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
In 2021, we will further adapt and adjust to the significant changes experienced during 2020, most notably caused by the continuation of the
Covid-19 pandemic. However, 2021 will also be a year when we continue to build on the current strategic momentum, continue our branded
volume driven revenue growth, strive to deliver a strong final year of our transformation and efficiency programme Calcium and take new
important steps towards delivering our Sustainability Strategy.
UNCERTAINTY IN 2021
AND LEARNINGS FROM 2020
The macroeconomic and political outlook for 2021
remains challenging, primarily due to the continuation
of the Covid-19 pandemic. As indicated by the IMF,
the global GDP growth projection for 2021 is 5.5 per
cent, but will still not recover to 2019 levels.
Emerging and developing economies are projected
to grow by 6.3 per cent (-2.4 per cent in 2020) and
advanced economies by 4.3 per cent (-4.9 per cent
in 2020). This could potentially have an impact on
the buying power and dairy demand growth.
In 2021, the consequences of Covid-19 will continue
to significantly impact our business, and we strive to
continue our strong commercial execution with the
agility and resilience of our supply chain and farmer
owners to quickly adapt to new demands and
requirements in this uncertain environment.
Our most important learning from 2020 is that agility
and speed of adaptation are key to success during
these uncertain times.
Brexit ended with a free trade agreement, and hence
the outlook for our core UK market is relatively stable
despite expected friction cost and uncertainty
regarding custom clearance delays etc.
Our financial outlook and guidance for 2021 are
subject to these uncertainties.
CONSUMER TRENDS
IN UNCERTAIN TIMES
The main consumer trends expected to impact dairy
in 2021, especially in the Western markets, are
e-commerce, growing in-home consumption, and
significant uncertainty about the return of foodservice.
This is due to the continued uncertainty caused by
the pandemic, and the speed of return to the 'new
normal'. Despite the Covid-19 impacts, we still
predict a continuation of the strong consumer and
societal trends of sustainably produced food,
increasing expectations for nutritious products and
guidelines, and growing convenience and on-the-go
sales. This is coupled with with higher consumer
and societal demands for transparency and
accountability.
FURTHER IMPROVING THE QUALITY
OF OUR BUSINESS THROUGH
STRATEGIC BRANDED GROWTH
Despite the very strong growth in 2020, we still
expect to grow our brand positions in 2021. We
expect to grow branded volumes in the range of
1-3 per cent and hence further improve the quality
of our revenue and the competitiveness of our
business portfolio. The 2021 branded growth target
is expected to move our branded share of revenue to
50 per cent and our international share above 23.5
per cent. In 2021, the continued strategic branded
growth is expected to be driven by strong commer-
cial execution across our European and international
commercial segments.
FINAL DELIVERY OF EUR 400
MILLION IN CALCIUM SAVINGS
We expect to further strengthen Arla's
competitiveness, driven by our transformation
and efficiency programme, Calcium. Our ambition
for 2021 is to achieve savings of EUR >45 million
and hence take the final steps towards reaching
our full programme target of EUR 400 million.
TARGETS, ACHIEVEMENTS, OUTLOOK
Revenue
10.3 - 10.6
2020: 10.6 EURb
61 ARLA FOODS ANNUAL REPORT 2020
Profit share
Calcium savings
Leverage
International share
Brand share
2.8-3.2%
>45
2.8-3.4
>23.5%
>50%
2020: 3.2% of revenue
2020: 130 EURM
2020: 2.7
2020: 23.6%
2020:48.9%
Strategic branded volume
driven revenue growth
1-3%
2020: 7.7%View entire presentation