Arla Cuts 2008 Profits Forecast 33Pct Citing Credit Crunch, Melamine Scandal

Arla Foods has reduced its 2008 profit forecast by up to 33%, citing the global financial crisis and the melamine contamination of China-made milk products as two of the main reasons.

The Danish dairy co-operative said it now expects its profits for financial year 2008 to drop from an estimated DKK 900 million to DKK 600-700 million.

Arla also warned that its leadership would be focusing on cost saving measures in 2009, without elaborating on what these might be.

"During this autumn, it became clear that the financial crisis had developed into an economic crisis with consumers opting for cheaper dairy products and, in certain markets, avoiding buying them altogether," said the company.

It added: "The latter especially has had a strong impact on Arla’s trading business."

Arla also said it was factoring in "for losses in the Chinese market as a result of the melamine crisis."