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 INTERNATIONAL (CONTINUED) Apetina ORIGINAL DANO CONFORME DANO MILK Goodness Arla Baby Me MIDDLE EAST AND NORTH AFRICA Our strategic agenda in the Middle East and North Africa progressed ahead of expectations in 2020. Revenue grew by 17.5 per cent to record-high revenue of EUR 748 million in the region. The growth was mainly driven by our core brands Puck®, LurpakⓇ and KraftⓇ. At the same time, our biggest market Saudi Arabia posted unexpectedly high branded volume driven revenue growth of 26.9 per cent, and we also increased our market shares considerably in UAE and Kuwait in core categories. Keeping especially our front line sales force safe during Covid-19, we managed to operate at almost full capacity at all times, which turned out to be a big competitive advantage. WEST AFRICA Despite a turbulent year with market lockdowns and economic downturn, we grew our strategic brands across West Africa and managed a profit improvement through proactive price management. Revenue for the region grew by 8.6 per cent to EUR 133 million, mainly driven by Ghana and Senegal. The weakened oil price caused reductions in bulk volumes, but consumer products continued to grow. Devaluation of the Nigerian Naira was neutralised by active price management. We successfully entered into the evaporated milk segment in Senegal seeing good opportunities to grow products outside our main powder category across West Africa. CHINA Our Chinese business performed well in 2020 with revenue growth of 24.3 per cent to EUR 190 million, primarily driven by the milk category. As expected, we did not grow exports of Early Life Nutrition products after a year of high sales in 2019. Through our partnership with Mengniu, cheese and butter export sales grew by 73 per cent. The successful launch of liquid LurpakⓇ contributed to the strong profit and growth in the business. SOUTH EAST ASIA Indonesia was challenged by the impacts of Covid-19 and did not meet our expectations of growth, while other main markets in South East Asia increased revenue. Overall, revenue totalled EUR 171 million, unchanged from last year. In Bangladesh, DanoⓇ became the number one dairy brand in the market for the first time ever. By focusing on affordable ranges and digital ways of working with our foodservice customers we achieved profitable growth of 18 per cent. In Indonesia, our Organic Early Life Nutrition launch was impacted by the challenges of building brand awareness and converting consumers during Covid-19. NORTH AMERICA Despite a volatile domestic milk price and significant duty increases in the US, revenue increased by 6.2 prer cent to EUR 270 million in 2020. The US saw a remarkable increase in consumer demand for Arla® brand products during Covid-19, and Canada saw a strong increase in the cooking assortment, driven by ApetinaⓇ and local brand Tre StelleⓇ. This more than offset the decline in foodservice in both countries. Furthermore, the local production sites benefitted from very high capacity utilisation and were at the same time able to limit the organisational impacts of the pandemic to a minimum. REST OF WORLD Rest of world, including Australia, Russia and Latin America, delivered strategic branded volume driven revenue growth of 9.5 per cent and total revenue of EUR 463 million. Covid-19 influenced our foodservice business negatively, whereas retail sales increased. The growth was driven by increased in-home consumption, which especially LurpakⓇ benefitted from, growing by 16.8 per cent. Also our On-The-Go Starbucks Iced Coffee business grew by 23 per cent overall with particularly high growth rates in Poland, Italy and Switzerland. 28 ARLA FOODS ANNUAL REPORT 2020

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