27 September 2006 - Arla Foods UK plc is today updating the market on trading for the twelve months to 30 September 2006.
On 24 July 2006, we announced our intention to dispose of our middle ground and doorstep delivery businesses to Dairy Crest Group plc for £33 million. Since then, trading has been in line with our expectations and our performance in the second half will represent a significant improvement on the first half.
Our brands have performed strongly, and Arla continues to be the market leader in the butter, spreads and margarine category. Sales of Lurpak have increased 8% year on year, and Anchor has increased 5% year on year.
Our Cravendale brand has grown by over 10% in value year on year with retail sales of over £72 million, despite significant fluctuations in conventional retail milk selling prices since March 2006. Further significant marketing activity for Cravendale is planned for the autumn.
All our major brands have benefited from a high level of marketing investment during the year, which is expected to continue into 2007.
Although fresh milk volumes to our three major supermarket customers are ahead by more than 6% in a generally flat market, which was temporarily affected by the hot weather in July, total fresh milk sales including those to middle ground retailers are similar to the previous year.
Our sales of organic milk have increased by 25% over the full year.
Exceptional utility and packaging inflation incurred during the winter months has been mitigated by a combination of increased prices and a sustained improvement in both operating and central costs throughout the year.
The impact of CAP reform has resulted in substantially lower realisations from sales of commodities, subsequently reflected in lower milk prices.
Our Preliminary results will be announced on 23 November 2006.