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
1.4 KEY PERFORMANCE INDICATORS
The alternative performance measures disclosed below are key performance indicators for the group.
They are not IFRS requirements.
1.4.1 Performance price
Stabile milk prices and decreased costs led to higher performance price
Arla's performance price is a key measure of the overall
performance, expressing the value added to each kilo of
milk supplied by our farmer owners. The performance
price is calculated as the standardised prepaid milk price,
included in production costs, plus Arla Foods amba's
share of profit for the year, divided by the weighed-in milk
volume in 2020. The performance price was 36.9
EUR-cent/kg owner milk, compared to 36.6 EUR-cent/
kg owner milk last year.
Table 1.4.2 Strategic branded volume driven revenue growth
(EURM)
2020
2019
Strategic branded revenue last year*
Strategic branded volume driven revenue growth
Price- and exchange rate adjustments
Strategic branded revenue
Strategic branded volume driven revenue growth, %
*2020 includes an adjustment of EUR 45m due to changes in the other supported brand category.
4,867
4,591
378
236
-89
-5
5,156
4,822
7.7%
5.1%
Strategic branded VDRG is calculated as the volume growth of EUR 378 million divided by EUR 4.867 million and equals 7.7 per cent in 2020.
Table 1.4.1 Performance price
2020
2019
EURM
Volume EUR-cent/
in mkg
EURM
kg
Volume EUR-cent/
in mkg
kg
Owner milk
4,364
12,515
34.9
4,318
12,382
34.9
Adjustment to standard milk
Note 1.4.3 Profit share
(4.2% fat, 3.4% protein)
-0.8
-0.8
Arla Foods amba's share of profit
Financial comments
for the year
345
Total
12,515
2.8
36.9
311
2.5
12,382
36.6
The profit share in Arla is targeted at 2.8-3.2 per cent
of revenue, calculated from the profit attributable to our
farmer owners.
For 2020 the profit to farmer owners amounted to EUR
345 million compared to EUR 311 million last year.
This corresponded to 3.2 per cent of revenue or 2.8
EUR-cent per kilo milk delivered and was distributed to
supplementary payment and consolidation as disclosed
in the statement of profit appropriation.
1.4.2 Strategic branded volume driven revenue growth
Financial comments
Volume driven revenue growth (VDRG) is defined as
revenue growth that is derived from growth in volumes
keeping prices constant.
VDRG on strategic brands is an alternative performance
measure applied to support and understand the
non-price revenue growth and performance of our
branded business.
Strategic branded VDRG increased significantly in
2020 to 7.7 per cent compared to 5.1 per cent last year.
A higher demand of branded products in the retail
business was the main driver of the increase.
Table 1.4.3 Profit share
(EURM)
Revenue
Profit for the year
Profit relating to non-controlling interests
Profit attributable to farmer owners
Profit share
79 ARLA FOODS ANNUAL REPORT 2020
2020
2019
10,644
352
10,527
323
-7
-12
345
311
3.2%
3.0%
Profit share is calculated as EUR 345 million divided by EUR 10.644 million and equals 3.2 per cent in 2020.View entire presentation