Arla, the farmer-owned dairy co-op, has announced it will pay all of the profits it makes in 2018 to its co-op members in a bid to support farmers after a difficult year. Arla estimates its net profit for 2018 will be in the range of 2.8% to 3.2% of total group turnover. If realised, this would see a sum in the region of €285m to €310m paid out to Arla members as an extraordinary payment, likely to be made in March 2019.
Arla, the farmer-owned dairy co-op, has announced it will pay all of the profits it makes in 2018 to its co-op members in a bid to support farmers after a difficult year. Arla estimates its net profit for 2018 will be in the range of 2.8% to 3.2% of total group turnover.
If realised, this would see a sum in the region of €285m to €310m paid out to Arla members as an extraordinary payment, likely to be made in March 2019.
Arla estimates the payment will equate to an additional 2.3c/l to 2.5c/l of milk for its farmer members.
Arla is owned by 11,200 farmers in the UK, Denmark, Sweden, Germany, Belgium, Luxembourg and the Netherlands who supply the co-op with 14bn litres every year
Jan Toft Nørgaard, chair of Arla co-op, said the co-op was proposing these extraordinary measures in recognition of the drought which hit Europe this summer and left many of its farmer members in a very difficult financial situation.
Arla is owned by 11,200 farmers in the UK, Denmark, Sweden, Germany, Belgium, Luxembourg and the Netherlands who supply the co-op with 14bn litres every year.
The proposal is subject to approval by the board of representatives in the co-op, which is made up of 179 farmers and 12 employees of the co-op.
Half-year results
Arla also announced half-year results with pre-tax profits increasing 2% year on year to €132m. Sales for the first six months of 2018 increased 2% to just over €5.1bn driven by growth in branded sales.
Sales of branded dairy products accounted for 45% of Arla’s total sales in the first half of 2018.
Profits (EBIT) increased by 4% in the period to €164m as profit margins widened marginally to 3.2%.
Peter Tuborgh, chief executive of Arla, said the co-op was able to make the extraordinary payment of all its profits to farmers due to its strong balance sheet.
Net debt
Arla net debt position stood at €1.9bn at the end of June, which is a manageable 2.6 times’ earnings.
Arla has also announced it will invest more than €36m in a new innovation centre in Denmark, which will focus on developing new products from whey and other milk-based ingredients.
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