Arla Foods Consolidated Annual Report 2021
7
Arla Foods Consolidated Annual Report 2021 / Mangement review / CEO letter
Contents
SOLID PERFORMANCE AND SUSTAINABILITY
ACTION IN ANOTHER VOLATILE YEAR
2021 proved to be far more volatile and disrupted
than anticipated. While the global economy
recovered more quickly than expected and the
demand for dairy products remained high, the
impact of Covid-19 persisted throughout the year.
Massive global supply chain challenges, labour
scarcity and inflation had widespread impact on
operations and costs both for the company and for
our farmer owners.
Yet, month on month, we managed sales and
operations firmly, delivering solid results on our
most important performance indicators while at
the same time maintaining a high activity and
investment level. Combined with relatively high
global raw milk prices, this resulted in an improved
performance price of 39.7 EUR-cent/kg in 2021,
up from 36.5 EUR-cent/kg in 2020.
Our brands did exceptionally well in 2021. Shifts in
consumer patterns towards more dining out and
less home cooking as lockdowns eased and rising
prices towards the end of the year gave us some
headwind, however we delivered volume growth
above expectations, at 4.5 per cent and increased
market share in key position. Both the European
and International zones built on the exceptional
brand performance in 2020 and achieved 2.3 and
9.1 per cent branded volume growth in 2021,
respectively. Particularly Starbucks TM and CastelloⓇ
exceeded expectations, but also Arla®, LurpakⓇ and
Puck delivered solid growth.
66 Month on month, we managed
sales and operations firmly,
delivering solid results on our
most important performance
indicators while at the same time
maintaining a high activity and
investment level. 99
On a 1.5°C trajectory
Towards the end of the year, our new Future26
strategy was launched with the central ambition to
lead on value creation and sustainability. Together
with our farmer owners, we will ensure that people
can continue to trust and enjoy the benefits,
versatility and affordability of dairy nutrition from a
cooperative that continuously takes climate action.
I am therefore delighted that, close to year-end,
we received the much awaited approval from the
Science Based Targets initiative deeming our new
emission reduction target for operations as consis-
tent with reductions required to limit global warming
to 1.5°C. With plans to convert to fossil-free trucks,
green electricity and low-energy solutions at our
sites, we are doubling our emission reduction target
for operations from 30 to 63 per cent by 2030.
The important sustainability work at farm level
progressed, as we conducted the second round of
Climate Checks and stepped up the efforts to utilise
the farm data, advisory services, ongoing research
and pilot farm trails to make more knowledge
and solutions available to our owners. Owners
that generate electricity from renewable energy
sources on farm were also given the opportunity
to help power their dairy company by selling their
Guarantees of Origin to Arla at a competitive price.
Outlook for 2022
We expect the inflation and volatility to continue
to impact our business and other sectors well into
2022, and the impact on consumer behaviours
will be multifaceted and difficult to predict. It is
likely that we will see a slowdown in our branded
growth until the market resettles at a new level.
As demonstrated in 2020 and 2021, we will do
what we can to respond quickly and diligently to
protect profitability as well as the continuity of
our operations and the health and safety of our
colleagues in the workplace.
2022 will be the important first year of executing
our new Future26 strategy. With the robust
foundations we stand upon today, the next five
years will see us investing more than ever in
innovation, digitalisation and sustainability across
our value chain and in our brands for the benefit
of our owners, customers and consumers.
Peder Tuborgh
CEOView entire presentation