Interim result in line with the budget

Despite falling world market prices for most dairy products during the first half year, Arla Foods’ interim result of DKK 425 million (as at March 31, 2002) was in line with the budget.

Trading conditions were affected by falling prices for bulk products (cheese, butter and skimmed milk powder) in export markets which declined during the first six months. The lower rate of the dollar also played a role.

“We expect to meet the expected result for the year although earnings have been under pressure,” said Jens Bigum, Managing Director, Arla Foods. “In the light of falling milk prices in a number of countries, we regard the interim result as satisfactory.”

Favourable trading conditions produced a better than expected result last year.

"It’s particularly during periods of declining world prices that our strategy of focusing on added value products will prove its worth,” Bigum said.

The ex-farm price for the financial year 2001/02 is expected to be 258 Danish øre per kg in Danmark and 308 Swedish øre per kg in Sweden.

Traditionally, Swedish co-operative owners have been paid for their milk on an ongoing basis with no supplementary payments. By contrast, Denmark has operated an “on account” price policy with supplementary payments at the close of the financial year.

At the beginning of the current dairy year, in order to harmonise the two systems, it was decided to raise the on-account price to 240 Danish øre per kg against 235 Danish øre per kg last year. This means a smaller than usual supplementary payment in Denmark and a larger than usual payment in Sweden.