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
PERFORMANCE REVIEW
Our ability to keep operations running during the Covid-19 pandemic and quickly react to changes in market trends and
demands was a defining factor in 2020. In this environment, we grew our strategic branded volume driven revenue by
7.7 per cent across our brands and commercial segments, while strengthening our business execution through our
transformation and efficiency programme Calcium with EUR 130 million in additional savings. With this result, we are on
course to reach our 2021 target of EUR 400 million in savings. We also continued delivering on our sustainability strategy and
further reduced our scope 1 and 2 CO2e emissions, reaching a total reduction of 24 per cent compared to the 2015 baseline.
STABLE AND COMPETITIVE
PREPAID MILK PRICE
Arla targets an annual net profit share in the range
of 2.8 to 3.2 per cent of revenue, allowing us to
actively balance the retained capital for future
investments and provide a competitive supple-
mentary payment to our farmer owners. This also
enabled us to pay out the largest possible share of
our profit via the pre-paid milk price to our farmer
Performance price
(EUR-cent/kg)
30.9
38.1
36.4
36.6
36.9
owners during the year. In 2020, we achieved a net
profit within the target range of EUR 345 million
equalling 3.2 per cent of revenue and 0.2 percentage
points higher than in 2019, which is a strong result
for our cooperative. The average pre-paid milk price
was 34.1 EUR-cent/kg which was unchanged
compared to last year. The performance price for
2020 was 36.9 EUR-cent/kg, compared to 36.6
EUR-cent/kg in 2019 (an increase of 0.8 per cent).
Standard prepaid milk price 2019-2020
(EUR-cent/kg)
38
37
36
35
wwww ww w w w
34
33
32
31
30
2016
2017
2018
2019
2020
Q1
Q2 Q3
Q4
Q1
Q2
Q3
Q4
2019
2020
MODEST GROWTH IN MILK INTAKE
FROM FARMER OWNERS
Despite the turmoil caused by the Covid-19
pandemic, Arla maintained a stable average
pre-paid milk price in 2020. However, as global
commodity prices dropped as a consequence of
the uncertainty in the market, Arla's pre-paid milk
price decreased in May, but increased again in
October and November as the 2020 year-end
outlook improved.
In 2020, we saw a modest increase in the milk
intake from our owners of 1.1 per cent compared
to 2019. The growth was seen across our main
owner countries with the highest increase in
volumes from our UK and Swedish farmer owners.
In Sweden, the milk intake increased by 2.1 per
cent and showed growth for the first time in more
than 5 years. This was partly due to good farming
conditions in 2020 after two years of draught, as
well as increasing milk volumes at farms offsetting
the loss from farms that reduced their volumes or
stopped producing for Arla.
"ARLA'S MISSION
IS TO SECURE THE
HIGHEST VALUE
FOR OUR FARMERS'
MILK WHILE
CREATING
OPPORTUNITIES
FOR THEIR
GROWTH."
57 ARLA FOODS ANNUAL REPORT 2020View entire presentation