Arla Foods Annual Report 2020
Management Review Our Strategy
CASH FLOW (CONTINUED)
Our Brands and Commercial Segments Our Responsibility Our Governance Our Performance Review Our Consolidated Financial Statements Our Consolidated Environmental, Social and Governance Data
Strong operational cash flow and increased investments
Free operating cash flow is a measure of the amount of
cash generated by normal operations. Cash flow from
operating activities decreased by 5 per cent to EUR 731
million compared with EUR 773 million last year, mainly
due to postponed declaration of VAT and duties offset
by extended payment terms for employee income taxes
in Denmark. Improved net working capital contributed a
modest positive net cash release of EUR 4 million whilst
still maintaining the previously years trend of improving
the net working capital position.
Cash flow from investment activities amounted to
EUR 488 million compared with EUR 571 million last
year. The overall investment level last year was higher
due to the acquisition of the cheese business in Bahrain,
however 2020 included a record high CAPEX investment
of EUR 478 million. The free operating cash flow ended
at EUR 219 million.
Cash flow from financing activities was EUR -293
million. A supplementary payment of EUR 127 million
was issued in relation to the 2019 profit allocation and
further payments, representing EUR 22 million from
individual capital instruments, were paid out to owners
who resigned or retired. Cash flow from other financing
activities amounted to EUR 144 million and related to
repayment of net interest bearing debt of EUR 90
million, payments to pension schemes of EUR 36
million and transactions with non-controlling interests
of EUR 18 million.
Combined cash and cash equivalents as of 31 December
2020 were EUR 126 million, compared to EUR 187
million last year. The movement was due to a net cash
out-flow of EUR 50 million during 2020 and exchange
rate adjustments on cash funds of EUR 11 million. An
insignificant amount of cash and cash equivalents at
31 December 2020 was deposits in restricted accounts.
Accounting policies
The consolidated cash flow statement is presented
according to the indirect method, with cash flow from
operating activities determined by adjusting EBITDA for
the effects of non-cash items such as undistributed
results in joint ventures and associates, changes in
working capital items and other non-cash items.
Development in cash flow
(EURM)
1000
800
600
400
200
0
-200
909
4
-182
EBITDA
731
-488
Net working capital
with impayments a
Other payme
nope and adjustment
pact on operating cash flow
Cash flow from operating activities
Investing activities
72 ARLA FOODS ANNUAL REPORT 2020
Free cash flow
243
-149
leaving members
Supplementary payments
Other financing activities
-144
50
Reduction in cashView entire presentation