group grew volumes sold by approximately 200 million kg and delivered its highest rate of branded sales to date.
UK butter and spreads, including Lurpak and Anchor, was up 4.6%, liquid milk (Cravendale) was up 2.1%, Castello cheese was up 6.7% and Arla Lactofree was up 23%. Overall revenue in the UK increased from €2.8bn in 2014 to €2.9bn in 2015.
Peter Giørtz-Carlsen, executive vice president, Arla Foods UK, said: “A relentless focus on supporting our farmer owners, product innovation and continually delivering efficiencies and cost savings will ensure that we stay ahead of the game. Our performance success means that we will continue to invest in branded growth, and increase our marketing spend as well as our presence in the yogurt category in 2016.”
Morning update
There’s a smattering of news this morning on a relatively quiet day for grocery events.
German consumer goods firm Beiersdorf said it “continued on its profitable growth path in 2015”. In what it called “a difficult market environment” Beiersdorf recorded organic sales growth of 3% increasing both sales and earnings. In nominal terms, sales increased by 6.4%, from €6.3bn to €6.7bn. The consumer business segment saw sales growth of 3.6%. Group EBIT excluding special factors rose to €962 million, up from €861 million in the previous year. The EBIT margin improved to 14.4%, up from last year’s 13.7%.
Beiersdorf CEO Stefan Heidenreich said: “Beiersdorf was successful in 2015. Once again, we were able to increase our sales and earnings. We gained market share in our relevant markets and further improved Beiersdorf’s competitiveness and efficiency. Our results in 2015 clearly show that we have made Beiersdorf more resilient and that we continue on a sustainable, profitable growth path even under challenging economic conditions. This is a solid foundation for further economic success in 2016”, said Stefan F. Heidenreich, CEO of Beiersdorf AG.
Beiersdorf expects group sales to grow by 3-4% and a slightly improved EBIT margin in 2016.
Waitrose’s total sales excluding fuel were up 1% in the week to 13 February (which would translate to a like for like decline) with sales driven by Shrove Tuesday and Valentine’s Day. Online flower sales rose by 28% and in store gifts were up 35% to take home and leisure sales up 11%. Chilled, fruit & veg and bakery was up 2.4% and meat, fish, frozen and dairy up by 0.5% but ambient fell 0.3%.
The FTSE 100 has continued its better trading momentum, up another 0.7% to 5,902.2pts this morning.
Major early movers include Premier Foods (PFD), up 2.7% to 32.4p, Tate & Lyle, up 2.5% to 560.5p, Sainsbury’s (SBRY), up 2.4% to 255.6p and WH Smith (SMWH), up 1.8% to 1,783p.
Beiersdorf has fallen 2.5% to €79.48 in early trading.
Yesterday in the City
The FTSE 100 kept its head above water yesterday despite another sharp drop in the price of Brent crude oil.
Brent crude was down another 3% yesterday after hopes of a slowdown in production by Saudi Arabia, Russia and others were dashed, but the FTSE ended the day up 0.7% to 5,862.2pts.
It was far from the most dramatic day of trading for the grocery and fmcg sectors with no big earnings announcements and few significant movers.
What movers there were included Conviviality (CVR), up 2.6% to 206.3p, British American Tobacco (BATS), up 1.8% to 3,844p and Majestic Wine (MJW), up 1.5% to 378.8p.
Poundland (PLND) continued its difficult 2016 so far by dropping a further 2.5% to 151.2p, while Greencore (GNC) was down 1.8% to 365.7p and WH Smith (SMWH) was down 1.6% to 1,751p.
The food retailers had slightly differing fortunes with Sainsbury’s (SBRY) and Marks & Spencer (MKS) both up 1% to 249.6p and 428.9p respectively. Tesco (TSCO) and Morrisons (MRW) were both down 0.2% to 178.5p and 178.2p respectively.
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