Arla Foods Reports Strong H1 2024 Results
Source: DairyNews.today
Arla Foods has delivered a robust performance in the first half of 2024, continuing the positive momentum from late 2023. This strong financial outcome has enabled the company to increase milk prices by 5 EUR cents per kilogram compared to the second half of 2023.
Additionally, Arla will provide its farmer owners with a supplementary payment of 1 EUR cent per kilogram of milk, reflecting the company's commitment to rewarding its stakeholders.
Peder Tuborgh, CEO of Arla Foods, expressed satisfaction with the company's progress, stating, "The momentum generated by our farmers and employees in 2023 has carried through to 2024. Arla is proud to report a strong half-year performance, which supports our competitive milk pricing and enhances our sustainability efforts moving forward."
Strategic Growth and Financial Highlights
The increase in milk prices and supplementary payments have been largely driven by rising commodity prices, the success of Arla’s “Fund Our Future” transformation and efficiency program, and a return to growth in branded volumes. In the first half of 2024, Arla's strategic brands achieved a 4.1% revenue growth, reversing a 6.0% decline fr om the same period in 2023. Key brands such as Lurpak®, Puck®, and Arla® saw volume increases of 7.9%, 4.4%, and 3.8% respectively.
For the first half of 2024, Arla reported a performance price of 47.5 EUR cents per kilogram, with total revenue reaching EUR 6.6 billion. The company achieved a net profit of EUR 167 million, underscoring its financial stability and operational efficiency. Torben Dahl Nyholm, CFO of Arla Foods, highlighted the significance of these results, noting, "We are pleased to deliver a competitive milk price while also surpassing expectations in branded growth, demonstrating the strength of our portfolio and strategic execution."
FarmAhead™ Technology Drives Sustainability Progress
In line with its commitment to sustainability, Arla has consolidated its sustainability initiatives under the FarmAhead™ Technology platform. Aiming for a 30% reduction in on-farm emissions by 2030, Arla has already achieved a significant reduction of nearly 1 million tons of CO2e over the past two years. The FarmAhead™ Incentive program, a key component of this initiative, rewards farmers for their environmental sustainability activities by directly linking them to the milk price.
Since its launch in July 2023, the average points earned by Arla farmers under this program have increased from 49 to 53 by the second quarter of 2024. Tuborgh emphasized the importance of this progress, stating, "The competitive milk price and supplementary payments empower our farmers to invest further in sustainability. Our farmer owners are making meaningful strides in reducing emissions and improving their environmental performance."
Arla is also expanding the commercial arm of FarmAhead™, offering dairy products with claimable CO2e reductions at a premium price. This initiative has gained traction, with all of Arla’s Danish retail and foodservice customers joining the FarmAhead™ Customer Partnership in June 2024, following the participation of several UK customers last year.
Outlook for the Second Half of 2024
Looking ahead, Arla anticipates continued market volatility due to geopolitical tensions and economic uncertainty. However, the company expects the positive trend in consumer purchasing power from the first half of 2024 to persist, particularly in Europe, wh ere inflationary pressures are easing, and wages are rising. This should support ongoing demand for dairy products, despite the anticipated higher retail prices driven by increased commodity costs.
Arla has adjusted its full-year revenue expectations upward to EUR 13.4-13.9 billion, with anticipated profit margins remaining in the 2.8-3.2% range. The company also raised its forecast for strategic branded revenue growth from 1.0-3.0% to 3.0-4.0%.
Arla remains committed to its climate strategy, with plans to maintain the current pace of emission reduction efforts. The company is confident in achieving its 2030 targets of a 63% reduction in Scope 1 and 2 emissions and a 30% reduction in Scope 3 emissions per kilogram of milk and whey.
"We are proud of Arla Foods' performance in a challenging global market. Our products are in high demand, and we are well-positioned to meet this demand while continuing to invest in our future," concluded Tuborgh.
Peder Tuborgh, CEO of Arla Foods, expressed satisfaction with the company's progress, stating, "The momentum generated by our farmers and employees in 2023 has carried through to 2024. Arla is proud to report a strong half-year performance, which supports our competitive milk pricing and enhances our sustainability efforts moving forward."
Strategic Growth and Financial Highlights
The increase in milk prices and supplementary payments have been largely driven by rising commodity prices, the success of Arla’s “Fund Our Future” transformation and efficiency program, and a return to growth in branded volumes. In the first half of 2024, Arla's strategic brands achieved a 4.1% revenue growth, reversing a 6.0% decline fr om the same period in 2023. Key brands such as Lurpak®, Puck®, and Arla® saw volume increases of 7.9%, 4.4%, and 3.8% respectively.
For the first half of 2024, Arla reported a performance price of 47.5 EUR cents per kilogram, with total revenue reaching EUR 6.6 billion. The company achieved a net profit of EUR 167 million, underscoring its financial stability and operational efficiency. Torben Dahl Nyholm, CFO of Arla Foods, highlighted the significance of these results, noting, "We are pleased to deliver a competitive milk price while also surpassing expectations in branded growth, demonstrating the strength of our portfolio and strategic execution."
FarmAhead™ Technology Drives Sustainability Progress
In line with its commitment to sustainability, Arla has consolidated its sustainability initiatives under the FarmAhead™ Technology platform. Aiming for a 30% reduction in on-farm emissions by 2030, Arla has already achieved a significant reduction of nearly 1 million tons of CO2e over the past two years. The FarmAhead™ Incentive program, a key component of this initiative, rewards farmers for their environmental sustainability activities by directly linking them to the milk price.
Since its launch in July 2023, the average points earned by Arla farmers under this program have increased from 49 to 53 by the second quarter of 2024. Tuborgh emphasized the importance of this progress, stating, "The competitive milk price and supplementary payments empower our farmers to invest further in sustainability. Our farmer owners are making meaningful strides in reducing emissions and improving their environmental performance."
Arla is also expanding the commercial arm of FarmAhead™, offering dairy products with claimable CO2e reductions at a premium price. This initiative has gained traction, with all of Arla’s Danish retail and foodservice customers joining the FarmAhead™ Customer Partnership in June 2024, following the participation of several UK customers last year.
Outlook for the Second Half of 2024
Looking ahead, Arla anticipates continued market volatility due to geopolitical tensions and economic uncertainty. However, the company expects the positive trend in consumer purchasing power from the first half of 2024 to persist, particularly in Europe, wh ere inflationary pressures are easing, and wages are rising. This should support ongoing demand for dairy products, despite the anticipated higher retail prices driven by increased commodity costs.
Arla has adjusted its full-year revenue expectations upward to EUR 13.4-13.9 billion, with anticipated profit margins remaining in the 2.8-3.2% range. The company also raised its forecast for strategic branded revenue growth from 1.0-3.0% to 3.0-4.0%.
Arla remains committed to its climate strategy, with plans to maintain the current pace of emission reduction efforts. The company is confident in achieving its 2030 targets of a 63% reduction in Scope 1 and 2 emissions and a 30% reduction in Scope 3 emissions per kilogram of milk and whey.
"We are proud of Arla Foods' performance in a challenging global market. Our products are in high demand, and we are well-positioned to meet this demand while continuing to invest in our future," concluded Tuborgh.
