Arla Foods marks 25 years of cooperative strength with solid half-year performance

Performance in the first half of 2025 reinforces Arla Foods’ commitment to value creation for farmer owners, with a competitive milk price, major investment decisions and continued progress on sustainability.

This year, Arla Foods celebrates the 25th anniversary of the merger between the Swedish cooperative Arla and the Danish cooperative MD Foods, which created the company as a cross-border, farmer-owned dairy cooperative.

In the first half of 2025, Arla Foods marked this milestone by delivering results in line with expectations in a volatile market. Building on a quarter-century of collaboration and resilience, Arla Foods achieved a net profit of EUR 158 million and a competitive performance price of 57.5 EUR-cent/kg. Revenue for the period was EUR 7.5 billion. Based on this performance, the Board of Directors has decided to make a half-year supplementary payment of 1 EUR-cent/kg milk based on the half-year milk volumes.

“As we mark our 25th anniversary, Arla Food’s ability to maintain a solid performance in a volatile market clearly demonstrates the strength of our cooperative model and the dedication of our farmer-owners and colleagues. Our performance in the first half of 2025 reflects our ongoing commitment to healthy, sustainable dairy and to creating value for all those who depend on Arla Foods,” says Peder Tuborgh, CEO of Arla Foods.

As expected, geopolitical uncertainty and higher dairy commodity prices created a more challenging market environment in the first half of 2025. These factors led to a 1.5 percent decline in Arla Foods’ branded product sales volumes compared to the first half of last year, as consumers became more cautious in response to higher prices and economic uncertainty.

“Although we saw a slight decline in branded sales volumes in the first half of the year, we expect the situation to improve as we move into the second half. With continued focus and the strength of our brands, we are well positioned to respond to changing market conditions, and we anticipate that branded growth will be close to neutral for the full year,” says Torben Dahl Nyholm, CFO of Arla Foods.

Arla Foods’ performance was further boosted by exceptional results in its ingredients business, driven by the successful integration of the Volac Whey Nutrition business acquisition. This integration has significantly strengthened Arla’s market position at a time of high demand for dairy proteins worldwide. The strong growth in this segment reflects Arla’s ability to meet the evolving nutritional needs of a growing global population and to drive innovation across the food industry.

Investments support future growth

In the first half of 2025, Arla Foods made several major decisions on future investments, reflecting the cooperative’s ongoing commitment to future growth, capacity expansion, and innovation across its business.

Key projects included an investment in UHT milk production in the UK, an expansion of cream cheese production capacity in Holstebro, Denmark, an investment in Linköping, Sweden to meet rising demand for Skyr products, and an expansion of cheese-in-glass-jar production capacity in Bahrain.

“Arla Foods’ high level of investment decisions in the first half of 2025 is a clear demonstration of our commitment to long-term resilience and reliability. By strengthening production and supply capabilities, we continue to play an important role in safeguarding food security and ensuring a steady supply of high-quality dairy products for customers and communities across our markets,” says Peder Tuborgh.

Full-year investments are expected to be in the range of EUR 650–700 million, excluding mergers and acquisitions.

Advancing sustainability through customer partnerships

Arla Foods continues to make progress toward its 2030 target of reducing on-farm emissions by 30% per kg of milk and whey, supporting farmer-owners in the transition to more sustainable dairy production. In the first half of 2025, the cooperative further developed its FarmAhead™ Technology platform, providing farmers with advanced, data-driven tools to measure, understand, and continue their sustainability efforts.

A key milestone this first half of the year was the expansion of the FarmAhead™ Customer Partnership program, which brings Arla Foods and its customers together to drive climate action on farms. For example, a new collaboration with a customer in Denmark focuses on retiring carbon-rich lowland soils, helping to reduce emissions and promote biodiversity. With total milk volumes exceeding 4 billion kilograms in the first half of the year, this kind of partnership enables both Arla Foods and its customers to make measurable progress towards their climate goals, while also providing customers with valuable data to support their sustainability reporting and commitments.

“By working closely with our customers and farmer-owners, Arla Foods is able to support meaningful progress on climate action and sustainability in the dairy sector. These partnerships help us create practical solutions and deliver value across the entire value chain,” says Peder Tuborgh.

Arla Foods and DMK approve merger plan

In June 2025, the Boards of Representatives of both Arla Foods and DMK Group approved a merger plan that will bring together two of Europe’s leading dairy cooperatives. This strategic step reflects a shared commitment to strengthening the cooperative dairy sector and creating added value for farmer owners, customers and consumers.

“The merger will expand opportunities for innovation, enhance resilience, and drive greater efficiency in an evolving global dairy market. By combining our strengths and expertise, Arla Foods and DMK are well positioned to meet future challenges and support the long-term development of the European dairy industry,” says Peder Tuborgh.

The merger will proceed to regulatory review, expected to conclude in the first half of 2026.

Outlook

Consumer purchasing power is projected to remain favorable, though sensitive to changes in the global environment. For a period of time, milk production worldwide has been limited, despite relatively high prices for farmers, likely influenced by uncertainty and new regulations. Recently, however, global milk production has begun to rise, possibly due to improved weather conditions. This increase in supply has contributed to a slight softening of global dairy commodity prices.

Expecting an improvement for the branded volume-driven revenue growth in the second half of 2025, Arla Foods has increased its outlook for branded growth to -0.5–0.5% for the full year. The revenue forecast has been adjusted to a range of EUR 14.7–15.2 billion, with profit share still anticipated within the target range of 2.8–3.2%.

Efficiency savings are now expected to reach EUR 100–120 million for the year, and the outlook for leverage is expected to be in the range of 2.9-3.3 by year-end.

“Celebrating 25 years as a cross-border, farmer-owned cooperative, Arla Foods’ ability to adapt and deliver value in a volatile market is clear. With stronger branded growth expected and an improved revenue outlook, we continue to build on the foundation laid by the merger of Swedish Arla and Danish MD Foods, and remain focused on delivering for our owners, customers, and society in the years ahead,” says Peder Tuborgh.

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Find the full half-year report here

Half year results 2025 key figures

• Group revenue: EUR 7.5 billion (HY 24: EUR 6,6 billion)

• Performance price: 57.5 eurocent/kg (HY 24: 47,5 eurocent/kg)

• Milk volume: 7.2 billion kg (incl. Non-owner milk) (HY 24: 7,0 billion kg.)

• Net profit share of revenue: 2.1% (HY 24: 2.5%)

• Half-year supplementary payment: 1 EUR-cent/kg milk (HY 24: 1 EUR-cent/kg milk)

• Net efficiencies: EUR 54 million (HY 24: EUR 62 million)

• Leverage: 3.5 (HY 24: 2.8)

• Overall strategic branded volume driven revenue growth: -1.5 % - Includes Lurpak® Arla ® Puck® Castello® Starbucks ™ (HY 24: 4.1%)

Commercial segments

Arla divides its business into 4 commercial segments.

Europe

In the first half of 2025, Arla’s European segment delivered a revenue increase of 10.9% to EUR 4,267 million, primarily driven by higher retail and foodservice prices following rising commodity costs. However, the elevated dairy price level led to a 2.4% decline in branded volume-driven revenue growth compared to last year. The decrease was most pronounced in the butter, spreads, and margarine (BSM) category, which saw an 8.3% drop, particularly impacting Sweden and the UK. In contrast, growth continued in the Skyr/Quark and milk-based beverages (MBB) categories, supported by the successful launch of Starbucks™ by Arla in Belgium and France. The Netherlands, Belgium, and France cluster maintained positive momentum, achieving 5.8% branded volume growth.

International

In the first half of 2025, Arla’s International segment delivered revenue growth of 0.9% to EUR 1,206 million, supported by higher price levels despite negative currency developments, mainly from the USD. Branded volume-driven revenue growth grew slightly by 0.4%. Growth was strongest in Southeast Asia, where branded volumes rose by 3.1%, while the Middle East and North Africa and Rest of World regions each achieved 1.9% growth, showing resilience amid ongoing geopolitical turbulence. In China, revenue declined due to the discontinuation of two Early Life Nutrition brands and market-driven volume pressures. At the brand level, Puck® achieved 2.7% growth, and Starbucks™ delivered a strong 12.3% increase. The segment continues to focus on navigating global trade uncertainty and economic challenges in key markets.

Arla Foods Ingredients (AFI)

In the first half of 2025, Arla Foods Ingredients delivered significant growth, with revenue up 53.7% to EUR 726 million. This was driven by strong market demand for dairy proteins, high prices for both commodity and value-added products, and the successful integration of the Volac Whey Nutrition business, which contributed EUR 137 million to revenue. Value-added protein product growth reached 37.3%, raising the total value-add share to 82.9%. A key focus during the period was the shift of production capacity at the Arinco site from Early Life Nutrition to ingredients, with full implementation expected in early 2026 and future sourcing of ELN products through a third-party agreement.

Global Industry Sales

In the first half of 2025, revenue in Global Industry Sales increased by 14.8% to EUR 1,255 million, driven by higher trading volumes and elevated commodity prices, especially for fat-rich products like butter and yellow cheese. The rise in trading volumes was prompted by lower retail demand in Europe and International markets and increased milk intake from farmer-owners following higher price levels. As a result, the proportion of milk solids sold through GIS grew to 28.5%, up from 25.8% in the same period last year.

Global brands

Strategic branded volume-driven revenue growth

Total: -1.5% (H1 2024: 4.1%, H2 2024: 3.4%)

• Arla: -3.1% (H1 2024: 3.8%, H2 2024: 3.9%)

• Lurpak: -4.0% (H1 2024: 7.9%, H2 2024: 3.3%)

• Castello: -1.7% (H1 2024: 0.1%, H2 2024: -2.0%)

• Puck: 2.9% (H1 2024: 4.4%, H2 2024: 2.3%)

• Starbucks: 17.4% (H1 2024: 0.2%, H2 2024: 1.2%)