Arla Foods UK's revenue increased in 2022 in the face of significant inflationary pressures

In a statement, Arla said: “As the cost of living crisis gained momentum and consumer spending habits changed, Arla’s total branded growth saw a slowdown following two years of exceptionally high growth during the pandemic, with a 7 per cent decline versus 2021.

“As positive momentum continued in Arla’s Foodservice division, Arla Pro grew by 17 per cent. The strong growth was driven by channel and category expansion, as the market continued to recover from post covid restrictions.”

In 2022, Arla achieved a net profit allocated to farmer owners of EUR 382 million, or 2.8 per cent of revenue, which it said was at the bottom end of its target range of 2.8-3.2 per cent.

Profit was driven by unprecedented high margins on commodity products, which, together with high production costs put retail and foodservice margins under pressure, Arla said.

Ash Amirahmadi, managing director of Arla Foods UK, commented: “As we saw in the first half of last year, inflationary pressure and uncertainty for us and our farmer owners continued to dominate, as we saw the cost of producing milk soar to levels we have never seen before.

"For us, balancing increased returns to our farmer owners to enable them to keep producing milk, whilst ensuring our nutritious dairy products remain accessible and affordable for shoppers was a key priority that we had to face to into.”

“There is no doubt that 2023 will continue to present volatile economic conditions and we will continue to navigate these conditions with the best interests of our farmers and our shoppers at the heart.

"Producing natural, nutritious, accessible and sustainable dairy is the DNA of Arla, and following the introduction of our new sustainability incentive model last year, we will continue our focus on supporting our farmers with their transition to sustainable dairy, whilst providing consumers the very best dairy products that are made in the best possible way.”

Arla employs 1,400 people in Yorkshire. It has two production sites (Settle and Stourton, near Leeds), one National Distribution Centre (Stourton) and its UK head office, which is also in Stourton.

Looking ahead Arla said that 2023 will be another difficult year with the challenging economic environment globally and the ongoing effects of the war in Ukraine continuing to impact the energy market and supply chains.

It added: “We are currently seeing some easing of cost pressure on farmers, and as a result we expect the supply and demand balance to be restored on the dairy market over the course of 2023. Commodity prices, however, began a sharp decline during the fourth quarter of 2022, and we expect further decrease on the commodity markets in 2023.”