Arla Foods Consolidated Annual Report 2021
76
Arla Foods Consolidated Annual Report 2021 / Consolidated Financial Statements / Notes
Revenue and costs
1.2 OPERATIONAL COSTS
Development in operational costs
(EURM)
11,000
10,800
10,600
10,400
10,223
1
INFLATION AND HIGHER COST OF RAW MILK
Operational costs were EUR 10,822 million, which
is an increase of 5.9 per cent compared to last year.
This development was mainly driven by higher milk
costs, primarily to owners, and by inflation on other
production and distribution-related costs, partly offset
by Calcium savings.
Production costs increased by 6.3 per cent to EUR 8,822
million from EUR 8,301 million last year. Excluding
costs relating to raw milk, production costs increased
to EUR 3,599 million from EUR 3,459 million last year.
The increase related to a more expensive production
mix meeting the demand for more branded products
and the effect of inflation resulting in higher costs of
utilities, such as electricity and other production-related
materials. Excluding the effect from inflation, Calcium
savings amounted to EUR 133 million in 2021. Refer to
pages 16-17 for more details on Calcium initiatives.
Sales and distribution costs increased by 6.1 per cent
to EUR 1,573 million compared to EUR 1,483 million
last year. Driver shortages in the UK and increased
fuel prices were the main reasons. Research and
development costs amounted to EUR 89 million,
compared to EUR 72 million last year.
Administration costs decreased 2.7 per cent to EUR
427 million compared to EUR 439 million last year due
to cost control and non-recurring one-offs in 2020,
partly offset by salary increases.
Cost of raw milk
The cost of raw milk increased by 7.9 per cent to EUR
5,223 million compared to EUR 4,842 million last year.
The increase was driven by higher milk prices.
Owner milk
Costs related to owner milk increased by EUR 398
million due to a higher average prepaid milk price.
Other milk
The cost of Other milk decreased by EUR 17 million
due to lower volumes, partly offset by higher prices.
Other milk consists of speciality milk and other contract
milk acquired to meet local market demands.
Staff costs and FTE
Staff costs increased by 1.1 per cent to EUR 1,360 million
compared to EUR 1,345 million last year. Staff costs
increased due to additional FTEs from insourcing
activities and due to salary increases, partly offset by
non-recurring items in 2020.
The total number of FTEs increased to 20,617
compared to 20,020 last year. Refer to the ESG section,
Note 1.2, for further details on the FTE development.
Marketing spend
The marketing spend was consistent with last year
and amounted to EUR 238 million. Continued focus
on efficiency improvements enabled by the Calcium
transformation and efficiency programme, including
insourcing and upscaling of "The Barn", our in-house
content studio, allowed us to increase our marketing
activities while keeping costs consistent with last year.
Depreciation, amortisation and impairment
Depreciation, amortisation and impairment increased
by 6.4 per cent to EUR 480 million compared to EUR
451 million last year. The increase was primarily due
to higher CAPEX investments, including the powder
production capacity in Germany, cheese production
facilities in Bahrain and an expansion of the mozzarella
production facilities in Denmark.
10,200
10,000
2020
Milk costs
381
Inflation
260
-133
34
10,822
57
Calcium, net of
reinvestments
Volume/mix and other
changes in operational costs
Currency
2021
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