VIBY, Denmark — Arla Foods managed to adapt to a tough dairy market by returning to strong branded growth in the second half of 2023, and thereby reaffirming a positive outlook for the first half of 2024. A strong year ending enables the Board to propose a higher than expected supplementary payment (dividend) to Arla Foods’ farmer owners – in total 270 mEUR for the full year.
Arla Foods and its farmer owners also made significant progress in reducing carbon emissions, cutting close to 1 million tonnes of CO2e in the last two years. This means that Arla Foods is on track towards its 2030 reductions.
With the 2023 launch of the Sustainability Incentive Model, a point-based system that rewards on-farm sustainability activities, as well as a new programme to help customers with their scope 3 reductions, Arla Foods expects to further accelerate reductions is 2024.
After a challenging first half of 2023, Arla Foods recovered fast delivering strong growth rates for all markets and brands in the second half. For the full year, the company’s efficiency programme exceeded the ambitions and Arla’s leverage was improved.
Total Arla Group revenue ended at EUR 13.7 billion, roughly the same level as its 2022 revenue of EUR 13.8 billion. The revenue was impacted by negative currency effects, primarily on SEK, GBP and USD. The cost of goods and general inflation led to a performance price decrease of 8.1 EUR-cent/kg to 47.0 EUR-cent/kg against the all-time high performance price in 2022. Although lower than 2022, the 2023 result is 15% above the last 5-year average.
“Thanks to the strong execution by our farmer owners, employees and management, Arla once again demonstrated our ability to adapt to challenging market conditions in 2023. I am incredibly proud of our solid results, both reflected in the competitive milk price and the sustainability milestones achieved. Sustainability is a challenge we cannot ignore, but we are on track towards our CO2e reduction target for 2030. We, farmer owners, show that we dare to be proactive and take on the task through innovation and action,” says Arla Foods chairman Jan Toft Nørgaard.
In 2023, Arla achieved a net profit of EUR 380 million, or 2.8% of revenue, which is at the bottom end of its target range of 2.8-3.2%. The solid financial performance and robustness allowed the Arla Board of Directors to propose a supplementary payment, including interest on contributed capital, to farmers of 2.07 EUR-cent per kg of milk delivered equaling 270 MEUR in total, well-above the level set in Arla’s Retainment Policy.
“The proposed supplementary payment as well as a competitive on account milk price in 2023 is a direct reflection of Arla’s financial performance and robustness. We have navigated a deflated and volatile global dairy market as well as headwind from several currencies. In light of this, I am very pleased that we during 2023 managed to pay the second-highest ever average on account milk price and still deliver a high supplementary payment to our farmer owners at year end,” says Peder Tuborgh, CEO of Arla Foods. Investments amounted to an all-time high EUR 601 million compared to EUR 521 million in 2022.
