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 EUROPE (CONTINUED) DENMARK The branded business continued to grow in 2020, resulting in revenue of EUR 998 million. Covid-19 had a significant impact on our channel mix with higher consumption in retail while our foodservice declined. We strengthened the milk category by launching our 'Animal Welfare' concept with 2 hearts on all Arla24 milk, and we continued our sustainability journey by introducing Climate Checks on all farms, reducing waste, and launching CO₂e neutral organic milk. During the uncertain Covid-19 times, strong cooperation across the full supply chain supported all our customers by securing products in a safe and timely way. SWEDEN Against a backdrop of Covid-19 and the impacts on our foodservice channel, Arla Sweden delivered very satisfactory results in 2020 with total revenue of EUR 1,361 million. Almost all categories and brands delivered growth, particularly the Arla KöketⓇ, Svensk SmörⓇ and Starbucks TM brands. In the context of an exceptional working environment, we succeeded in providing a seamless supply of nutritious dairy products to the Swedish consumers, whilst safeguarding the health and wellbeing of our colleagues. As part of Arla's sustainability agenda, we introduced our Zero Vision for animal welfare initiative and launched animal welfare milk. E FINLAND Our sizeable Finish foodservice was significantly impacted by Covid-19 as lockdowns and increased in-home consumption resulted in lower sales. Contrary, we experienced growth across most main brands resulting in total revenue of EUR 314 million. In particular Arla LempiⓇ grew considerably as the naturality of the products and the sustainable packaging continue to be key differentiators for our consumers. Innovation is a continuous strong focus of the Finnish business and in 2020, a new range of wellbeing yogurts, Arla Got Guts?, was launched. UK Our UK market had an exceptional year of double digit branded growth driven by strong commercial execution and increased in-home consumption as a result of extended periods of Covid-19-related restricted living. Revenue in the UK was EUR 2,380 million. The Arla®, LurpakⓇ and Starbucks TM brands grew and consolidated their number one positions, while overall the business broke through GBP 1.0 billion branded retail sales value for the first time. In addition, our UK business proudly supported a number of charities providing food for the nation during these uncertain times, at the same time propelling our sustainability agenda with a number of innovative prototype solutions to better recycle farm waste. GERMANY Germany had another year of strong branded growth with initiatives on key Arla sub-brands, in particular Arla Bio®, Arla® Kaergarden and Arla® Skyr. Several of these initiatives contributed to our sustainability agenda, e.g. removal of cup lids and launches of recyclable and carbon reduced packaging. Despite the impacts of Covid-19, we managed to handle increased customer demand well due to tremendous efforts from the entire supply chain. The decline in the foodservice business was compensated by high demand for especially cooking and milk products, both in private label and branded products. Total revenue was EUR 1,024 million. NETHERLANDS, BELGIUM AND FRANCE Despite the challenges impacting 2020, Arla NL/BE/FR continued to deliver significant branded revenue growth of 9.8 per cent, and total revenue was EUR 336 million. Our key brands Arla®, including Organic, Lactofree and Skyr, and MelkunieⓇ, including Protein and Breaker, all drove exceptional growth, most of them double digit. A strong marketing campaign to build LurpakⓇ as a leading brand was launched in the fourth quarter. Belgium continued delivering on growth with Arla® Skyr and MelkunieⓇ Protein, while France was able to deliver growth with Arla ProⓇ despite the foodservice challenges caused by Covid-19. 3. LURPAK PROTEIN MANGO 20 26 ARLA FOODS ANNUAL REPORT 2020 MINI eкo SKYR Lamp Mailo rahka 02%

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