Arla Foods UK enjoyed a “steady” start to 2018 with year-on-year net revenue growing by 2.3% to £961m, according to its first half results, published today.
The dairy co-op’s UK division (which represents its largest market) led the way in “driving growth” across the UK dairy sector, said MD Ash Amirahmadi.
It came despite “globally challenging market conditions”, including the ongoing impact of the weak pound and volatility around fat and protein prices. This prompted the supplier to take “urgent action to repair our bottom line”, added Arla Foods group CEO Peder Tuborgh, with the launch of global cost-saving programme Project Calcium in April.
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Growth in the UK was driven by a 6.7% increase in volume sales for Arla’s entire branded portfolio, supported by a 9.3% increase in volume sales of products sold under the Arla masterbrand, which includes products such as Skyr and Cravendale.
The 38.1% volume sales growth of its Best of Both milk was singled out as a key highlight within Arla’s masterbrand portfolio. However, standalone brands such as Lurpak (with volume sales up 2.2%) and Castello (up 8.8%) also performed well in the UK, while Arla’s foodservice range Arla Pro grew by 52.82%.
“Our decision to invest to build capability in the growing channels of foodservice, online and convenience is paying off and will continue to do so as we further develop the UK business,” said Amirahmadi.
Despite 2018 beginning with what Tuborgh described as a “tough start” to the year, gobal sales for the total Arla group were also up, with a 3% increase in branded volumes contributing to a total sales increase of 2.2% compared to the first half of 2017 to €5.1bn (£4.6bn).
This was supported by “strong performance” by the Arla masterbrand, Lurpak, Puck and Castello.
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The percentage of Arla’s global business that was branded rose from 44.1% to 44.6%, putting the supplier on course to reach its target of 45% by 2020.
Arla said it expected net profit for the year to be within the target range of 2.8% to 3.2% of group revenue, while Project Calcium, which aims to reduce costs within the global business by €400m (£360m) by 2021, was already “starting to deliver”, Tuborgh added.
“Every week we see steady progress across the programme,” he said, with Arla expecting a “positive contribution” of at least €50m (£45m), up from the initially forecasted €30m (£27m), by the end of the year.
The dairy giant has also announced plans to build a new innovation centre in Nr. Vium, Denmark to “unleash the wonders of whey”.
Part of Arla Foods Ingredients, the new centre - which is expected to open in 2021 - would use “cutting edge research and technology to explore milk and whey to their full potential as ingredients for a wide range of nutrition”, Tuborgh said.
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