Arla Foods, a leading supplier of fresh dairy products to major retailers and foodservice customers, has announced its highest ever performance price and an improved balance sheet, the result of a strong European business and rapid growth in growth markets outside the EU - at a time when Arla's most important ingredient, milk, has increased in value worldwide.
Arla's global business benefitted from a strong base in its core markets in Europe in 2013 as well as a significant increase in sales within its growth markets outside the EU. Globally, the demand for dairy products exceeded the supply of milk, which increased the value of milk and the overall price level of dairy products.
The key figure in any Arla financial report is the performance price, which indicates how much value Arla has been able to generate from each kilo of milk supplied to the company by the cooperative owners in Sweden, Denmark, Germany, the UK, Belgium and Luxembourg throughout the year. The 2013 performance price amounts to 33.91 pence a kilo with a total volume of owner milk of 9.5 billion kilos.
Arla's total revenue rose by over £1.1 billion to £8.4 billion, up by 16.6%. The company's net profit was the planned 3% of the revenue, equal to £250 million.
"Milk has become a more valuable commodity globally, and that naturally has a positive effect on our results," said Arla Foods' CEO Peder Tuborgh. "With this tailwind we have driven our business forward in 2013 - with a strong efficient base in Europe, promising growth rates in Russia, China, the Middle East and Africa as well as a very profitable ingredients business in Arla Foods Ingredients.
"The Performance Price is up by 12.5% per cent in 2013, and that has been much needed among our farmers," commented Arla Foods' board of directors chairman Åke Hantoft. "The higher milk price strengthens the economy on the farms. The milk production is rising, and the relationship between a farmer's profits and costs has been improved. This development was necessary and must be carried on in 2014."