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Bigum: Good result for 2002/03

Press Release   •   Dec 11, 2003 16:58 CET

Despite the falling milk price, Arla Foods’ Managing Director Jens Bigum regards the result for the 2002/03 financial year as good.

In his report at the meeting of the Board of Representatives in Stockholm this week, Jens Bigum emphasised that Arla’s earnings of 256.44 Danish øre per kg milk significantly exceeded that of its peer group – the five European co-operative dairies to which Arla compares itself.

"The difference is almost 10% compared to approximately 7% last year,” Jens Bigum told the meeting. “In 2002/03, therefore, our comparative results were the best ever. The difficulties over the past financial year have impacted less on Arla Foods than on our competitors. We see this as a sign that the processing strategy is succeeding once again and makes us less susceptible to fluctuations than other companies. On this basis, I have no hesitation in describing the result for the 2002/03 financial year as good.”

Growth no threat
Jens Bigum emphasised that the processing strategy is based on “a high, but clearly profitable level of investment” which has recently been the subject of heated debate in Sweden and Denmark.
"Growth ambitions and the consequent need for investment and consolidation are sometimes seen as a threat to the price paid to co-operative members. I’m convinced that the opposite is the case. When customers and competitors expand as they do, Arla Foods must develop alongside them. Growth is not an end in itself, but a means to maintaining sound earnings.”

Market development
In his report he set out how developments in different markets had impacted on Arla Foods.
"The Danish and Swedish domestic markets have partly been characterised by a certain reticence among consumers and partly by strongly increasing competition which is putting our market position and earnings under pressure."

In the UK, Arla has enjoyed a relatively strong financial position, which has formed the basis for positive trends in sales. And although the trend for sterling, followed by the weakening of the US dollar, have had an adverse effect, the UK Division achieved its best ever result.

In Central Europe, particularly in Germany, the situation is more difficult. The crisis in the German economy continues and unemployment is now above 10%.
"German consumers are seeking out the cheapest solutions by opting for discount and own label products,” continued Bigum. “This is putting pressure on our sales and earnings in the Central European market.”
In markets outside the EU, earnings were negatively affected by the fall in the US dollar and the EU’s policies on export subsidies.


Arla Foods’ Managing Director Jens Bigum retires by the end of the year. He is succeeded by Dep. Managing Director Åke Modig.