Dairy group Arla sees higher revenue in 2025 as prices rise

COPENHAGEN (Reuters) - Denmark's Arla Foods, maker of Lurpak butter and Castello cheese, reported a slight rise in 2024 revenue on Wednesday and predicted a bigger increase this year driven by higher prices.

The cooperative, which is one of the world's largest dairy firms, said it had continued to slash costs and that it would raise its dividend payment for 2024 to a record high.

"We see a high demand for dairy and our products in particular across the globe," Arla CEO Peder Tuborgh said in a statement.

The company, owned by 7,600 dairy farmers in seven countries across northern Europe, posted 2024 revenue of 13.8 billion euros ($14.43 billion), up from 13.7 billion in 2023. It forecast revenue would rise to between 14.5 billion and 15.3 billion euros in 2025, with growth "driven by the high dairy price level".

It predicted consumer purchasing power would remain stable in 2025 following improvements in 2024 that were driven by easing inflation and rising wages compared to the previous year.

Arla's profit, which last year stood at 401 million euros, or 2.9% of its revenue, was expected to remain in the group's target range of 2.8% to 3.2% in 2025, it said.

Arla expects global dairy supply, which fell short of demand in 2024, to adapt to the elevated price levels, potentially boosting output in 2025, it said.

However, it said geopolitical tensions and uncertainty in the global market were of concern, with the war in Ukraine and developments in the Middle East highlighting vulnerabilities in international supply chains.

Arla, a competitor of companies like Danone and Nestle in the dairy industry, is owned by farmers in Denmark, Sweden, Britain, Germany, Belgium, Luxembourg and the Netherlands.

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(Reporting by Isabelle Yr Carlsson, editing by Terje Solsvik and Susan Fenton)