Arla Foods achieves strong financial performance in 2024

In 2024, Arla Group's total revenue reached EUR 13.8 billion and the company achieved a net profit of EUR 401 million. The performance price increased to 50.9 EUR-cent/kg, marking the second-highest level in Arla’s history and reflecting strong market demand and effective cost management. As a consequence, Arla proposes a supplementary payment of 2.2 EUR-cent/kg milk delivered, marking the highest dividends paid to the farmer owners in the company’s history. 

”Arla's strong results in 2024 are a testament to the dedication and skill of our farmer owners and employees. Our competitive milk price and financial performance reflect our ability to navigate a complex market landscape effectively and deliver value to our stakeholders.” says Jan Toft Nørgaard, Chair of Arla Foods. 

In 2024, consumers across Europe saw a resurgence in purchasing power and Arla Foods saw a return to branded volume growth, as Arla’s strategic brands Arla®, Lurpak®, Puck®, Starbucks™ and Castello®. achieved a volume-driven revenue growth of 3.7%, compared to a decrease of -0.7% in 2023. This rise in brand growth significantly contributed to Arla's high revenue level.  

Arla’s Fund our Future transformation and efficiency programme exceeded expectations and achieved a net saving of EUR 131 million. 

The strong financial performance enabled the Arla Board of Directors to propose the company’s highest-ever supplementary payment of 2.2 EUR-cent/kg of milk delivered, totaling EUR  292 million. This payment underscores Arla's commitment to delivering value to its farmer owners and exceeds the level set in Arla's Retainment Policy.         

"I am delighted that Arla Foods is performing well, and we see a high demand for dairy and our products in particular across the globe. The highest ever supplementary payment, along with a highly competitive milk price, reflects Arla’s financial strength, states Peder Tuborgh, CEO of Arla Foods.   

In 2024 Arla continued to invest in significant projects to support future operations. Investments reached a record high of more than EUR 1 billion.

On track towards 2030 target with climate initiatives
This year, Arla consolidated its sustainability efforts under the FarmAhead™ brand, underscoring a dedicated push towards science-based farming. FarmAhead™ Technology provides Arla’s farmer-owners with essential tools to measure and advance their sustainability transitions. Key components include a climate check with more than 200 data points for every Arla farm, and Arla’s incentive model, where farmers are compensated directly in the milk price based on the number of climate actions they implement.

In 2024, Arla made significant strides in reducing emissions, cutting Scope 1 and 2 emissions by 4 percentage points to achieve a 37% reduction from 2015 levels. This progress was mainly driven by energy optimizations, district heating, heat pump investments, and contributions from power purchase agreements.

With the support of FarmAhead™ Technology, Arla's farmer owners continued to reduce carbon emissions in 2024 despite challenges from weather and uncertainties around future legislation. This led to an additional 1 percentage point decrease in scope 3 emissions per kg of milk and whey contributing to an overall reduction of 13% since 2015.

In 2024, Arla’s absolute emissions related to milk was reduced by 3 % compared to 2023, corresponding to 415 thousand tonnes of CO2e. While reductions were evidently achieved by Arla farmers, a substantial increase in the purchase of external whey for Arla’s growing ingredients business led to only a modest decrease in total scope 3-emissions compared to 2023.

"We remain steadfast in our sustainability journey, and we are on track to meet our ambitious goals. In 2024 we took the lead in sustainability for the dairy industry with our innovative FarmAhead™ initiatives. Our integrated approach not only reduces emissions but also adds value to our customers and farmer-owners, demonstrating our commitment to shaping a sustainable future”, says Peder Tuborgh.

Food security in an unpredictable world
The high levels of geopolitical turbulence from previous years persisted in 2024, with conflicts such as the war in Ukraine and tensions in the Middle East. These crises, in addition to their dire humanitarian impacts, fueled market volatility and uncertainty, disrupted global logistics, and highlighted the vulnerabilities in international supply chains. 

“In an unpredictable world, maintaining food production is paramount, Governments that have not yet prioritized a comprehensive strategy for food security must ensure that it’s in place going forward. Ensuring robust local food systems is not just a matter of economic stability, but a fundamental responsibility to safeguard our communities in times of uncertainty”, says Peder Tuborgh.

Arla is actively contributing to food security and stability within its home markets. In Sweden, Arla is engaged with the food authority consultation group and contribute actively to the ongoing work to strengthen the civil defense. In Finland, where there is a long history of preparing for exceptional circumstances, the dairy industry is a key component of food security. The authorities at the National Emergency Supply Agency coordinate and promote preparedness measures, and Arla, along with other food companies critical to security of supply, participate in activities through the food pool.

Across home markets, Arla upholds a significant supply chain responsibility by efficiently processing and utilizing milk from local dairy farmers. This approach secures local employment and ensures the continuous provision of nutritious, high-quality products to consumers.  Arla's strategic investments in logistics, infrastructure, and collaboration with farmers and stakeholders are designed to maintain a stable food production and supply chain, even amidst challenges. 

"Our cooperative model not only ensures resilience and stability in food supply but also strengthens our capacity to support and feed communities during times of crisis. The fact that we are farmer owned allows for rapid adaptation and innovation during these challenging times, as decision-making is closely linked to those closest to production, says Peder Tuborgh.

Also essential is Arla Foods Ingredients, where Arla discovers and delivers ingredients and products that can advance lifelong nutrition for the benefit of consumers around the world. With a specialty in early life nutrition, medical nutrition and health foods, the business is in the midst of a growth journey. This was marked by several strategic changes in 2024, including the acquisition of Volac’s Whey Nutrition Business, the largest acquisition in AFI history.

Outlook
Looking ahead to 2025, the geopolitical turbulence is expected to persist, and will require careful navigation, leveraging Arla's cooperative strength and local food production capabilities.
       
Despite these challenges, consumer purchasing power is anticipated to remain stable in 2025, following improvements in 2024 due to lower inflation and higher wages. However, dairy demand is expected to be influenced by consumer reactions to elevated dairy prices and ongoing geopolitical uncertainties.            
           
The global dairy supply, which lagged behind demand in 2024, is anticipated to adjust to the higher price levels, potentially increasing supply in 2025. Nonetheless, political uncertainties, particularly those related to sustainability in core markets, may continue to pose challenges.           
           
Arla projects its 2025 revenue to range between EUR 14.5-15.3 billion, driven by the high dairy price level, with profit share within the target of 2.8% to 3.2%. However, the high price levels, combined with consumer uncertainty, are expected to pressure branded volume-driven revenue growth, projected at -2.0% to -1.0%. This range is subject to the balance of supply and demand dynamics throughout the year. Arla projects efficiencies  for 2025 in the range of EUR 90-110 million.

"Our commitment to resilience and adaptability remains unwavering. By harnessing the strength of our cooperative model and focusing on sustainable practices, we are well-positioned to navigate the uncertainties ahead and continue delivering value to our farmer owners and customers, says Peder Tuborgh.

Additional information

Annual Results 2024 key figures: 

• Group revenue: EUR 13.8 billion (2023: 13.7)
• Performance price: 50.9 eurocent/kg  (2023: 47.0)

• Milk volume: 13.7 billion kg (2023: 13.9)

• Net profit share of revenue: 2.9% (2023: 2.8%)
• Proposed supplementary payment: 2.2 EUR-cent/kg of milk delivered (2023: 2.1 EUR-cent/kg of milk delivered)

• Net efficiencies: EUR 131 million (2023: 114)

• Leverage: 3.2 (2023: 2.6)

• Overall strategic branded volume driven revenue growth: 3.7% - Includes Lurpak® Arla ® Puck® Castello® Starbucks ™ (2023: -0.7%) 

Sustainability 

• Scope 1+2 emissions reduction: 4%P
• Scope 3 emissions reduction: 1%P
• Absolute emissions related to milk reduction: 3%

• Arla consolidated its sustainability efforts under the FarmAhead™ brand, underscoring a dedicated push towards science-based farming.

UK performance characterised by strong branded growth

2024 was a year of strong performance in the UK for branded growth. Branded revenue increased by 103mEUR (£89m)  with total branded growth at +7.6%.  This was largely driven by the Arla® brand at over 10% and Lurpak® at 7.5%. Arla Protein saw big gains growing at 28.6% and Arla Skyr increasing by 21.5% in a particularly strong year for Arla’s yogurt brands.

Arla’s UK foodservice division also saw strong volume growth at over 22%, with strategic branded revenue growth finishing the year at over 17%.

Following changes in the external landscape such as lower prices and overall milk volume declines, plus adjustments to private label volumes, UK revenue saw a slight decline of -2.9%* year on year.

Bas Padberg, managing director of Arla Foods UK, comments, “2024 was clearly a year of strong branded growth, which really highlights the power of the portfolio and product mix we have, as shoppers look for quality, nutritious and tasty products.

“As a cooperative, everything we do is to drive the best possible returns for our owners, so through strong collaboration and the support of the farmers, our customers and the whole business,  means we can give back to our farmers for the hard work they do in producing our food and investing for the future of the dairy industry.”

2024 also saw Arla continue to support various projects to ensure access to nutritious milk for those that need it. Through the ongoing partnership with FareShare, Arla donated over 2.7million meals to almost 4,500 charities. In addition, Arla’s collaboration with the Coronation Food project has delivered 1.25million breakfasts for those in need.

Bas Padberg continues, “As a nutrient dense food, milk can play an important role in contributing to a healthy, balanced diet. Supporting people with access to quality dairy products is something we are hugely passionate about and will continue to do into 2025.”

* in GBP/ 2024 group consolidation rate

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