Arla Foods has delivered strong results in the UK despite the pandemic, with revenues growing nearly 5 percent in the first half of 2020.
Foodservice closures shifted demand into shops and supermarkets with dairy proving a high priority product as the UK went into lockdown.
Despite this, results show that Arla Foods UK reported a revenue growth of 4.7 per cent in the first half of 2020 with a net revenue of £1bn.
The co-op has underlined that the figures mask a 'complex story' of changed profitability, operating costs and temporary demand which may not be sustained across the rest of the year.
Ash Amirahmadi, Managing Director Arla Foods UK said: “With more people cooking and dining at home to stay safe, demand spiked and our retail sales grew.
"However, at the same time our foodservice business almost came to a complete standstill overnight as restaurants, coffee shops and canteens closed.
"There was a dramatic shift in our business for most of the half-year, but our colleagues have adapted extremely well to working through difficult conditions and I am grateful for their support and efforts to help feed the nation.”
In the first half of 2020, Arla achieved an overall Strategic Branded Revenue Growth of 16% compared to the first half of 2019.
The most significant increase came from Cravendale which grew 22 percent, Lurpak at 20 percent and Anchor at 17 percent.
However, Arla warned that whilst overall performance had been good in the first half of 2020, the lack of profitability in the liquid milk category in the UK market remained a challenge.
But despite the global market circumstances throughout the first half of 2020, the milk price to farmers remained stable at a competitive level.
The Arla Group performance price – which measures the value Arla creates per kilogram of owner milk – was at 37.0 EUR-cent compared to 36.1 EUR-cent first half year of 2019.
Peder Tuborgh, CEO of Arla Group, said the Covid-19 pandemic was one of the most severe crisis situations the co-op had experienced.
"We quickly channelled milk from our foodservice business into retail and successfully maintained a steady flow of products in demand while our foodservice business found creative solutions to support their customers.”
Despite the uncertain external factors, the Arla Group still expects to meet its expectations for the full year.
Revenue outlook for 2020 is in the range EUR 10.4bn (£9.2bn) – EUR 10.8 bn (£9.6bn), a net profit of 2.8 to 3.2% of revenue and a year-end leverage at the bottom or below target range of 2.8 - 3.4.
