Danish dairy cooperative Arla Foods has launched an internal transformation programme in order to improve efficiencies and realise savings across the company in addition to strengthening its investment capability.
The producer of Anchor butter and spreads is looking to deliver more than €400M (US$487M) in savings by the end of 2020 through its three-year ‘Calcium’ programme, launched as a part of its Good Growth 2020 strategy, the company said in a 20 April statement.
The general aims of the programme were to improve returns to Arla’s farmer-owners and maintain a competitive milk price and to reinvest into business areas of strong growth.
The company said the Calcium programme’s goals had been planned since the end of 2017, but the scope of the cost-saving ambitions had been increased due to external challenges.
Peder Tuborgh, CEO of Arla Foods, said there had been two unexpected developments outside Arla’s control that had hit the company.
“These are the currency impact of Brexit on our actual performance and the impact of the reversal in commodity prices on fat and protein on our relative performance against our international peers,” said Tuborgh.
“These developments have negatively impacted our profitability.”
The programme covered activities throughout Arla, including production, products, procurement, promotional marketing and people.
Out of the expected €400M in savings, the firm aimed to return €300M back to farmers through farmgate milk price, with the additional savings being reinvested into the Good Growth 2020 strategy.
Arla did not disclose what specific consequences – including the number of jobs – the programme would have within specific areas of the company, saying it was too early to comment on any possibilities.