Arla Foods Annual Report 2020
Management Review
Our Strategy
Our Brands and Commercial Segments Our Responsibility Our Governance
Our Performance Review Our Consolidated Financial Statements
Our Consolidated Environmental, Social and Governance Data
Revenue and cost
1.1 REVENUE
Table 1.1.a Revenue split by country
(EURM)
2020
2019
Share of revenue in 2020
United Kingdom
2,740
2,716
26%
Sweden
1,478
1,464
14%
Germany
1,267
1,343
12%
Denmark
1,031
1,054
10%
Netherlands
526
507
5%
China
368
331
3%
Saudi Arabia
352
282
3%
Finland
316
324
3%
Oman
194
167
■2%
USA
177
176
2%
Other*
2,195
2,163
21%
Total
10,644
10,527
*Other countries include, amongst others, Belgium, Canada, UAE, Spain, France, Australia
Table 1.1.a represents the total revenue by country and includes all sales that occur in the countries, irrespective
of organisational structure. Therefore, the figures cannot be compared to our commercial segment review on page
25 to 30.
Table 1.1.b Revenue split by brand
(EURM)
Arla®
LurpakⓇ
PuckⓇ
CastelloⓇ
Milk based beverage brands
Other supported brands
Strategic branded revenue
2020
2019
3,116
3,033
638
588
427
363
177
179
232
207
566
452
5,156
4,822
AFI
716
710
Non-strategic brands and other
4,772
4,995
Total
10,644
10,527
Accounting policies
Revenue is is recognised when there is a contract with
a customer for the production and transfer of dairy
products across various product categories and
geographical regions. Revenue per commercial
segment or market is based on the group's internal
financial reporting practices.
Revenue is recognised in the income statement when
a performance obligation is satisfied, at the price
allocated to that performance obligation. This is defined
as the point in time when control of the products has
been transferred to the buyer, the amount of revenue
can be measured reliably and collection is probable.
The transfer of control to customers takes place
according to trade agreement terms, i.e. the Incoterms
and can vary depending on the customer or specific
trade.
Revenue comprises invoiced sales for the year less
customer-specific payments, such as sales rebates, cash
discounts, listing fees, promotions, VAT and duties.
Contracts with customers can contain various types of
discounts. Historical experience is used to estimate
discounts, in order to correctly recognise revenue.
Furthermore, revenue is only recognised when it is
highly probable that a material reversal in the amount
of revenue will not occur. This is generally the case
when the control of the product is transferred to the
customer also taking into consideration the level of
rebates.
The vast majority of all contracts have short payment
terms with an average of 35 days. Therefore, an
adjustment of the transaction price with regards to
a financing component in the contracts with customers
is not required.
♫ Uncertainties and estimates
Revenue, net of rebates, is recognised when goods are
transferred to customers. Estimates are applied when
measuring accruals for rebates and other sales
incentives. The majority of rebates are calculated based
on terms agreed with the customer. For some customer
relationships, the final settlement of the rebate depends
on future sales volumes and prices, as well as other
incentives. Thus, there is an element of uncertainty in
estimating the exact value.
Since Arla's main line of business is the sale of fresh
dairy products, returns of goods rarely occur and
therefore do not require specific accounting disclosure.
Based on current milk price, Arla contractually secured
approximately EUR 295 million revenue related to raw
milk sales for 2020 and approximately EUR 234 million
for 2021 and later.
75 ARLA FOODS ANNUAL REPORT 2020View entire presentation