Arla Foods forecasts US$25B revenue for 2024

DENMARK – Arla Foods, a Danish-Swedish multinational dairy cooperative, is forecasting a remarkable revenue of nearly US$25 billion for 2024, representing a 52% increase from the revenue reported in the year’s first half. 

According to the company’s financial results for the first half of 2024, the reported revenues were close to US$12 billion accompanied by a net profit of US$300 million.

During this period, the cooperative collected an impressive 7 billion kilograms of milk, allowing it to increase milk prices by nearly €0.10 per kilogram compared to the latter half of 2023. 

Additionally, Arla distributed a half-year supplementary payment of €0.035 per kilogram to its farmer-owners, reflecting the cooperative’s robust financial performance.

The company is optimistic that easing inflationary pressures, rising wages, and steady consumer demand across Europe will drive the outlook despite ongoing geopolitical tensions. 

Although increased retail prices from commodity price hikes may influence purchasing behavior, the cooperative expects that consumer purchasing power will remain positive, bolstering demand for dairy products.

CEO Peder Tuborgh emphasized the company’s ability to maintain the positive momentum from 2023 into 2024.

“The increases in milk prices and supplementary payments are primarily driven by rising commodity prices and the successful execution of Arla’s “Fund Our Future” transformation and efficiency program,” he noted.

“This performance was further supported by a return to branded volume growth, with Arla’s strategic brands—Lurpak, Puck, and Arla—collectively experiencing a revenue growth of 4.1% in the first half of 2024.”

The branded product growth was particularly strong, with Lurpak achieving a notable 7.9% increase in volumes, Puck growing by 4.4%, and the Arla brand seeing a 3.8% rise. 

“We are very pleased to deliver a competitive milk price,” Tuborgh remarked, adding that the return to branded growth exceeded expectations, underscoring the strength of Arla’s brands and the cooperative’s efforts to regain market share.

Arla Foods’ solid performance in the first half of 2024 continues the positive trajectory from late 2023. 

This success enabled the cooperative to increase the milk price by €0.05 per kilogram compared to the second half of 2023 and to provide a half-year supplementary payment to farmer owners of €0.01 per kilogram, based on production volumes. 

Tuborgh expressed satisfaction that the momentum generated by farmers and employees in 2023 has persisted into 2024, allowing Arla to announce a robust half-year result alongside a competitive milk price.

The performance price for the first six months of 2024 was reported at €0.475 per kilogram, with total revenue for the Arla Group reaching €6.6 billion and a net profit of €167 million. 

CFO Torben Dahl Nyholm noted that the return to branded growth was greater than anticipated, showcasing the strength of Arla’s brands and successful market strategies.

In tandem with its financial success, Arla Foods is prioritizing sustainability initiatives through the FarmAhead Technology program. 

The cooperative aims to reduce emissions on farms by 30% by 2030 and has already cut nearly 1 million tons of CO2 equivalent over the past two years. 

A key component of this initiative is the FarmAhead Incentive, a point-based system that rewards farmers for their climate and environmental sustainability efforts, translating points into direct payments based on the milk they deliver.

Since the program’s activation in July 2023, Arla farmers have improved their average points from 49 to 53 in the second quarter of 2024, highlighting the cooperative’s commitment to sustainability alongside its economic objectives.

Subscribe to our food and agriculture industry email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE