31/08/2021 | Ingredients

Arla Foods raises full-year earnings guidance despite higher resource costs

The inflationary environment created by Covid-19 is expected to challenge dairy giant Arla Foods and its farmer owners with increasing production costs due to higher prices on fuel, energy, packaging and feed. Despite these headwinds, the global dairy cooperative adjusted its expectations for full year revenue for 2021 to the range of EUR 10.6 bn to EUR 11 bn. These promising results were predominantly driven by retail sales, which allowed the company to pay out a competitive prepaid milk price to farmer owners. Total Arla group revenue increased slightly by 1.2 % to EUR 5.441 bn.

Many of Arla’s farmer owners are challenged by increased production costs as global prices of fuel, energy and feed going up. Arla increased the guidance of its branded sales volumes growth to around 3 to 4 %, and its year-end leverage to no more than 2.8 %. Its net profit forecast is maintained at 2.8 to 3.2 % of revenue.