Dairy giant Arla saw strong performance across its branded portfolio in the UK during the first half of 2024, with total volume growth of 11% and branded revenue increasing by 5.4%. This was predominantly driven by its Lurpak and Arla Protein brands, as well as its foodservice offering, Arla Pro.
However, Arla’s total net revenue in the UK declined by 11% to £1.2bn as a result of falling commodity and commercial prices.
Bas Padberg, Managing Director of Arla Foods UK, commented: “Following the high levels of inflation that we saw back in 2023, Arla has continuously reinvested back into our brands, to deliver value for our shoppers and ensure the necessary growth needed to return the highest possible milk price to our farmer owners. This combined with increased consumer buying power in the first half of the year, has led to a strong performance across our branded range.
“Whilst we expect consumer confidence to remain into the second half of the year, trading conditions will be more challenging than we have seen in recent months as commodity markets rise again and we balance reduced global supply with the increasing demand for dairy.”
The wider Arla group saw volume growth of 4.1% over the six-month period compared to a decrease of 6.0% in the first half of 2023. Growth was led by its Lurpak, Puck and Arla brands, which grew volumes by 7.9%, 4.4% and 3.8% respectively.
Total Arla Group revenue came in at €6.6bn, with a net profit of €167m.
Torben Dahl Nyholm, CFO at Arla Foods, said: “We are very pleased to deliver a competitive milk price. At the same time, the return to branded growth happened with a higher magnitude than expected due to the strength of our brands and successful efforts to regain growth, so we are on a positive trajectory.”
Looking ahead into the second half of the year, Arla said it anticipates the volatile market conditions driven by geopolitical tension and uncertainty to continue. However, it noted that the positive trend on consumer purchasing power from the first half of 2024 should prolong into the second half, especially in Europe, as inflationary pressure continues to subside and wages increase.
“This is anticipated to translate into a continued upturn in demand for dairy, although it is uncertain how consumers will react to the expected higher retail price levels following the commodity price increases,” the group said.
With the expectation that the strong market momentum from the first half will continue into the second half, Arla has adjusted its full-year expectations for revenue from €13.2-13.7bn to €13.4-13.9bn and still expects to deliver a profit within the range of 2.8-3.2%. The group has also adjusted its full-year expectations for strategic branded volume-driven revenue growth from 1.0-3.0% to 3.0-4.0%.
