Arla’s UK and German mergers boost income by £1.2bn

By Lorraine Mullaney

- Last updated on GMT

Related tags: Milk link, Milk, Mergers and acquisitions, Butter

Anchor production will be moved to the UK this month
Anchor production will be moved to the UK this month
Danish milk processor Arla’s merger agreements with Milk Link in the UK and German processor MUH will increase the firm’s annual revenue by £1.2bn.

Arla submitted the merger applications to the EU Commission for approval last month and is awaiting a decision.

“It’s in the hands of the authorities now,”​ Amanda Hare, spokeswoman for Arla UK, told “We’re all waiting with baited breath.”

The merger with the UK’s dairy co-operative Milk Link is a strategic milestone for the Danish firm, which has long-term plans to grow its business in the UK and become “a strong European dairy company that operates globally”​.

Last week (August 31) it also announced plans to produce Anchor butter in the UK for the first time. Production will be moved from New Zealand to its Westbury site in Wiltshire by the end of this month.

UK focus

As the milk processor released its half-year results for 2012, Arla UK ceo, Peter Lauritzen, said: “In addition to achieving a financial result in line with our expectations, we delivered several strategic milestones, principally the commencement of the construction of our new dairy at Aylesbury and the announcement of our proposed merger with Milk Link.

Looking ahead to the second half of 2012, Lauritzen said: “Our focus for the remainder of the year, in addition to implementing the proposed merger with Milk Link, is ensuring a successful start of Anchor butter production at our dedicated butter-making facility in Westbury and maintaining focus on costs in order to deliver our demanding 2012 targets.”

For the first six months of 2012, Arla posted revenue of just under £3.4bn (compared with £3.1bn in the first half of 2011). The firm said the increase was the result of a combination of organic growth within core and growth markets and the realisation of merger and acquisition benefits, including those in Sweden and Germany.

Price pressures

Arla’s achievements have been against a background of a large increase in global milk production, which has put significant pressure on earnings and, consequently, milk prices.

“We anticipate that we will be able to deliver the three per cent increase in revenue in our annual results as planned, which equates to £204M,”​ said Arla’s chief financial officer, Frederik Lotz.

“However, the milk price currently paid to our owners is not as high as we would like,”​ said Lotz. “The world commodity market has proved more unfavourable than foreseen, primarily due to an unexpected increase in world milk production.”




Related topics: Dairy, Dairy-based ingredients

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