Weakening trends put pressure on prices and foreign exchange rates as German sales decline.
This was the message from Arla Foods’ Managing Director Jens Bigum to a meeting of Arla Foods’ Board of Representatives in Stockholm Wednesday.
Although profits for the two domestic divisions, Denmark and Sweden, are largely in line with expectations, the Ingredients and Production Divisions have experienced significant falls. This means that profits from dairy operations are currently falling short of the budget.
”It’s too early to predict the outcome for the year as a whole, but it seems likely that we’ll not reach the budgeted target this year,” Jens Bigum said.
In the past three months, US dollar, sterling and Saudi riyals rates have all fallen. Currently the dollar is worth DKK 6.90 which, over 12 months, means a cut of DKK 300 million in export earnings. This corresponds to five øre per kg milk.
In addition, the economic crisis in Germany has put the brake on Europe’s economy and made consumers more reluctant when buying food products. Both butter and cheese are now achieving lower prices.
”Only a marked improvement in the economic situation within the new few months will change this,” Jens Bigum said.
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