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
FINANCIAL OUTLOOK (CONTINUED)
In 2021, Calcium savings are expected to be largely
driven by efficiencies in our production, logistics
and procurement activities, but we expect savings
to slow down to some extent due to unprecedented
high levels in 2020.
EXPECTED NET PROFIT OF
AT LEAST 2.8 PER CENT
As we always focus on paying out the largest
possible share of our profit via the prepaid milk
price to our farmer owners, we continue to target
a net profit share for 2021 in the range of 2.8 to 3.2
per cent. Our net profit target range is a full-year
target, and results for the half-year 2021 are
expected to be below the annual target range due
to seasonality in our profit creation.
SIGNIFICANT INVESTMENTS
IN 2021
2021 will be another important investment year
for Arla with an investment outlook of EUR 700
million, driven by structural investments, Calcium
efficiency initiatives and sustainability activities.
Our main projects will be the finalisation of our
powder tower in Pronsfeld, Germany and the
mozzarella capacity increase project in Branderup,
Denmark. Another key investment project will be
the expansion of our production site in Bahrain, as
well as investments at our production site in Riyad,
Saudi Arabia. AFI also continues to be a core
investment area in 2021 focused on the Denmark
Protein and ARINCO sites. Our continued strong
financial position allows us to invest in the
capacities and technologies required to build the
future of dairy, while stepping up our focus on
energy efficiency and other investments driven by
our ambitious sustainability strategy.
SOLID LEVEL OF LEVERAGE
EXPECTED IN 2021
Sufficient financial room to manoeuvre is a priority
for Arla as it enables us to strategically position
ourselves for future growth. Based on our ambitious
investment plans for 2021, we expect leverage to
increase slightly versus the 2020 level. However,
continued improvement of our working capital
position and a strong operational cash flow will likely
deliver leverage at the lower end of our long-term
target range of 2.8-3.4.
CONTINUED DELIVERY
ACCORDING TO GOOD GROWTH 2020
AND NEW LEARNINGS
2021 will be a year in which we continue to build
on the momentum of the Good Growth 2020
strategy as well as the learnings from the first year
of the Covid-19 pandemic.
As reflected in our Essential Business Priorities for
2021, we will continue our strong operations in
light of Covid-19 and further develop our branded
market positions, protect and develop strategic
positions with our top customers, and further
strengthen e-commerce. At the same time, we will
focus on delivering the last stretch of our Calcium
programme and accelerating our sustainability
agenda. We will continue to implement our Climate
Check programme, make efficiency improvements
of our ArlagårdenⓇ programme and support
livelihoods in selected growth markets. A new
strategy will be defined to set the future course for
Arla beyond 2021.
ESSENTIAL BUSINESS PRIORITIES FOR 2021
CONTINUE STRONG
OPERATIONS IN LIGHT OF
COVID-19
Continue operational stability and
security of supply for our customers.
Sustain and further develop branded
market positions captured during
Covid-19, while engaging and securing
the safety of our employees.
POWER UP GROWTH
CHANNELS AND KEY
CUSTOMERS
Protect and develop strategic positions
with our top customers, step up
e-commerce and drive new concepts
for foodservice.
WIN WITH FORESIGHT
IN CHANGING
CONSUMER TRENDS
Step up health and sustainability
proposition through big plays for the
Arla Brand, while developing our
strategic brands to capture consumers'
demand for value offering.
DEMONSTRATE AND
ACCELERATE
SUSTAINABILITY
Accelerate our sustainability agenda
and demonstrate our progress, while
further building on our strong farmer
owner engagement and progress.
DELIVER CALCIUM
AND EMBED NEW WAYS
OF WORKING
Deliver the last stretch of EUR >45
million to reach our 2021 target of EUR
400 million sustainable cost savings,
and continue to build our future pipeline,
while anchoring the transformation and
embedding Covid-19 learnings across
the organisation.
DELIVER MISSION-
CRITICAL PROJECTS
Navigate outcome of Brexit and
minimise friction costs, secure more
whey for AFI and deliver on key
investment projects.
WIN THE FUTURE
Create even stronger member relations
where trust in the cooperative is further
enhanced, while defining a new group
strategy to set the future course for Arla.
62 ARLA FOODS ANNUAL REPORT 2020
The forward-looking statements in this Annual Report reflect our current expectations for future events and financial results. Such statements are inherently subject to uncertainty, and actual results may therefore
deviate from expectations. Factors which may cause the actual results to deviate from expectations include general economic developments and developments in the financial markets, changes or amendments to
legislation and regulation in our markets, changes in demand for products, competition and the prices of raw materials. See also the section on risk (from page 49).View entire presentation