Press release

Arla Foods amba announces half-year results

UK business makes multi-million pound investment in its flagship Stourton dairy at Leeds and further strengthens its commitment to the environment through on-farm heat recovery and solar panel trial.

Arla Foods amba has today announced half-year results in line with expectations. Net profit for January to June 2008 was DKK 481 million (£50.63 million). 

Despite the good result, the company is operating in a challenging environment with a number of factors impacting on earnings. The cancellation of EU export subsidies in the first half of 2007 resulted in the company losing substantial revenues, coupled with foreign exchange rates falling significantly below those for the same period last year. 

In the Middle East consumers are still uncertain about Danish products and this remains a concern. Finally, rising cost inflation and higher energy prices continue to put pressure on earnings for both Arla and its farmers.

Offsetting these challenges, an improvement in earnings has been achieved due to the company working to seek recovery of higher costs from its customer base to offset inflationary pressure on milk and commodities. In addition, the benefits from the extensive rationalisation programmes of recent years are being realised.

Commenting on the half-year results Peder Tuborgh, CEO of Arla Foods amba said: "We anticipate that 2008 will be more profitable than 2007, however the market will be more volatile with frequent price variations - partly due to the elimination of the EU's regulatory mechanisms. The pressure on prices will be maintained during the second half of the year."

Arla Foods amba's interim results come on the back of the announcement that Arla Foods UK is making a further multi-million pound investment in its flagship dairy at Stourton, Leeds, boosting capacity at the site to over 650m litre per annum. The investment includes the world's largest weight filling machine, new processing equipment and nine new silos.

Arla UK's continued commitment to reducing its environmental impact and greenhouse gas emissions was further advanced at the beginning of 2008 when it received energy efficiency accreditation from the Carbon Trust. Arla Foods UK is the first UK dairy company to receive this standard following its achievement of gaining ISO 14001 and OHSAS 18001 certifications.

Over the last six months the amount of milk transported per litre of fuel consumed increased by seven per cent. Waste minimisation programmes similarly continue to deliver substantial savings with all UK sites recovering and recycling over 80 per cent of material and three sites operating near on zero waste to landfill programmes. 

The company continues to identify ways to reduce the material density across all its packaging and is currently performing trials of plastic bottles with recycled material.

In a further display of Arla Foods UK's commitment to the environment, it is working collaboratively with members of Arla Foods Milk Partnership, a group of over 1,400 farmers who supply milk to Arla, to reduce the environmental impact of farming operations and introduce farming environmental best practice. Arla Foods UK is sponsoring a heat recovery and solar panel system trial among farmers that is designed to utilise waste heat from refrigeration systems and heat from the sun as a means to reduce reliance on fossil fuels and reduce costs.

The last six months have also been successful for Arla Foods UK's leading dairy brands. Lurpak, the UK's number one selling butter and spreads brand has increased its lead over its nearest competition by over £30 million, Cravendale, the UK's number one selling milk brand, has broken through the £110m sales barrier and is currently the second fastest growing grocery brand in the country and Anchor launches its first unsalted butter variant in September.

Lactofree continues to perform extremely well, growing at 82.4 per cent year on year. As the popularity of Lactofree fresh and longlife milk continues to grow, a new range extension to include yogurt and cheese will be launched later in the year.

Arla Foods UK plc is home to some of the UK’s leading dairy brands including Cravendale, Lurpak and Anchor. Processing approximately two billion litres of milk a year Arla continues to be one of the UK’s leading dairy companies and a supplier of fresh liquid milk and cream to the top seven retailers.

Over 2,500 daily deliveries are made directly to stores nationwide and Arla brands can be found across the dairy category. As well as the leader of the butter, spreads and margarine sector, and a major supplier of other added value products including flavoured milk and cheese, Arla continues to build working relationships with Arla Foods Milk Partnership, a unique group of dairy farmers, which supplies around 90 per cent of Arla's total milk requirements.

Behind this leading business is a team of circa 2,800 people across the UK located at our dairies, distribution centres and head office.

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