Damaging decline in the value of the Swedish krona

Major European dairy companies have also enjoyed a satisfactory year. Referring to some of Arla Foods’ largest competitors Jens Bigum noted “they are gaining on us.”

”Today our milk price is 1.5% above the average for these companies. Last year we were 6.6% higher,” he said, adding:
”One important reason for this trend is the fall in the Swedish exchange rate – a factor outside our control. Had the Swedish krone remained unchanged, our result would have been 4.2% above the European average.

Currency decline
To watch the group’s largest currency decline by 7.5 % against the euro was, in Jens Bigum’s words, “a very special experience.”
On the backdrop of this, Jens Bigum expressed his regret that the group was forced to operate in several currencies.

”No one should be in any doubt that this makes trading conditions complex beyond reason,” he said, pointing towards areas such as accounting comparisons within the group, product distribution between countries, calculations concerning structural decisions and cross-border comparisons of milk prices.

Exposed
Bigum believed that, as a Danish-Swedish concern, Arla Foods is more exposed to such factors than others. However, he said that the group was not alone in regarding the issue of different currencies as a barrier to Nordic co-operation.

”Arla Foods, therefore, welcomes the Swedish Prime Minister Göran Persson’s frequent calls to join the euro. A targeted Swedish move towards adopting the Euro should also have a positive impact on the debate in Denmark. This could help us out of the currency isolation which we Danes have imposed on ourselves,” said Jens Bigum who drew attention to the fact that, as from January 1, 2002 most of Arla Foods’ competitors need only operate in one currency.
”The rest of us will be watching from the sidelines,” he said.”