Arla Cuts Organic Milk Price
Arla has cut the price it will pay UK farmers for organic milk by 2ppl from next week, saying that consumers are scaling back their organic purchases in the face of the recession.
It seems to be another case of consumer ethics & ideology going out of the window when cash is tight.
The move will drop the price for a standard organic litre to 33.5p, still a premium of 8.5p/litre above Arla's standard milk price.
The move comes against the depressing backdrop of news that 15,000 UK dairy farmers have quit the industry since 1997.
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."
Arla Sees Profits Falling In 2009
Arla Foods AmbA, the Danish/Swedish-owned co-op says it expects profits to fall significantly in 2009 as milk prices decline "rapidly" after four years of gains.
“2009 will definitely be a tough year,” said Arla CEO Peder Tuborgh.
Denmark-based Arla won’t reach a sales forecast of 52 billion kroner ($8.8 billion) this year because of the Danish kroner’s strength against the pound and the financial crisis, the CEO said. The U.K. is Arla Foods’ largest market.
The price of skim-milk powder, the benchmark for world trade, has dropped 49 percent this year on the Chicago Mercantile Exchange. That has affected profitability at Arla, Europe’s second-largest dairy company, and the likes of Groupe Danone SA, the world’s biggest yogurt maker, which this month said revenue will rise in 2009 at a rate below its “medium-term” prediction.
“Looking beyond 2009 is very difficult, because the dairy market has for the past 12 to 18 months, and will continue, to be extremely volatile and difficult to predict,” Tuborgh said. “On top of that, we are seeing recession.”
Wiseman And Arla Announce Milk Price Increases
Robert Wiseman has announced that its farm gate milk price would increase by 1p/litre from 1 November 2008, taking a standard litre to 27.2p/litre. The company said it would also increase prices during October, once negotiations with customers had concluded, thought to be sometime within the next fortnight.
Meanwhile, Arla said it would increase the price for milk supplied by members of its dedicated supply group, Arla Foods Milk Partnership (AFMP), by 1p/litre, with effect from 13 October 2008. That increase would take its standard milk price to 27p/litre and was in addition to the volume bonus announced at the beginning of October.
Arla Foods Announces Half-Year Results
Arla Foods amba has today announced half-year results in line with expectations. Net profit for January to June 2008 was DKK 481 million (£50.63 million).
Despite the good result, the company is operating in a challenging environment with a number of factors impacting on earnings. The cancellation of EU export subsidies in the first half of 2007 resulted in the company losing substantial revenues, coupled with foreign exchange rates falling significantly below those for the same period last year.
In the Middle East consumers are still uncertain about Danish products and this remains a concern. Finally, rising cost inflation and higher energy prices continue to put pressure on earnings for both Arla and its farmers.
Offsetting these challenges, an improvement in earnings has been achieved due to the company working to seek recovery of higher costs from its customer base to offset inflationary pressure on milk and commodities. In addition, the benefits from the extensive rationalisation programmes of recent years are being realised.
Commenting on the half-year results Peder Tuborgh, CEO of Arla Foods amba said: “We anticipate that 2008 will be more profitable than 2007, however the market will be more volatile with frequent price variations – partly due to the elimination of the EU’s regulatory mechanisms. The pressure on the price will be maintained during the second half of the year.“
Arla ups milk price 0.5ppl
Arla Foods UK has increased the milk price it pays to its supply partnership (AFMP) members by 0.5ppl.
The price rise applies from June 1 and takes the producer price to 26ppl.
Deputy chief executive of Arla Foods UK, Hanne Sondergaard said the increase came despite the fall in milk commodity prices and followed good progress in price negotiations."The 0.5ppl increase reflects our commitment and that of our customers to improve our price within a very competitive marketplace," she said.
AFMP chairman, Jonathan Ovens, adds said he believed the additional 0.5ppl offered an important boost to members at a time when on-farm costs continued to rise.
"Arla Foods recognises that there is volatility in the marketplace and has agreed to continue to monitor developments, and on-farm costs, to ensure that its current milk price reflects market conditions," he said.
