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
CREATING VALUE IN A YEAR LIKE NO OTHER
A year like no other
2020 was defined by Covid-19, disrupting
consumer behaviour, business plans and political
agendas instantly as the virus spread across the
world. Despite being challenged at work and at
home, Arla farmers and colleagues maintained a
steady flow of dairy to society, whilst doing their
best to keep each other safe.
The global dairy industry was heavily affected, not
least by the impact of lockdowns on the foodservice
sector, which precipitated a drop in global commodity
prices. We saw partial recovery in the second half,
but prices have not yet returned to the same levels
as before the pandemic. Despite this and a weaker
US dollar, we delivered a relatively strong Arla
performance price, given the volatility seen in the
dairy industry.
Solid performance
Our performance can be ascribed to the agility of
our organisation, the versatility and quality of our
business and solid deliveries in our Calcium
transformation programme.
The quality of our brands and our ability to move
more products into the soaring retail sector meant
that we achieved exceptionally strong growth in
our brands of 7.7 per cent. AFI also performed well,
driven by increased demand for whey proteins for
pediatric and medical nutrition products.
Calcium secured EUR 130 million in savings, primarily
from supply chain efficiencies, optimised marketing
spend and reduced expenses due to many office
employees working from home. Since 2018, we have
saved net EUR 354 million, and are on course to
achieve our 2021 target of net EUR 400 million.
The improved quality of our business is reflected
in a performance price of 36.9 EUR-cent/kg, up
from 36.6 EUR-cent/kg in 2019. Our net profit
ended at 3.2 per cent and the financial leverage at
2.7, enabling the Board of Directors' proposal to
the Board of Representatives of a EUR-cent 1.75
supplementary payment per kilo milk, which is
0.75 EUR-cent/kg more than in previous years.
66 DURING
COVID-19, WE
HAVE PROVEN
TO BE AGILE
AND EFFICIENT
IN TIMES
OF EXTREME
UNCERTAINTY. ❞
Sustainability action
2020 saw us take further sustainability action
throughout the value chain, on packaging,
renewable energy for dairies, biogas trucks and
the launch of a carbon net zero organic milk.
The most prominent achievement is that 93 per
cent of our owners with considerable efforts
implemented Climate Checks and 100 per cent
our ArlagårdenⓇ programme. Arla farmers are
among the most climate efficient in the world and
committed to making ongoing progress on our
climate and broader sustainability ambitions.
Expectations for 2021
2021 will be another challenging year with the
ongoing impact of Covid-19 and its effects on
economies and people's livelihoods. We expect to
deliver growth, but not to the extent seen in 2020.
The Free Trade Agreement between the EU and
the UK announced just before the year end is
welcome news. Brexit does bring some non-tariff
barriers, however, we are well-prepared to manage
the new procedures and focused on minimising
the extra costs.
2021 will also be the year in which we will present
a new strategy to replace Good Growth 2020, which
has successfully improved the quality and resilience
of Arla over the past five years. Our strengthened
position makes our dairy cooperative a solid home
for farmers in the uncertain times ahead.
Peder Tuborgh
CEO
Calcium
130
(million EUR)
2020
2019
2018
130
110
114
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