ANNUAL
REPORT
2024
We are progressing towards aligning our
reporting with the European Sustainability
Reporting Standards (ESRS) and the EU
Corporate Sustainability Reporting
Directive (CSRD), with full adoption
planned by 2025.
Sustainability statements
In the sustainability statements section,
we present our double materiality
assessment, highlighting the impacts,
risks and opportunities of significant
ESRS topics, including our progress in
each key area.
The statements also cover the statutory
reporting on Corporate Social
Responsibility (CSR) in accordance with
sections 99a and 99d of the Danish
Financial Statements Act. See page 38
for more details.
Consolidated financial statements
In the consolidated financial statements
section, we highlight the financial
performance for the year
and the financial position at year-end.
This excludes the parent company's
statements, which are filed with Danish
authorities. The structure remains
consistent with the previous year's
annual report.
ABOUT THIS REPORT
This comprehensive report offers an
overview of Arla's financial results,
sustainability performance and govern-
ance structure. It includes our
externally audited consolidated finan-
cial statements and externally assured
sustainability statements.
Change for the better
Johnny grows most of his crops, including
fodder beet, which is a valuable feed mixture
ingredient that provides nutrients and energy
to support milk production. "My father and
I have different profiles, but that is a good
thing. He gave me the freedom and space
to improve the farm, which creates a great
synergy between us," he adds.
ON THE FRONTPAGE
JOHNNY NIELSEN
Near Slagelse, Denmark, Johnny Nielsen, one
of Arla's farmer owners and the 7th generation
on his family farm, can be seen working at
Krogsagergaard. He takes care of 350 Holstein
cows and 300 hectares of land, growing most of
the crops. "We started with 20 cows and 30
hectares and that was already plenty," says his 80-
year-old father, Jørgen, who is still very active on
the farm.
After reading about the FarmAhead™ Customer
Partnership and finding it interesting, Johnny
decided to apply to join the feed efficiency
project. He is already familiar with finding the
right balance of different mixed feeds, identifying
which groups of cows yield more milk and mon-
itoring them daily. By joining the feed efficiency
project, he will also be focusing on achieving an
optimal milk-per-feed ratio while reducing feed
waste, thereby making milk production more
climate-efficient.
"With data and technology, we can improve our
ways of working, so let us do that. We, dairy farm-
ers, do adapt for improvement and we are open to
change for the better. I would like to share that
story to everyone," he says, a true testament to
the balance between tradition and innovation.
PAGE 2
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
TABLE OF
CONTENTS
MANAGEMENT
REVIEW
FINANCIAL
STATEMENTS
REPORTS AND OTHER
DISCLOSURES
INTRODUCTION
5
Chair letter
6
CEO letter
7
2024 performance at a glance
8
Five-year overview
10
2024 highlights
ABOUT ARLA
12
Business model
13
Future 26 strategy:
Midway update
15
Risk management
PERFORMANCE
REVIEW
18
Executive summary
19
External market overview
21
Performance overview
30
2025 outlook
CONSOLIDATED
FINANCIAL STATEMENTS
Primary statements
101 Income statement
101 Comprehensive income
102 Profit appropriation
103 Balance sheet
104 Equity
107 Cash flow
Notes
109 Introduction to notes
112 Note 1: Revenue and costs
118 Note 2: Net working capital
122 Note 3: Capital employed
131 Note 4: Funding
152 Note 5: Other areas
SUSTAINABILITY
STATEMENTS
General information
32
Sustainability in Arla
34
Materiality assessment
Environment
40
Climate change and
animal welfare
53
Biodiversity and nature
61
Resource use and circularity
Social
68
Employees and workers in the
value chain
80
Consumers – healthy and
safe nutrition
Governance
87
Responsible business conduct
OUR GOVERNANCE
91
Governance framework
93
Management
97
Management remuneration
98
Business ethics
MANAGEMENT'S AND
AUDITOR'S REPORTS
162 Board of Directors' and Executive
Board's report
163 Independent auditor's report on the
consolidated and parent company
financial statements
165 Independent auditor's
assurance report on
the sustainability statements
OTHER DISCLOSURES
168 UN Global Compact commitment
169 EU legislation data points
170 Glossary
171 Corporate calendar
PAGE 3
ARLA FOODS ANNUAL REPORT 2024
INTRODUCTION
5
Chair letter
6
CEO letter
7
2024 performance at a glance
8
Five-year overview
10
2024 highlights
Arla® Skyr is one of our products
renowned for its creaminess,
high protein content and low fat
content. Our products create value
in 164 countries around the globe.
ARLA®
SKYR
Arla's ability to consistently deliver
competitive milk prices is crucial for our
farmer owners. We have to maintain and
develop financially healthy farms, while
at the same time making investments
in continued sustainability leadership
with customers and adjustments to
new legislations. Our milk price is
a key measure of our strength and
attractiveness as a cooperative at a time
when competition for milk in Europe
is increasing as the demand for dairy
remains high.
Progressing on sustainability
In 2024, Arla and our farmer owners
continued the ambitious efforts to drive
sustainability improvements, and in
2024 further reduced CO2e emissions
on farms, showing the effectiveness of
our approach and keeping Arla on track
towards our long-term targets.
A key development in 2024 and an
enabler for further improvements was
consolidating our on-farm sustainability
efforts in the FarmAhead™ framework,
equipping our farmer owners with
tools to measure and advance their
sustainability transition.
Our well-established FarmAhead™
Check, introduced in 2020, provides
farmers insights into their climate
impact, while the Incentive rewards
proactive measures directly through
the individual milk price. The points-
based FarmAhead™ Incentive continues
F
to drive change, with the average
number of points increasing from
an average of 50 to 53 from the
introduction in 2023 to 2024.
Most recently, with the introduction
of the FarmAhead™ Customer
Partnership, we have taken a
significant step in our collaboration
with our customers to drive further
improvements in sustainability. The
programme allows our customers
access to primary data for their ESG re-
porting to achieve scope 3 emissions
reduction targets and become partner
on specific sustainability projects
taking place on Arla farms, creating a
strong link from farm to consumer and
helping to offset the cost associated
with transitioning to farming with a
lower carbon footprint.
A strong outlook for our
cooperative
Based on the significant milestones
and results we achieved in 2024, we
enter the second half of our Future 26
strategy with a well-defined direction
and plan, a strong commercial and
financial position and company
and farmer owners determined to
continue to lead the dairy industry in
value creation and sustainability.
DELIVERING OUR
MISSION AND
DRIVING THE GREEN
TRANSITION ON
FARMS
or Arla, 2024 was a year of
strong financial results as
well as key progress on our
sustainability journey – a tes-
tament to the dedication and
skill of Arla's farmer owners,
employees and management.
With increased revenue and brands
returning to growth, we strengthened
our competitive returns to our 7,624
farmer owners, while at the same
time continued our science-based
and data-driven approach to reducing
our carbon footprint across our value
chain, consolidating our position as
an industry leader in driving the green
transition for dairy.
JAN TOFT
NØRGAARD
Chair of the Board
of Directors
Delivering on our mission
Our mission as a cooperative is to
secure the highest value for our
farmers' milk, and in 2024, we delivered
a competitive performance price of
50.9 EUR-cent/kg of owner milk.
Based on Arla's results and strong
financial position, the Board of Directors
proposed a supplementary payment
– later approved by the Board of
Representatives – of EUR 292 million,
which marked our highest supplemen-
tary payment ever. This corresponds to
2.2 EUR-cent/kg of milk and is above
the level set in Arla's retainment policy
for the third year in a row.
PAGE 5
ARLA FOODS ANNUAL REPORT 2024
I.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
II.
III.
CEO letter
2024 performance at a glance
2024 highlights
Five-year overview
Chair letter
More than EUR 1 billion invested
in our future
In total, we invested more than EUR 1
billion this year to secure future growth
and ensure our competitiveness. One
area is the specialised protein products
for nutrition and sports purposes, a
category that continued to grow in
2024. With Arla Foods Ingredients'
acquisition of a whey nutrition business
and its production facility in the UK
from Volac International Limited, we
have strengthened our position in this
particular market, while simultaneously
gaining a network of new suppliers
and a significantly larger pool of raw
materials to secure our supply chain.
Taking sustainability leadership
with FarmAhead™
With the consolidation of our green
transition initiatives on farm under
the new FarmAhead™ brand as well
as a very successful roll-out of the
FarmAhead™ Customer Partnership,
we advanced our leadership position
in sustainability in the food sector.
This year, our CO2e emissions related
to milk reduced by 3% compared to
2023, corresponding to 415 thousand
tonnes.
FarmAhead™ Technology has been
pivotal in achieving a significant cut
in Arla's CO2e emissions on farm. The
FarmAhead™ Customer Partnership
further strengthens these efforts by en-
abling customers to engage in climate
n 2024, we delivered a satisfying
financial performance driven by
strong brands and solid deliveries
in our efficiency programme, while
we at the same time advanced
significantly in our sustainability
leadership through FarmAhead™.
The high demand for dairy across the
globe, and for our brands in particular,
was the main driver for our highly
competitive milk price through 2024
as well as our highest supplementary
payment ever.
The growing revenue of EUR 13.8
billion demonstrated our strong market
position and effective management of
both prices and costs. We achieved a
net profit of EUR 401 million or 2.9% of
revenue, well within our target range.
I
reduction projects on farms, providing
valuable data for ESG reporting and
scope 3 climate targets. Partnerships
with customers encompassing over 4
billion kg of milk by the end of 2024
mark a significant step in collaborative
sustainability efforts, and we are confi-
dent in delivering our 2030 targets.
High levels of geopolitical turbu-
lence continued
The high levels of geopolitical turbu-
lence persisted in 2024, and prepar-
edness plans for potential impacts of
the global situation are increasingly in
focus, also in our core markets.
In this situation, we should not
underestimate the value of robust and
stable food production. Due to our
cooperative model with dairy farmers
at the heart of our business, we are well
positioned to provide nutritious quality
food during times of disruption, while
upholding the values of sustainability
and community support. Our track
record of navigating and adapting in
times of change is strong.
Outlook for 2025
Looking ahead to 2025, we anticipate
a more challenging year, with branded
growth potentially slowing down due
to high dairy commodity price levels
and continued market volatility. Higher
prices would normally stimulate
supply in the coming year, however,
regulatory uncertainties may continue
The performance price increased
to 50.9 EUR-cent/kg, marking the
second-highest level in our history.
Our efficiency programme exceeded
expectations and achieved a net saving
of EUR 131 million.
Strategic brands back in growth
As consumers across Europe regained
purchasing power during 2024, we
saw a resurgence in brand growth that
exceeded our expectations. Lurpak®,
Arla® and Puck® demonstrated solid
volume growth rates, and despite chal-
lenges in the Middle East, StarbucksTM
also achieved growth in 2024. Only
Castello® saw a slight decline. Our stra-
tegic brands delivered a volume-driven
revenue increase of 3.7%, compared to
a decrease of 0.7% in 2023.
STRONG FINANCIAL
PERFORMANCE AND
SUSTAINABILITY
LEADERSHIP
PEDER
TUBORGH
CEO of Arla
to influence farmers' appetite for new
investments in core markets.
As we enter 2025, we acknowledge the
challenges ahead but remain confident
in our strategic direction and the
resilience of our business. Responding
to dynamics in the market, maintaining
our focus on efficiencies and continu-
ing our sustainability improvements will
be key to navigating the uncertainties
and delivering value as outlined in our
Future 26 strategy.
PAGE 6
ARLA FOODS ANNUAL REPORT 2024
I.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
II.
III.
Chair letter
2024 performance at a glance
2024 highlights
Five-year overview
CEO letter
2015
2024
37%
2023
33%
2030
63% GOAL
2015
2024
13%
2023
12%
2030
30% GOAL
2024
2024
2024
2024
2024
2023
2023
2023
2023
2023
2022
2022
2022
2022
2022
13.8
2.8%
101
13.7
3.0
13.7
2.8%
114
13.9
2.6
13.8
2.9%
131
13.7
3.2
2024
2024
2023
2023
2022
2022
55.1
-3.2%
3.7%
47.0
-0.7%
2.1
2.2
Supplementary payment
2.2
PERFORMANCE PRICE
EUR-CENT/KG
50.9
STRATEGIC BRANDED
VOLUME DRIVEN
REVENUE GROWTH
3.7%
Read more
about our Future 26
strategy on page 13.
SCOPE 1+2 EMISSIONS
REDUCTION IN 2024
4%p
SCOPE 3 EMISSIONS
PER KG OF MILK AND WHEY
REDUCTION IN 2024
1%p
Competitiveness
Value creation
Sustainability
Sustainability
2024
PERFORMANCE
AT A GLANCE
Within guidance
MILK VOLUME2
BILLION KG
13.7
NET EFFICIENCIES
EUR MILLION
131
REVENUE
EUR BILLION
13.8
LEVERAGE3
3.2
PROFIT SHARE1
OF REVENUE
2.9%
1 Based on profit allocated to owners of Arla Foods amba.
2 Standardised milk: 4.2% fat, 3.4% protein. 2022
numbers are restated accordingly. The milk volume
includes both owner milk and other milk.
3 Leverage adjusted for the temporary effect of mergers
& acquisitions (M&As) in the year was 2.9.
50.9
PAGE 7
ARLA FOODS ANNUAL REPORT 2024
I.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
II.
III.
Chair letter
CEO letter
2024 highlights
Five-year overview
2024 performance at a glance
FIVE-YEAR OVERVIEW
Financial key figures
EUR million
2024
2023
2022
2021
2020
Performance price
EUR-cent/kg owner milk
50.9
47.0
55.1
39.7
36.5
Income statement
Revenue
13,770
13,674
13,793
11,202
10,644
EBITDA
1,109
1,079
1,001
948
909
EBIT
598
600
529
468
458
Net financials
-135
-145
-80
-61
-72
Profit of the year
417
399
400
346
352
Arla Foods amba's share of profit of the year
401
380
382
332
345
Profit appropriation for the year
Individual capital
40
41
39
42
41
Common capital
69
69
74
83
81
Supplementary payment
292
270
269
207
223
Balance sheet
Total assets
9,330
8,299
8,746
7,813
7,331
Investments in property, plant and equipment
557
445
373
452
478
Investments in right of use assets
132
88
56
69
102
Non-current assets
5,354
4,788
4,611
4,668
4,413
Current assets
3,976
3,511
4,135
3,145
2,918
Equity
3,138
3,052
3,168
2,910
2,639
Non-current liabilities
3,105
2,650
2,915
2,446
2,296
Current liabilities
3,087
2,597
2,663
2,457
2,396
Net interest-bearing debt including pension liabilities
3,533
2,850
2,986
2,466
2,427
Net working capital
1,519
1,104
1,442
810
679
Cash flows
Cash flow from operating activities
652
1,151
184
780
731
Cash flow from investing activities
-887
-519
-443
-482
-488
Free cash flow
-235
632
-259
298
243
Cash flow from financing activities
186
-592
269
-330
-293
Financial key figures
EUR million
2024
2023
2022
2021
2020
Financial ratios
Profit share1
2.9%
2.8%
2.8%
3.0%
3.2%
EBIT margin
4.3%
4.4%
3.8%
4.2%
4.3%
Leverage2
3.2
2.6
3.0
2.6
2.7
Interest cover
7.5
11.1
19.6
23.7
16.8
Equity ratio
33%
36%
35%
37%
35%
Inflow of standard milk (mkg)
Inflow from owners in Denmark
5,279
5,277
5,185
5,185
5,224
Inflow from owners in the UK
3,449
3,412
3,360
3,345
3,320
Inflow from owners in Sweden
1,901
1,925
1,876
1,896
1,905
Inflow from owners in Germany
1,554
1,646
1,637
1,683
1,732
Inflow from owners in the Netherlands, Belgium and Luxembourg
790
798
757
749
742
Inflow from others
762
816
858
968
1,043
Total inflow of raw milk
13,735
13,874
13,673
13,826
13,966
Number of owners
Owners in Sweden
1,938
1,996
2,108
2,236
2,374
Owners in Denmark
1,828
1,948
2,105
2,274
2,357
Owners in the Germany
1,218
1,329
1,429
1,497
1,576
Owners in the UK
1,919
1,981
2,053
2,127
2,241
Owners in the Netherlands, Belgium and Luxembourg
721
745
797
822
858
Total number of owners
7,624
7,999
8,492
8,956
9,406
1 Calculated as Arla Foods amba's share of profit for the year/revenue.
2 Leverage adjusted for the temporary effect of M&As in the year was 2.9.
Read more details in the Financial Statements section, starting from page 100 onwards.
PAGE 8
ARLA FOODS ANNUAL REPORT 2024
I.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
II.
III.
Chair letter
CEO letter
2024 performance at a glance
2024 highlights
Five-year overview
FIVE-YEAR OVERVIEW
Sustainability key figures
Target
Target year
2024
2023
2022
2021
2020
Climate
Scope 1+2 emission reductions compared to baseline year 2015
-63%
2030
-37%
-33%
-29%
-25%
-24%
Scope 3 emission reductions per kg of milk and whey compared to baseline year 2015
-30%
2030
-13%
-12%
-9%
-7%
-7%
Renewable electricity in Europe1
100%
2025
75%
69%
52%
39%
40%
Biodiversity and nature1
Soy (ingredients) to be deforestation and conversion free (DCF)
100%
2025
94%
69%
-
-
-
Palm (ingredients) to be deforestation and conversion free (DCF)
100%
2025
96%
79%
-
-
-
Forest fibre (packaging and energy) to be deforestation and conversion free (DCF)
100%
2025
96%
96%
-
-
-
Soy (feed) to be deforestation and conversion free (DCF)
100%
2025
48%
27%
-
-
-
Palm (feed) to be deforestation and conversion free (DCF)2
100%
2028
Not available
Not available
-
-
-
Resource use and circularity
Packaging designed for recycling (own brands)
100%
2025
94%
95%
Virgin fossil-based plastic
0%
2030
79%
83%
Food waste
50%
2030
8%
0%
Employees and workers in the value chain
Average number of full-time employees
-
-
21,895
21,307
20,907
20,617
20,020
Gender diversity in manangement (director +)
40%
2030
31%
29%
29%
27%
26%
Accidents per million working hours
0
Ongoing
4.6
5.5
4.4
4.3
5.2
Consumers – healthy and safe nutrition
Low-income consumers reached in Bangladesh and Nigeria (million)
100
2030
84
97
87
86
76
Product recalls
0
Ongoing
2
1
1
0
1
1 Target is set for the end of the year. Since the KPI is based on 12 months of data, target achievement will not be reflected in the 2025 annual report.
2 Data is not made available from feed companies.
Renewable
electricity in Europe
In 2024, 75% of our
electricity in Europe
came from renewable
sources. From the
end of 2025 onwards,
we will rely solely on
renewable sources.
Read more details in the Sustainability Statements section, starting from page 31 onwards.
PAGE 9
ARLA FOODS ANNUAL REPORT 2024
I.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
II.
III.
Chair letter
CEO letter
2024 performance at a glance
2024 highlights
Five-year overview
HALFWAY THERE
2024
HIGHLIGHTS
INVESTING IN ACQUISITIONS, NEW INNOVA-
TIONS, FORMING BRAND PARTNERSHIPS AND
LAUNCHING FARMAHEAD™ ARE SOME OF OUR
KEY HIGHLIGHTS IN 2024, MOVING OUR
FUTURE 26 STRATEGY FORWARD.
STRONGER THROUGH
PARTNERSHIPS
A key action in the Scale to Grow pillar
of our Future 26 strategy brought to
life with the launch of Milka® chocolate
milk in Germany, Austria and Poland with
Mondelēz International and the introduc-
tion of the Galaxy® chocolate drink with
Mars Inc. in MENA.
These collaborations meet the consumer
demand for indulgent products while
enhancing our market presence, providing
access to globally relevant brands with a
genuine role in the chocolate milk market.
Read more on MENA on page 27.
AFI'S SIGNIFICANT GROWTH JOURNEY
Arla Foods Ingredients (AFI) is on a growth jour-
ney with several strategic initiatives, including
acquiring Volac's Whey Nutrition business to
strengthen AFI's position in the health and per-
formance sector. In addition, a major investment
in specialised protein is set for commercialisa-
tion in early 2025, and construction of a new
permeate dryer has begun in Argentina.
Read more on page 28.
FARMAHEAD™:
A DATA-DRIVEN PROGRAMME
FOR SUSTAINABLE DAIRY
This year, we have consolidated our
sustainability initiatives under the name
FarmAhead™, highlighting our commit-
ment to science-based farming.
FarmAhead™ Technology equips
our farmer owners with tools to
measure and advance their sustain-
ability transition. With components
AFI's growth
journey
The growth is
achieved through
various actions,
including an acquisi-
tion, investments and
expert collaborations,
further unlocking
access to nutrition
through whey.
ARLA® PROTEIN:
ADVANCING IN VOLUME
AND INNOVATION
Arla® Protein contin-
ued to excel with its
high-protein, low-sugar
and low-fat offerings. In
2024, it achieved 36.0%
volume-driven revenue
growth, capturing the
attention of individuals
leading active lifestyles.
This year, we introduced
new options for consum-
ers in Denmark, the UK and
soon in the Netherlands,
featuring grab-and-go
high-protein meal replace-
ment shakes.
like FarmAhead™ Check, Incentive
and Innovation, farmers gain insights
into their climate impact and are
rewarded for proactive measures. The
FarmAhead™ Customer Partnership
allows customers to engage in sus-
tainability projects on farms, providing
them with access to primary data for
their ESG reporting and achieving scope
3 emissions reduction targets. The
programme already has agreements
covering over 4 billion kg of milk.
Read more on page 44.
PAGE 10
ARLA FOODS ANNUAL REPORT 2024
I.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
II.
III.
Chair letter
CEO letter
2024 performance at a glance
Five-year overview
2024 highlights
ABOUT
ARLA
12
Business model
13
Future 26 strategy:
Midway update
15
Risk management
Arla® 24 ensures milk reaches stores
from farms within 24 hours. The two-
heart label indicates our cows graze
outdoors in summer and roam freely
in barns during the winter.
ARLA® 24
FARMERS
& COWS
CONSUMERS
CUSTOMERS
MILK
COLLECTION
INNOVATION,
PRODUCTION &
PACKAGING
Input
Output
BUSINESS MODEL
OUR MISSION IS TO SECURE THE
HIGHEST VALUE FOR OUR FARMERS'
MILK WHILE CREATING OPPORTUNI-
TIES FOR THEIR GROWTH.
As a cooperative, our focus is on
maximising the value from our milk.
With our cooperative structure, this
means that all profits generated from
our products are distributed among the
owners via the milk payment system. As
the world's fourth-largest dairy producer
by milk intake, and with a commitment
to creating the future of dairy, our farmer
owners are actively engaged in sustaina-
bility initiatives and invest in the business
to drive growth and strive to ensure the
welfare of future generations.
Sourcing raw materials
Farms and cows
Our cooperative consists of 7,624
farmer owners who oversee over 1.3
million cows. Their goal is to produce
milk in a sustainable and profitable
manner, ensuring the well-being of the
cows and preserving the surrounding
environment. Their sustainability actions
are rewarded through the FarmAhead™
Incentive. More on page 44.
Other ingredients
In addition to milk, we source raw materials
globally, including whey, soy, sugar, vegeta-
ble oil, fruits and various other ingredients
for our products, alongside plastic and
forest fibre for packaging. In 2024, we
sourced 2.3 billion kg of external whey,
0.6 billion kg of other ingredients and 0.3
billion kg of packaging materials.
Milk collection
Annually, we gather about 13.7 billion
kg of raw milk, primarily sourced from
our owners in seven countries: Denmark,
Sweden, the UK, Germany, Belgium, the
Netherlands and Luxembourg.
Innovation, production and
packaging
Reducing climate impact is as essential
to us as creating products that support a
nutritious and sustainable diet. Together
with our 21,895 employees, we strive to
create the future of dairy.
Innovation
Our commitment to innovation is key
to creating products that are nutritious,
healthy and natural. We enhance the val-
ue of our owners' milk through branding
and marketing efforts.
Production and packaging
We operate 58 production and
packaging sites, producing 6.4 billion
kg of nutritious dairy products annually.
Our facilities create jobs worldwide and
we are committed to offering fair wages
and benefits for all employees. More on
page 45.
Customers
We supply our products worldwide,
reaching 164 countries around the
globe and serving a variety of clients
such as supermarket chains, foodser-
vice providers and business-to-busi-
ness. Our success stems from our
commitment to collaborative partner-
ships that provide consumer service
with a mindful approach to reducing
the environmental footprint of retail
activities. More on page 23.
Consumers
Through our offerings, we provide the
benefits of dairy to millions of individu-
als. Our approach focuses on innovative
solutions, promoting positive food
habits and ensuring affordable access
to nutrition for low-income consumers.
More on page 80.
PAGE 12
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Future 26 strategy
Risk management
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Business model
HALFWAY THERE
A recap
In January 2022, we launched the
Future 26 strategy driven by our vision,
'Creating the future of dairy to bring
health and inspiration to the world,
naturally'.
It was based on our understanding of
the continued positive demand for dairy
globally, while also recognising that
consumer behaviours and preferences
are rapidly changing. Influences such
as sustainability, nutrition science and
technology are shaping lifestyles, with
dairy playing a crucial role in providing
solutions.
Future 26: Midway update
More than halfway through our strategy
period, we are well on our way to de-
livering progress across its four pillars:
FUTURE 26 STRATEGY:
MIDWAY UPDATE
AS WE CLOSED THE THIRD YEAR OF OUR FUTURE 26 STRATEGY, WE ARE
FIRMLY ADVANCING IN CREATING A TRULY RELEVANT, RESILIENT AND
SUSTAINABLE DAIRY COOPERATIVE, BRINGING OUR VISION TO LIFE.
We remain on the right track and
are making good progress, firmly
moving our strategy forward. We have
maintained our competitiveness by
offering competitive milk prices to our
farmers, expanding our brands and
reducing CO2e emissions in line with
our science-based targets.
To secure future growth and ensure our
competitiveness in the years to come,
we made substantial investments this
year, allocating more than EUR 1 billion
across various areas, from intangibles,
property, plant and equipment, includ-
ing right-of-use assets and M&As.
We are now embarking on the remaining
strategy period with confidence and an
unwavering commitment to creating the
future of dairy. Our foundation is solid,
and our direction is well-defined with an
increasing focus on value creation and
sustainability within the dairy industry.
More specifically, our main focus in the
last two years of the strategy period will
be to leverage and follow through on
the many investments made in the first
three years of the strategy.
More details on our Future 26 strategy
progress can be found on the next page.
lead sustainable dairy, scale to grow,
build growth platforms and collaborate
for efficiencies. These achievements
highlight the strength of Arla, driven
by our culture, dedicated employees,
innovative farmers and overall business
performance.
Three years into the strategy period, we
have faced several external challenges,
including ongoing geopolitical uncer-
tainties, market volatility and inflation.
Well underway with our
strategy period
We maintained our com-
petitiveness and expanded
our brands, despite market
volatility.
Arla® LactoFREE offers a range of products
that are full of dairy goodness, but contain
none of the lactose. In 2024, it achieved
5.0% volume growth.
ARLA®
LACTOFREE
PAGE 13
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Business model
Risk management
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Future 26 strategy
FUTURE 26
STRATEGY
STRATEGIC FOCUS
STRATEGY
ASPIRATION
LEAD
SUSTAINABLE
DAIRY
SCALE
TO GROW
BUILD
GROWTH
PLATFORMS
COLLABORATE
FOR EFFICIENCIES
1
2
3
4
DIGITAL & INNOVATION
AS ACCELERATORS
A leader in value
creation and
sustainability
WIN WITH OUR
OWNERS & PEOPLE
VISION
Creating the future of dairy to bring health
and inspiration to the world, naturally
103-107
Peer group index
We aspire to have a competitive
milk price compared to our peers.
1-4%
Branded volume growth
We aim to create brands and products
that bring value to our costumers' life
through health and nutrition.
SCOPE 1+2: -63% SCOPE 3: -30%
CO₂e reduction
We are committed to the 1.5°C ambition and
to becoming the most ambitious global dairy
cooperative.
600-800 mEUR
ANNUALLY
Investments
We invest to support owners
and value creation.
70-100 mEUR
ANNUALLY
Efficiencies
We fund our future by having an end-to-end focus on becoming
both more efficient and more effective in the way we work.
What we will do
· Our farmers will lead carbon reductions with efficient practices and new
technologies
· Inspire healthier lives with more natural and affordable products
· Invest in energy optimisation and renewable electricity
· Move towards fully circular packaging by using less and better plastic and
ensuring our packaging is recyclable
· Secure strong commercial value to make the journey financially sustainable
for our owners
What we will do
· Scale and strengthen global brands by investing in loyalty and expanding
consumer connections globally
· Accelerate growth by scaling positions with global competitive
advantages
· Enhance core market success via strategic partnerships, category
leadership and scaling distribution and sales channels
· Elevate AFI growth through innovation and strong partnerships
What we will do
· Build new positions in selected growth markets, focusing on brands and
innovation
· Expand the Arla® Pro brand in restaurants and bakeries to accelerate
global foodservice
· Boost e-commerce by partnering with top platforms and developing
winning online capabilities
What we will do
· Fund our future by improving efficiency and effectiveness in our
operations
· Future-proof our supply chain by optimising production and delivery
while reducing our carbon footprint
· Partner with customers to drive growth and excellence using commer-
cial, agile operating models, digital tools and data
Midway achievements
· The FarmAhead™ Incentive increased from an average of 50 in 2023 to
53 in 2024, demonstrating our farmer owners' commitment to reducing
carbon emissions on their farms
· Partnered with customers through the FarmAhead™ Customer Partnership
with agreements covering 4 billion kg of milk
· Implemented a wide range of activities in the supply chain to reduce
emissions, including solar panels, heat pumps and biogas trucks
Midway achievements
· Delivered growth in our core markets with our strategic brands, including
Arla® and Lurpak®
· Built more capacity with Arla® Protein and grew the milk-based beverag-
es (MBB) business through partnerships
· Grew the AFI business by acquiring Volac Whey Nutrition business
· Invested in the expansion of Taw Valley Dairy in the UK, securing our
position as the world's leading mozzarella producer
Midway achievements
· Accelerated our presence in e-commerce and expanded the foodservice
business, particularly in mozzarella and bakery categories
· Achieved significant share gains in the Netherlands and improved
profitability in Germany while delivering consistent results in SEA and
Rest of World
· Progressed in certain growth markets such as Nigeria and Bangladesh,
but did not fully meet expectations in categories like plant-based and
early-life nutrition
Midway achievements
· For the past three years, our net efficiencies have surpassed the
expected EUR 70-100 million annually through various initiatives,
including optimised logistics, recipes and packaging
· Built a robust pipeline for future efficiencies and integrated a culture
of efficiency into our operations
· Strengthened our culture for driving the efficiencies agenda, making it
an integral part of our ways of working
Looking ahead
We are confident in achieving our 2030 targets and strengthening customer
partnerships to continue CO2e reduction across the value chain. We will fur-
ther intensify our focus on providing more nutritious products to consumers
Looking ahead
We will ensure sufficient capacity and capability in innovation and invest-
ment to sustainably grow our categories and reach more consumers
Looking ahead
We will adjust operations in key markets as we navigate external volatility
while maintaining a strong innovation pipeline to expand our offerings
Looking ahead
Supported by digital innovation and transformation, we are continuing
our efforts to improve efficiencies across the value chain
1 LEAD SUSTAINABLE DAIRY
2 SCALE TO GROW
3 BUILD GROWTH PLATFORMS
4 COLLABORATE FOR EFFICIENCIES
PAGE 14
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Business model
Risk management
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Future 26 strategy
RISK
MANAGEMENT
AS A GLOBAL DAIRY COMPANY COM-
MITTED TO SUSTAINABLE PRACTICES,
WE ARE CONTINUOUSLY WORKING
WITH OUR APPROACH TO RISK
MANAGEMENT TO ENSURE STRATEGIC
GROWTH, PROTECT OUR VALUE AND
SUPPORT PROGRESS TOWARDS OUR
GOALS.
Approach to risk management
Our approach focuses on identifying
and reducing risks, as well as mitigating
internal and external impacts. We also
consider opportunities arising from
these risks that could increase our val-
ue. Dedicated risk owners track trends
that affect our future while pinpointing
key risks. These risks are then appraised
using a two-dimensional heat map,
quantifying both their potential effect
on operating profit and their probability
of occurrence. Risks are assessed on a
short (less than a year), medium (one
to five years) and long (more than five
years) term.
We continuously refine our approach
to identifying, assessing, mitigating
and managing risks. All business units
across Arla submit risk summaries
twice a year to ensure consistency in
documentation and evaluation. This
year, we enhanced the level of detail
in these summaries, adding more
qualitative assessments and actions
taken to mitigate them. Consequently,
our enterprise risk management frame-
work now includes improved tools and
processes for clearer communication
and documentation.
Governance and oversight
The Executive Management Team
(EMT) and the Board of Directors (BoD)
Very likely
Likely
Likelihood
Profit impact
Possible
Critical
Major
Moderate
5
2
1
4
6
7
8
3
1. Regulatory constraints and cow diseases
impacting milk production
2. Geopolitical instability and economic turmoil
3. Transformation of consumer behaviour
4. Loss of competitiveness in branded portfolio
5. Loss of international competitiveness due
to increased production costs
6. IT disruptions, including major cyber attacks
7. Major product quality and safety issues
8. Currency volatility
Peripheral risks
Market-specific
risks
Arla-specific
risks
Risk description
Peripheral risks: These risks are outside of our management's
direct control.
Market-specific risks: These risks are considered managed
within the strategic and business planning process.
Arla-specific risks: These are risks that Arla can directly
manage and mitigate. They serve as a starting point for
the development of global policies and internal control
procedures.
regularly assess the most significant
risks. The BoD ensures that we have solid
systems in place for risk management,
compliance and internal controls. The
EMT is responsible for overseeing risks,
with a focus on mitigating and reducing
them while also identifying any related
opportunities. They review our risk map
and discuss significant risks with the
BoD. Together, the BoD and EMT work
collaboratively to prevent, minimise and
manage identified risks. The approach is
flexible, allowing us to respond quickly to
unexpected risks.
ACT
PLAN
UNDERSTAND
Identification
· Risk map
· Classification of
risk types
Evaluation
· Estimates of
likelihood
· Assessment of
risk impact
Reporting
· Monthly risk reports
· Early-warning
indicators
· Risk in value
management
Planning
· Risk in operative planning
· Risk in strategic planning
· Risk in investment valuation
· Risk-return portfolio
management
Risk response
Crisis management
· Peripheral
· Market-specific
· Company-specific
· Contingency measures
· Business continuity measures
· Communication measures
Corporate risk management
PAGE 15
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Business model
Future 26 strategy
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Risk management
Category
Risk description
Impact
development
Timeframe
Potential impact
Mitigating actions
Peripheral
risks
1
Regulatory constraints and
cow diseases impacting
milk production
More about climate-related risks
on page 51.
The EU's adoption of the Nature Restoration Law in
2024, along with discussions on further land use
changes, may limit farming capabilities. Climate
taxes such as the EU ETS and the Danish CO2 tax
could increase farmers' costs. Denmark also plans
to implement stricter animal housing requirements.
Additionally, diseases like bluetongue pose risks to
livestock health and productivity.
Stable
Short and
medium
· Higher production costs on farms
· Lower milk volumes
· Increased housing investment on farms
· Reduced flexibility of operations
· Continuously implement on-farm activities to reduce CO2e emissions
· Incentivise farmers to lower their CO2e emissions and minimise their
impact on land use change
· Actively reduce emissions in our own operations and remain alert to
potential reductions in milk intake
· We have various roles in addressing the impacts of disease and we will
execute tasks according to our continuity plan to ensure resilience
2
Geopolitical instability and
economic turmoil
Vulnerability to global political and economic insta-
bility, including heightened trade barriers in regions
such as China, MENA and West Africa.
Stable
Short
· Economic instability and recession could reduce the demand for dairy,
affect exchange rates and increase commodity prices, impacting
profitability
· Political unrest or wars might disrupt the global food value chain,
potentially leading to shortages of animal feed and disruptions in
logistics networks. These disruptions could affect our milk volumes and
profitability
· Balance our growth between higher-risk and lower-risk markets in our
International segment
· Increase the agility of our supply chain
Market-
specific
risks
3
Transformation of consum-
er behaviour
Consumer preferences in the food industry are
always evolving. The increasing speed and unpre-
dictability of these changes could pose a risk that
significantly impacts our business.
Stable
Medium
· Loss of market share and sales volumes if our sustainable transforma-
tion does not match the speed of changing consumer trends
· Understand and closely track consumer needs
· Provide a wide range of options to consumers who seek more sustainable
meal choices
· Ensure consumers understand the nutritional and health benefits of our
products and brands
4
Loss of competitiveness in
branded portfolio
Due to the ongoing uncertainty of consumer spend-
ing power in some key markets, consumers might
opt for more affordable alternatives.
Stable
Short
· Price pressure on our branded products could make our brands less
competitive in the market
· Our brands are at the core of our value generation model. Slow
development in branded revenue will negatively impact profitability
· Keep our branded portfolio relevant and affordable for our consumers
through innovation and strong sales execution
5
Loss of international
competitiveness due to
increased production costs
Most of our dairies are based in Europe, where high
production costs challenge the competitiveness of
our products in international markets.
Stable
Short
· In our key growth market in the international region, we often compete
with dairy companies based outside Europe. These companies
have a competitive edge over us if the current level of input costs is
maintained
· Maintain a cost-efficient supply chain to reduce dependence on our
European sites and explore possibilities in production and sourcing for
our international markets where we have strategic commercial interests
Arla-specific
risks
6
IT disruptions, including
major cyber attacks
Relying heavily on IT systems, combined with
increasing crimeware attacks on manufacturers,
poses a significant operational vulnerability.
Stable
Short
· Disruption of operations, and potential damage to our ability to
manufacture, deliver and sell our products
· Strengthen our processes around IT operations and mitigate IT security
vulnerabilities
· Build security awareness and provide support to Arla colleagues through
a Chief Information Security Officer (CISO)
7
Major product quality and
safety issues
Managing a complex and extensive value chain with
diverse products may increase risks to maintaining
product safety, accurate labelling and the health
and safety of our employees.
Stable
Short
· Major product quality and/or food safety issues may lead to a loss of
brand reputation and reduced trust in our products
· Downgrade of products may lead to financial losses
· Constantly improve our quality and food safety management
programmes
· Prioritise food safety and compliance with health and safety regulations
across our supply chain
8
Currency volatility
Given that a significant portion of our revenue
comes from currencies other than EUR or DKK,
our primary financial risk arises from currency
fluctuations in global markets.
Stable
Short
· Currency changes that increase sales prices in individual markets can
affect our competitiveness and potentially impact revenue and profit
· Purchasing owner milk and operating in countries outside the euro
zone means that we expose our performance price, measured in EUR, to
fluctuations in currencies such as GBP, USD, SEK, NGN, ARS and BDT
· A team dedicated to manage currency exposure
· Reduce short-term exposure through hedging activities
More about our currency risk in Note 4: Funding on page 131.
PAGE 16
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Business model
Future 26 strategy
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Risk management
PERFORMANCE
REVIEW
18
Executive summary
19
External market overview
21
Performance overview
30
2025 outlook
Lurpak® saw strong volume-
driven revenue growth of 5.6%. It
recently launched its plant-based
version in Denmark and the UK.
LURPAK®
2024
2023
2021
2022
2020
2024
2024
2024
2023
2023
2023
2021
2021
2021
2022
2022
2022
2020
2020
2020
2024
2023
2021
2022
2020
13.7
-0.7%
47.0
11.2
4.5%
39.7
13.8
3.7%
13.8
-3.2%
55.1
10.6
7.7%
36.5
2.1
2.2
1.7
1.8
Supplementary payment
2.2
50.9
STRONG BRANDED
GROWTH AND
FINANCIAL
PERFORMANCE
In 2024, we saw a return to branded
volume-driven revenue growth as
consumer purchasing power increased
due to lower inflation and higher wages
coupled with firm sales execution. The
increased demand for dairy combined
with a stagnant global milk supply sent
commodity prices upwards. This in turn
led to increasing retail and foodservice
price points, especially in the second
half of 2024.
During this volatility, we saw strong
underlying business performance with a
firm market share development for our
brands due to branded volume-driven
revenue growth of 3.7%. We had a
robust financial position, with leverage
on par with our goals and our efficiency
programme, Fund our Future, delivered
above the expected level. We invested
a record high of more than EUR 1 billion
in various areas to secure future growth
and ensure our competitiveness in the
years to come.
Building on our solid branded growth,
successful efficiency agenda and
increased commodity price levels, our
total revenue reached EUR 13.8 billion.
The strong profit enabled us to make
the highest supplementary payment to
REVENUE
EUR BILLION
13.8
PERFORMANCE PRICE
EUR-CENT/KG
50.9
our owners of 2.2 EUR-cent/kg, which is
well above the 1.5 EUR-cent/kg of milk,
as prescribed in our Retainment Policy.
The performance price increased by
8.3% compared to 2023, rising from
47.0 EUR-cent/kg to 50.9 EUR-cent/kg
in 2024, marking the second-highest
level in Arla’s history.
This year, our scope 1 and 2 emissions
decreased by 4 percentage points,
achieving a total reduction of 37% com-
pared to 2015. We have set ourselves
apart by leveraging the FarmAhead™
framework for more emission-reducing
STRATEGIC BRANDED
VOLUME-DRIVEN
REVENUE GROWTH
3.7%
actions on farms and improving our
farmer owners' performance on key
sustainability levers. As a result, these
efforts have led to a 1 percentage point
decrease in our total scope 3 emissions.
TORBEN
DAHL
NYHOLM
CFO of Arla
NET EFFICIENCIES
EUR MILLION
131
143
2.7
155
2.6
101
3.0
114
2.6
131
3.2
LEVERAGE1
3.2
1 Leverage adjusted for the temporary effect of M&As in
the year was 2.9.
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
External market overview
Performance overview
2025 outlook
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Executive summary
PAGE 18
Source: Eurostat
2021
2024
2023
2020
2022
90
100
110
120
130
140
2023 inflation:
5.4%
2024 inflation:
2.4%
EXTERNAL
MARKET
OVERVIEW
2024 WAS CHARACTERISED BY CONTINUED
GEOPOLITICAL TURBULENCE, AN UPTURN
IN CONSUMER PURCHASING POWER AND
INCREASING DAIRY COMMODITY PRICES.
Inflation decreased
in the EU
Average inflation in
the EU was projected
to decrease to 2.4%
in 2024, down from
5.4% in 20231.
High levels of geopolitical
turbulence continued
In 2024, the high levels of geopolitical
turbulence from previous years per-
sisted. Besides having dire humanitarian
consequences, these developments
also fuelled volatility and uncertainty in
global markets, disrupted logistics and
increased freight prices. The uncer-
tainty was amplified by, among others,
regulatory constraints from possible
emission taxes in Europe.
Inflationary pressure continued
to ease off
In 2024, we observed continued
easing of inflation, driven by supply-side
improvements following the elevated
levels of inflationary pressure during
the pandemic. It was mainly evident in
ingredients and utilities, where we expe-
rienced deflation throughout 2024. This
was particularly notable in the first half
of the year, with signs of normalisation in
the latter half. The deflation in ingredi-
ents and utilities was offset by inflation
in business services and staff costs.
On average, inflation in the European
Union (EU) was expected to decrease
to 2.4% in 2024, down from 5.4% in
20231. However, higher inflation levels
are anticipated to persist outside
Europe, especially in the Middle East
and Africa, resulting in a global inflation
European Harmonised Consumer Price Index
(Index, Jan. 2020 = 100)
1 Source: IMF, World Economic Outlook, October 2024
PAGE 19
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
Performance overview
2025 outlook
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
External market overview
Source: Danmarks Nationalbank
2024
2023
2020
2021
2022
80
85
90
95
100
105
110
115
Source: ZMB
2024
2023
2020
2021
2022
0
2
4
6
8
10
12
Source: GDT
2023:
38.3 EUR-cent/kg
38.8 EUR-cent/kg
39.0 EUR-cent/kg
2023:
97.35
91.77
102.34
2023:
6.15 EUR/kg
5.53 EUR/kg
2024:
49.0 EUR-cent/kg
49.7 EUR-cent/kg
49.4 EUR-cent/kg
2024:
100.15
92.19
102.41
2024:
6.21 EUR/kg
7.96 EUR/kg
Gouda
Mozarella
SMP
GBP
SEK
USD
Protein
Fat
Fat and protein commodity prices
(EUR/kg)
rate projected to remain at a higher
level of 5.8% (2023: 6.7%)1.
Gradual economic recovery
in Europe
In 2024, Europe experienced an
extension of the low economic growth
from 2023, which also resulted from
high interest rates applied by central
banks to mitigate inflationary pressure
and geopolitical uncertainty. However,
a gradual recovery was expected, with
growth of 0.8% in 2024 compared to
0.4% in 20231.
Developing countries were estimated
to maintain a higher growth rate of
4.2% in 2024, slightly down from 4.4%
in 20231, signalling continued dairy
growth potential. A similar trend was
observed in China and the USA, where
growth in 2024 was estimated at 4.8%
and 2.8%, respectively, compared to
5.3% and 2.9% in 20231. This resulted in
a balanced global GDP growth estimate
of 3.2% for 2024 ( 2023: 3.3%)1.
Increased dairy demand
As inflation and thereby living costs
normalised alongside increasing
wages, European consumers saw an
improvement in purchasing power. This
led to an increase in dairy consumption,
resulting in 0.8% growth in European
sales volumes during 2024. The cheese
category was the main contributor, climb-
ing by 1.5%, while the butter, spreads and
margarine (BSM) category experienced a
volume decline of 0.8% primarily due to
higher consumer prices for BSM products
caused by surging fat prices. We saw sim-
ilar volume growth rates across brands
and private label products, as brands
returned to growth due to increased
consumer purchasing power.
Dairy supply from farmers affected
by uncertainties
Even though farmgate prices rose in
2024, the supply from farmers remained
flat. This was partly due to unfavourable
weather conditions, such as a wet spring
in Northern Europe and the spread
of bluetongue disease. Additionally,
concerns over possible emission taxes
and persistently high interest rates and
feed costs might hinder farmers from
investing more in milk production.
Upturn in dairy commodity prices
The increased dairy demand, improved
consumer purchasing power and con-
strained dairy supply led to rising dairy
commodity prices in 2024, particularly
in the second half of the year.
The upturn in commodity prices was
driven by increases in cheese, butter
and cream prices, which resulted in fat
prices increasing by 40% while protein
prices remained stable (December
2023 to December 2024).
Higher farmgate milk prices
Driven by the dairy commodity price
increase, farmgate milk prices rose
during 2024. In the EU 27, average
farmgate milk prices were projected to
increase by 12.3% in 20242.
From an Arla point of view, total stand-
ardised milk supply decreased from
13.9 to 13.7 billion kg. The decrease
came from owner milk, which was 0.7%
lower while contract milk decreased
Commodity prices
EU-cent/kg, milk utilisation equivalent
2024
2023
2020
2022
2021
20
30
40
50
60
70
Average prices
Average prices
Average prices
Development in foreign exchange rates
by 6.6%. The minor volume reduction
in owner milk was mainly driven by
Germany.
Favourable impact from foreign
exchange rate development
In 2024, we noted a favourable impact
from foreign exchange rates on key
currencies for Arla. On average, in 2024,
GBP strengthened by 2.7% against
EUR compared to 2023 and SEK rose
by 0.3%, while USD was flat. However,
this was offset by the adverse impact of
devaluations in Bangladesh and Nigeria.
1 Source: IMF, World Economic Outlook, October 2024
2 Source: Milk Market Observatory
PAGE 20
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
Performance overview
2025 outlook
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
External market overview
H1
2020
H1
2021
H1
2022
H1
2023
H1
2024
H2
2020
H2
2021
H2
2022
H2
2023
H2
2024
54.3
47.5
44.3
49.7
60.6
49.6
41.3
38.6
36.8
37.0
2023:
47.0
2024:
50.9
PERFORMANCE
OVERVIEW
IN A YEAR WITH VOLATILE MARKET
CONDITIONS, WE DELIVERED STRONG
FINANCIAL PERFORMANCE AND
BRANDED GROWTH, WITH SIGNIFICANT
RESULTS IN SUSTAINABILITY.
Performance price
EUR-cent/kg
Positive momentum in milk prices
driven by increasing commodity
prices
In 2024, Arla's average pre-paid milk price
increased by 8.4% to 47.8 EUR-cent/
kg, up from 44.1 EUR-cent/kg in 2023.
The performance price, which indicates
the added value Arla provides to each
kilogramme of its owners' milk, increased
by 8.3% to 50.9 EUR-cent/kg compared
to 47.0 EUR-cent/kg in the previous year.
This increase was mainly driven by rising
dairy commodity price levels, especially
in the second half of the year, as well as
strong branded growth and a successful
efficiency agenda.
Revenue increased by branded
volumes and commodity prices
This year, Arla's revenue increased by
0.7% to EUR 13.8 billion, compared to
EUR 13.7 billion in 2023. The increase
was partially driven by the positive
impact from branded retail and foodser-
vice volumes as well as volumes in the
ingredients business. As a result of the
higher commercial volumes, less milk
was available to Global Industry Sales
(GIS), resulting in lower commodity
volumes.
In terms of prices, we saw a positive
impact on GIS from higher commodity
prices, however, this was offset by
commercial prices being at a lower
average level year over year, partly due
to high commercial prices at the start of
2023. Commercial prices tend to follow
Strong growth in
both retail and
foodservice
Our branded
volume-driven
revenue in retail and
foodservice grew
by 3.4% and 7.5%,
respectively.
PAGE 21
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
/ Global brands
Europe
International
Arla Foods Ingredients
Global Industry Sales /
2024
2023
2021
2022
2020
3.0
2.7
2.6
3.2
2.6
2024
2023
2021
2022
2020
115
113
114
118
118
4.5%
-3.2%
-0.7%
3.7%
emissions, resulting in a 37% decrease
from 2015 levels. This was accom-
plished through energy optimisations,
district heating and heat pump
investments and contributions from
power purchase agreements.
Arla's farmer owners continued to
reduce carbon emissions motivated
by our FarmAhead™ Technology. This
achievement led to a 1.4% reduction
in emissions from our farmer owners'
milk, resulting in a 1 percentage point
decrease in scope 3 emissions per kg
of milk and whey contributing to an
overall 13% reduction since 2015.
The FarmAhead™ Incentive points in-
creased from an average of 50 in 2023
to 53 in 2024, demonstrating that it is
a valuable tool for reducing emissions
on farms. We believe that FarmAhead™
helps us to continue our progress
towards reaching our targets.
Our CO2e emissions related to milk
reduced by 3% compared to 2023,
corresponding to 415 thousand tonnes.
While reductions were evidently
achieved by Arla farmers and in our
operations, a substantial increase in the
purchase of external whey for our grow-
ing ingredients business led to only a
modest decrease in total emissions
compared to 2023.
Net profit within target range
Arla's net profit in 2024 was EUR 401
million, or 2.9% of revenue, within the
target range of 2.8-3.2%. Together with
a solid financial position, this will allow us
to pay out a supplementary payment to
our owners of 2.2 EUR-cent/kg of milk.
Other comprehensive income
The negative income of EUR 11
million (2023: EUR -199 million)
consisted of value adjustments of net
assets measured in foreign currencies
(translation effect) amounting to EUR
60 million and negative effects from
value adjustments of defined pension
schemes and hedge instruments
amounting to EUR -33 million and EUR
-27 million, respectively. Effects from
associates and joint ventures amounted
to net EUR -16 million.
Robust financial position
This year, we maintained our robust
financial position in the volatile
market. Our leverage ratio settled at
3.2 compared to 2.6 last year. The
ratio was impacted by M&As, mainly
the Volac Whey Nutrition business in
AFI late in the year, which increased
our net interest-bearing debt level.
The reported leverage level was still
safely within our target range of 2.8-3.4.
Leverage adjusted for the temporary
effect of M&As in the year was 2.9.
Reduction in operating cash flow
Cash flow from operating activities fell
to EUR 652 million (2023: EUR 1,151
million). Higher price levels resulted in
more funds being tied up in net working
capital of EUR -379 million compared
to a release of EUR 320 million last year.
EBITDA landed at EUR 1,109 million
compared to EUR 1,079 million in 2023.
Increased level of investments
We continued to invest in significant
projects to support future growth within
our strategic business areas. Our total
investments for the year, including
M&As, reached a record high of EUR
1,053 million. Investments in intangi-
bles, property, plant and equipment,
including right-of-use assets (excluding
M&As), amounted to EUR 763 million
compared to EUR 601 million in 2023.
The strength of our brands was evident
in our market share development in
2024, where we saw an increase in our
branded volume market share in the
European retail market, particularly
within the BSM category.
Larger Fund our Future savings
than expected
Our Fund our Future transformation
and efficiency programme exceeded
expectations and achieved net savings
of EUR 131 million. This was driven by
numerous efficiency initiatives, such as
logistics route efficiencies, recipe and
assortment optimisations.
Progress in reducing our
emissions
In 2024, we achieved a 4 percentage
points reduction in scope 1 and 2
commodity prices, albeit with a delay
due to their greater rigidity – a trend
that persisted in 2024 and became
particularly evident towards the end of
the year.
Strong retail and foodservice
branded volume-driven revenue
growth
Increased consumer purchasing power in
2024 led to rising retail and foodservice
demand. This, combined with firm sales
execution and the strength of our brands,
resulted in strong branded volume-driv-
en revenue growth of 3.7%, with
branded retail volumes growing by 3.4%
and branded foodservice volumes by
7.5%. Market developments also drove
commodity prices upwards, putting retail
and foodservice margins under slight
pressure in the second half of 2024.
Some of our major investments
included enhancing butter capacity in
Holstebro, Denmark and driving growth
in AFI. Additionally, new projects, such
as the introduction of mozzarella
technology in Taw Valley, UK, were
undertaken.
Investments related to M&As amounted
to EUR 290 million, primarily due to the
acquisition of the Volac Whey Nutrition
business.
Higher net interest-bearing debt
Net interest-bearing debt, including
pension liabilities, increased to EUR
3,533 million (2023: EUR 2,850
million), driven by more funds being
tied up in net working capital positions
and higher level of investments.
NEXT SECTION
Read more about our perfor-
mance based on brands and
markets on the following pages.
Global brands
23
Europe
24
International
26
Arla Foods Ingredients
28
Global Industry Sales
29
Financial leverage development
Target range: 2.8-3.4
Strategic branded volume-driven revenue growth,
indexed to 2018
%
PAGE 22
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
/ Global brands
Europe
International
Arla Foods Ingredients
Global Industry Sales /
2024: 3.9%
2023: -2.8%
2024: 3.1%
2023: -2.3%
2024: 5.6%
2023: 0.8%
2024: 8.4%
2023: 2.9%
2024: 3.4%
2023: 6.5%
2024: -2.7%
2023: 4.9%
2024: 0.8%
2023: 15.7%
2024: -1.1%
2023: -1.7%
2024: -0.2%
2023: 3.0%
STRATEGIC BRANDED
VOLUME-DRIVEN
REVENUE GROWTH
STRATEGIC
BRANDED NET
REVENUE GROWTH
3.1%
3.7%
Our brands
GLOBAL BRANDS
OUR STRATEGIC GLOBAL BRANDS ARE CENTRAL TO OUR BUSINESS,
DRIVING THE MAJORITY OF VALUE CREATION FOR ARLA.
In 2024, we experienced a return to
branded growth with volume-driven
revenue of 3.7% (2023: -0.7%) and a
branded revenue increase of 3.1% to EUR
6,589 million (2023: EUR 6,375 million),
which exceeded our expectations at the
start of the year. This growth was driven
by increased consumer purchasing power,
strong sales execution and the strength
of our brands, which pushed innovations
catering to market demands. These
factors resulted in a rise in our branded
volume market share.
Arla® brand
Our Arla® brand with its various successful
sub-brands covering multiple categories
such as milk, yoghurt, cream, powder and
cheese, achieved volume-driven revenue
growth of 3.9% (2023: -2.8%). The volume
increase was partly offset by a slightly
lower price level, which resulted in a 3.1%
revenue increase to EUR 3,737 million in
2024 (2023: EUR 3,618 million).
Some of our sub-brands experienced
exceptional volume-driven revenue
growth. The growth was in particular
driven by Arla® Protein, which grew
volumes by 36.0%, supported by the
launch of the Food To Go concept, and our
foodservice brand Arla® Pro experienced
growth of 13.7%. From a market perspec-
tive, the branded volume-driven revenue
growth was especially prominent in the
Netherlands, Belgium and France cluster
and the UK, with branded growth of 10.7%
and 10.6%, respectively.
Lurpak®
Our Lurpak® brand achieved revenue
growth of 8.4% to EUR 837 million (2023:
EUR 772 million) with its volume-driven
revenue increasing by 5.6% compared to
0.8% in 2023. This strong growth was a
result of Lurpak® successfully capitalising
on strategic initiatives and its brand
strength. The European markets led
this brand growth with volume-driven
revenue of 6.7%, mainly driven by the UK
and Denmark. Our international markets
maintained steady volume-driven revenue
growth of 3.7%, led by West Africa and the
Rest of the World cluster. Growth in 2024
was also supported by the successful
launch of Lurpak® Plant Based.
Castello®
Our speciality cheese brand, Castello®,
saw a 1.1% decrease in its volume-driven
revenue compared to 2023, which was
offset by higher prices leading to a minor
revenue decrease of 0.2% to EUR 245
million (2023: EUR 246 million). Our
European markets saw a volume decrease
of 3.1%, which, although a decline, is
an improvement from last year (2023:
-4.6%). In international markets, volumes
increased by 0.4%, led by growth in SEA
and the Rest of the World. The volume
growth was mainly driven by the cream
and processed cheese categories, but was
constrained by decreases in the mould
and yellow cheese categories, which faced
an adverse volume impact from increased
price competition in key markets.
Puck®
Overall, Puck®, our leading brand in MENA,
grew with volume-driven revenue of 3.4%,
with revenue decreasing by 2.7% to EUR
514 million (2023: EUR 526 million). The
cooking portfolio saw strong growth in
both volume and revenue, led by cooking
creams and the cooking cheese portfolio.
The decrease in revenue was mainly due
to increased price competition in the
processed cheese category.
Starbucks™
Our Starbucks™ ready-to-drink (RTD)
coffee assortment, available in more than
50 countries across Europe, the Middle
East and Africa, delivered 0.8% branded
volume-driven growth. The volume-driven
revenue growth was mainly due to our
European business, which increased
volumes by 2.8% due to enhancements
in distribution and channel strategies,
along with the successful introduction of
Ready-To-Drink Protein Coffee in the UK.
Our international markets experienced a
decrease of 3.5% in their volume-driven
revenue growth because of the negative
impacts from the ongoing turmoil in the
Middle East, however, partly offset by
strong growth in the Rest of the World.
2023: 1.2%
2023: -0.7%
PAGE 23
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
Europe
International
Arla Foods Ingredients
Global Industry Sales /
/ Global brands
EUROPE
2023: -1.3%
2023: 7,984
2023: 2.7%
2023: 58.4%
4.1%
8,066
In 2024, revenue increased by 1.0% to
EUR 8,066 million (2023: EUR 7,984
million). This was caused by branded
volume-driven revenue growth of 4.1%
due to strong branded positions and
growth efforts as well as increased
European consumer purchasing power,
thanks to easing inflation and rising
wages. The growth was partly offset by
a reduction in private label volumes and
changes in commercial prices, which
followed commodity prices.
Our branded volume-driven revenue
growth exceeded the general branded
European retail category volume by
2.1%, particularly because the BSM
category decreased by 1.1%, while
Lurpak® increased retail volumes by
6.6%.
OUR EUROPEAN COMMERCIAL SEGMENT COVERS
EIGHT COUNTRIES IN NORTHERN AND WESTERN
EUROPE. IN THIS SEGMENT, WE OFFER BRANDS SUCH
AS LURPAK®, ARLA® AND STARBUCKS™.
Strategic branded volume-driven
revenue growth
Revenue
EUR million
Revenue growth
Share of total Arla revenue
1.0%
58.6%
The growth was particularly strong
in our UK business (7.6%) and our
Netherlands, Belgium and France
cluster (7.4%). It was also evident in
our European foodservice business,
which saw 7.6% branded volume-driven
revenue growth across countries.
Several of our European brands
performed well in their volume-driven
revenue growth in 2024. This included
Arla® Protein growing by 32.3%, Arla®
Pro by 8.7% and Lurpak® by 6.7%.
The growth was in part due to the
successful launch of Arla® Protein in
Sweden and Milka® chocolate milk in
Germany.
In addition, over 4 billion kg of our
farmer owners' milk in Europe is part of
the FarmAhead™ Customer Partnership
programme.
Our foodservice brand Arla® Pro
continued to drive success with 8.7%
branded volume-driven revenue growth
in Europe, continuously meeting evolving
foodservice market demands.
ARLA®
PRO
Solid performance
in foodservice
Our European
foodservice business
experienced 7.6%
branded volume-driv-
en revenue growth.
PAGE 24
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
/ Global brands
International
Arla Foods Ingredients
Global Industry Sales /
Europe
Strategic branded volume-
driven revenue growth
Strategic branded volume-
driven revenue growth
Markets
Markets
Revenue
growth
Revenue
growth
Share of
Europe revenue
Share of
Europe revenue
Strategic branded volume-
driven revenue growth
Strategic branded volume-
driven revenue growth
Markets
Markets
Revenue
growth
Revenue
growth
Share of
Europe revenue
Share of
Europe revenue
Strategic branded volume-
driven revenue growth
Strategic branded volume-
driven revenue growth
Markets
Markets
Revenue
growth
Revenue
growth
Share of
Europe revenue
Share of
Europe revenue
In total, our UK business saw a minor revenue decrease of 0.2% to EUR
3,055 million (2023: EUR 3,060 million). The minor decrease was a
result of strong branded volume-driven revenue growth of 7.6% and a
favourable currency effect from a strengthening GBP being offset by
decreasing private label volumes as well as decreasing price levels. The
volume-driven revenue growth was mainly driven by Arla® Protein, Arla®
Pro and Lurpak® growing by 28.6%, 16.1% and 7.5%, respectively. The
well-executed launch of Lurpak® Plant Based in the UK also contributed
to the growth.
Revenue growth of 2.4% to EUR 397 million (2023: EUR 388 million) was
achieved in Finland due to branded volume-driven revenue growth of
6.9%, mainly driven by strong growth in the Arla® Protein, Arla Luonto+®
and Arla® Apetina brands. Within foodservice, we also saw strong branded
volume-driven revenue growth of 8.9% driven by successful efforts to
attract new customers. In September 2024, Arla launched a nationwide
marketing campaign focusing on the breakfast occasion and well-being for
children.
Our business in the Netherlands, Belgium and France achieved revenue
growth of 4.1% to EUR 509 million (2023: EUR 489 million). Both the retail
and foodservice businesses showed consistent branded volume-driven
revenue growth across all three markets. Notably, our brands Melkunie®
Breaker, Arla® Pro and Arla® LactoFREE delivered growth rates of 46.1%,
22.0% and 20.0%, respectively, leading to overall branded volume-driven
revenue growth of 7.4%.
In Germany, we experienced a 2024 revenue increase of 1.5% to EUR
1,272 million (2023: EUR 1,253 million). Our volume-driven revenue
increased by 7.0%, mainly driven by strong branded growth in our Arla®
Skyr, Kærgården® and BUKO® brands which grew volumes by 26.3%,
16.3% and 12.4%, respectively. Furthermore, we had success with the
launch of Milka® chocolate milk in Germany and expanded the BUKO®
portfolio with cooking products.
Revenue in Denmark decreased by 1.3% to EUR 1,241 million (2023:
EUR 1,258 million). Strategic branded volume-driven revenue increased
by 0.5%, however, this was offset by decreasing private label volumes.
Despite the stable overall growth, we particularly saw strong growth
in some brands, such as Arla® Protein, Starbucks™ and Lurpak® which
achieved volume-driven revenue growth of 24.2%, 5.2% and 3.2%,
respectively.
Arla Sweden's revenue increased by 3.6% to EUR 1,592 million (2023:
EUR 1,536 million) with strategic branded volume-driven revenue growth
of 2.0%. Our Svenskt Smör®, Arla® Pro and Bregott® brands contributed to
the growth with 14.4%, 7.0% and 6.9%, respectively.
Additionally, Arla® Protein was successfully launched in 2024 in Sweden.
The branded volume-driven revenue growth was adversely impacted by a
general trend in Sweden of private labels taking market share from brands
within the milk category.
UK
GERMANY
SWEDEN
THE NETHERLANDS,
BELGIUM AND FRANCE
DENMARK
FINLAND
7.6%
7.0%
2.0%
7.4%
0.5%
6.9%
2023: 2.2%
2023: -5.4%
2023: -5.1%
2023: 6.9%
2023: -0.2%
2023: -2.4%
-0.2%
1.5%
3.6%
4.1%
-1.3%
2.4%
2023: 2.4%
2023: 4.6%
2023:-3.7%
2023: 10.3%
2023:4.1%
2023: 14.6%
2024: EUR 3,055 million
2023: EUR 3,060 million
2024: EUR 1,272 million
2023: EUR 1,253 million
2024: EUR 1,592 million
2023: EUR 1,536 million
2024: EUR 509 million
2023: EUR 489 million
2024: EUR 1,241 million
2023: EUR 1,258 million
2024: EUR 397 million
2023: EUR 388 million
PAGE 25
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
/ Global brands
International
Arla Foods Ingredients
Global Industry Sales /
Europe
INTERNATIONAL
2023: 1.9%
2023: 2,4711
2023: 1.4%
2023: 18.1%
2.9%
2,435
Our International segment saw a
revenue decrease of 1.5% in 2024 to
EUR 2,435 million (2023: EUR 2,471
million). This was driven by an unfavour-
able impact from currency develop-
ments, mainly due to devaluations in
Nigeria and Bangladesh. The underlying
revenue development excluding
currency effects, was positive as com-
mercial prices followed the upwards
moving commodity prices in the year.
Our branded portfolio achieved
volume-driven revenue growth of
2.9%. This growth was realised despite
facing challenges such as price
increases implemented to offset the
effects of currency devaluations and
escalating geopolitical turbulence in
the Middle East, both of which reduced
consumer demand. Additionally, milk
price differences between Europe and
Oceania remained high throughout
2024, putting pressure on our more
commodity-driven positions.
OUR INTERNATIONAL SEGMENT COVERS
APPROXIMATELY 140 COUNTRIES ACROSS
SIX CONTINENTS. OUR KEY BRANDS INCLUDE
PUCK®, ARLA® DANO®, LURPAK®, CASTELLO®
AND STARBUCKS™.
Strategic branded volume-driven
revenue growth
Revenue
EUR million
Revenue growth
Share of total Arla revenue
-1.5%
17.7%
Puck® grew volumes by 3.4%. The
growth in both volume and revenue was
led by the cooking creams and cooking
cheese portfolio.
PUCK®
THICK CREAM
Branded volume
growth in interna-
tional markets
Despite geopolitical
turbulence and differ-
ences in milk prices,
our branded portfolio
achieved volume
growth of 2.9%.
At a regional level, we achieved branded
volume-driven revenue growth across
all regions except West Africa, which
was significantly impacted by currency
devaluation effects.
From a brand perspective, we saw
stable volume-driven revenue growth
across our brands with Starbucks™
seeing a volume decrease, which was
driven by the turmoil in the Middle East.
Our foodservice channel advanced
further, achieving branded volume-driv-
en growth of 7.3%.
PAGE 26
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
/ Global brands
Europe
Arla Foods Ingredients
Global Industry Sales /
International
Strategic branded volume-
driven revenue growth
Strategic branded volume-
driven revenue growth
Strategic branded volume-
driven revenue growth
Strategic branded volume-
driven revenue growth
Strategic branded volume-
driven revenue growth
Strategic branded volume-
driven revenue growth
Regions
Regions
Regions
Regions
Regions
Regions
Revenue
growth
Revenue
growth
Revenue
growth
Revenue
growth
Revenue
growth
Revenue
growth
Share of
International revenue
Share of
International revenue
Share of
International revenue
Share of
International revenue
Share of
International revenue
Share of
International revenue
In MENA, revenue decreased by 2.4% to EUR 972 million (2023: EUR
996 million) due to lower price levels, however, it continued to achieve
2.7% branded volume-driven revenue growth. This was in particular
driven by our foodservice segment and by our key brand in the region,
Puck®, growing its cooking and mozzarella positions. The strong launch
of Galaxy® chocolate milk in the region contributed to the volume-driven
revenue growth. The high levels of geopolitical turbulence in the region
had an adverse impact, especially on the StarbucksTM range.
In MENA, Puck® launched the Puck® Reusability campaign, inspiring
consumers to reuse their glass jars since the infrastructure for recyclability
is lacking. The Puck® Selfless Shelves campaign empowered struggling
Lebanese women to sell their handmade produce in reused jars in
supermarkets, winning two Gold Effies and one Bronze Cannes Lion award.
In 2024, we experienced a revenue decrease of 20.1% in China to EUR
114 million (2023: EUR 142 million) driven by decreased private label
volumes, mainly in UHT milk, which faced pressure from prices in China
and Oceania being significantly lower than European milk prices. Our
branded volumes increased by 9.9% spearheaded by Baby&Me in the Early
Life Nutrition segment which achieved volume-driven revenue growth
of 25.8% as well as a very successful launch of our Cocio® chocolate milk
brand in China in 2024.
Our 2024 revenue in West Africa decreased by 21.5% to EUR 100 million
(2023: EUR 127 million), driven by continued currency devaluation in Nigeria.
Branded volumes were negatively impacted by the price increases implement-
ed to mitigate the currency devaluation effects. Thus, branded volume-driven
revenue experienced a 19.1% decrease in growth, mostly affecting our Dano®
brand, which saw a reduction of 22.2%.
In Nigeria, our local farm performed well with an increasing herd size and
expected yield. We inaugurated a new yoghurt factory and held the Arla-
Damau Open Day, where our stakeholders experienced our commitment
to shaping the future of dairy. We also released a manual on best practices
in sustainable dairy farming for dairy professionals to enhance farming
practices.
MIDDLE EAST AND
NORTH AFRICA
WEST
AFRICA
CHINA
Our Rest of the World cluster covers over 80 different countries. The rev-
enue in this cluster increased by 8.0% to EUR 649 million in 2024 (2023:
EUR 601 million), largely due to branded volume-driven revenue growth
of 6.4%. Growth was positive across our brands in the region spearheaded
by our Arla® Protein brand, which increased its volume-driven revenue
by 64.3%. Our Arla® Pro brand and StarbucksTM also achieved impressive
volume-driven revenue growth rates of 19.5% and 11.3%, respectively,
largely driven by strong growth of 34.4% in Poland.
To promote healthy eating, we focused on breakfast to address the trend
of skipping this meal. In Greece, we partnered with Sklavenitis and the
Together for Children organisation to educate consumers and provide
around 5,000 breakfasts in 2024, supporting children's healthy growth
and learning.
REST OF
THE WORLD
In 2024, we saw a stable revenue development, with a slight decrease of
0.2% to EUR 339 million (2023: EUR 340 million) in North America. On
the volume side, North America achieved branded volume-driven revenue
growth of 2.2%. This was due to growth of 2.6% in the USA driven by the
Arla® brand and 1.9% in Canada mainly from our Tre Stelle® brand.
Arla Canada introduced the Bocconcini Water recovery project, focusing
on saving water daily, improving pipe insulation to reduce carbon
emissions and maintaining zero waste to landfill.
NORTH
AMERICA
In South East Asia, revenue experienced a decline of 1.7% to EUR 261
million in 2024 (2023: EUR 266 million), mainly due to the challenging
macroeconomic situation in Bangladesh, where further currency
devaluations occurred in 2024. We achieved a 1.7% increase in branded
volume-driven revenue, as strong performance in the Philippines and
Indonesia offset decreased volumes in Bangladesh. Foodservice remained
a key driver in South East Asia, growing volumes by 18.0% with 26.6%
volume-driven revenue growth in our Arla Pro® brand.
Late in 2024, we introduced UHT milk in Bangladesh to establish a further
leg to the business there for the future. Also in Bangladesh, the Green
Dairy Partnership was launched, aiming to cut emissions by 30% and
increase dairy farm household incomes by 30% for 10,000 farmers in the
southwest. In Indonesia, we continued to support the movement towards
organic dairy through the partnership with Market Driven Organic Dairy
Production. In both projects, we contributed our expertise on sustainable
dairy value chains.
SOUTH EAST
ASIA
-19.1%
2023: -8.8%
9.9%
2023: -20.7%
2.7%
2023: 4.2%
6.4%
2023: 3.2%
2.2%
2023: 0.3%
1.7%
2023: 3.9%
-21.5%
2023: -18.8%
-20.1%
2023: 8.7%
-2.4%
2023: 3.2%
8.0%
2023: 5.4%
-0.2%
2023: -2.0%
-1.7%
2023: -1.1%
2024: EUR 100 million
2023: EUR 127 million
2024: EUR 114 million
2023: EUR 142 million
2024: EUR 261 million
2023: EUR 266 million
2024: EUR 339 million
2023: EUR 340 million
2024: EUR 649 million
2023: EUR 601 million
2024: EUR 972 million
2023: EUR 996 million
PAGE 27
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
/ Global brands
Europe
Arla Foods Ingredients
Global Industry Sales /
International
ARLA FOODS INGREDIENTS
2023: 10.4%
2023: 79.7%
2023: 963
2023: 7.0%
2.5%
80.1%
AFI's 2024 performance was driven by
a continuous effort to produce new
innovations and inspiring concepts,
and despite market price volatility, our
ingredients business maintained strong
momentum during 2024.
2024 was a year characterised by high
market prices across both commodities
and value-add products, driven by
strong demand for dairy proteins in
general, and especially for specialised
proteins like the AFI value-add whey
and milk protein portfolio. This resulted
in growth in the value-add segment
of 2.5% (2023: 10.4%) and a revenue
increase of 5.4% to EUR 1,015 million in
2024 (2023: EUR 963 million).
Implementation of our Future 26 strate-
gy continued at full force. In late 2024,
AFI acquired full ownership of Volac
Whey Nutrition Limited, which
ARLA FOODS INGREDIENTS (AFI) IS A GLOBAL LEADER IN
WHEY-BASED INGREDIENTS THAT ARE USED IN A WIDE RANGE
OF CATEGORIES FROM CLINICAL AND SPORTS NUTRITION TO
DAIRY, CONFECTIONARY AND BAKERY.
Growth of the value-add segment
Value-add share
Revenue
EUR million
Share of total Arla revenue
1,015
7.4%
produces products for the high-growth
area of health and performance
nutrition and offers opportunities for
further valorisation. Additionally, a
major investment in new capacities for
our specialised proteins was finalised
at Danmark Protein and is ready for
commercialisation in early 2025. We
also commenced construction of a
new permeate dryer at our plant in
Argentina.
To support continued growth in
AFI's core ingredients business,
a strategic decision was made to
initiate a reprioritisation of efforts and
production capacities at our Arinco
site by discontinuing production of
early life nutrition products, which will
now be handled by a third party, and
focusing on ingredients production.
This transition will happen towards the
beginning of 2026.
Whey is a by-product of the
cheese-making process and
serves as a premium ingredient
in nutritional and functional food
applications, including in Arla®
Protein shakes.
ARLA®
PROTEIN
Strong demand for
specialised protein
High market prices
in 2024 were driven
by strong demand for
dairy proteins, includ-
ing AFI's specialised
whey protein.
PAGE 28
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
/ Global brands
Europe
International
Global Industry Sales /
Arla Foods Ingredients
GLOBAL
INDUSTRY SALES
THROUGH GIS, WE CONDUCT BUSINESS-TO-
BUSINESS SALES OF CHEESE, POWDER AND
BUTTER TO OTHER COMPANIES FOR USE AS
INGREDIENTS IN THEIR PRODUCTION. THIS
TRADING BUSINESS ALLOWS US TO BALANCE
OUR MILK SUPPLY THROUGHOUT THE YEAR.
European and global dairy commodity
market prices rose throughout 2024
due to high demand and a dairy supply
that remained constrained, in part
due to the outbreak of bluetongue
disease in Central Europe, wet weather
in Northern Europe and regulatory
uncertainties. The commodity price
increase was mainly driven by fat-heavy
products such as butter and yellow
cheese. Specifically for butter, there
was a 40% increase between January
and December 2024.
2023: 27.4%
2023: 2,256
2023: -10.9%
2023: 16.5%
24.8%
2,254
Share of milk solids sold through Global
Industry Sales
Revenue
EUR million
Revenue growth
Share of total Arla revenue
-0.1%
16.3%
Commodity prices
increased in 2024
The increase was
mainly driven by
fat-heavy products,
such as butter and
yellow cheese.
On the volume side, we saw a re-
duction in trading volumes due to
higher retail volumes in our Europe and
International segments and a decline in
milk intake from our farmer owners. As
a result, the overall share of milk solids
sold through GIS decreased to 24.8%
(2023: 27.4%). Despite the decreasing
share of milk solids sold through GIS, we
saw a stable overall revenue devel-
opment of -0.1% due to the higher
commodity price levels.
PAGE 29
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Performance overview
2025 outlook
/ Global brands
Europe
International
Arla Foods Ingredients
Global Industry Sales /
2025 OUTLOOK
As we look ahead to 2025, we do not
anticipate a decrease in market volatil-
ity, as geopolitical turbulence appears
to be increasing. Navigating this will
require careful strategic planning and
adaptive measures.
We expect consumer purchasing power
to remain favourable in 2025, following
an increase in 2024 due to lower
inflation and higher wages. However,
we anticipate that dairy demand will be
impacted by consumers' reactions to
the higher dairy price levels.
There is also significant uncertainty
about how global dairy supply will
develop in 2025. The imbalance
between supply and demand in 2024,
is anticipated to adjust to the higher
price levels, potentially increasing supply
in 2025. Political uncertainty related
WE EXPECT 2025 TO BE A YEAR WHEN BRANDED GROWTH
SLOWS DOWN DUE TO HIGH DAIRY PRICE LEVELS AND
VOLATILE MARKET CONDITIONS.
to sustainability in core markets could
however remain a limiting factor.
In addition, the high dairy price level is
expected to drive revenue up, bringing
our revenue expectation for next year
to a range of EUR 14.5-15.3 billion. The
acquisition of the Volac Whey business is
expected to increase AFI revenue in the
level of 20%.
Our profit share is anticipated to be
within our target range of 2.8% to
3.2%. However, the high price level,
combined with consumer uncertainty,
is expected to put pressure on branded
volume-driven revenue growth.
Consequently, our expectation for
branded volume-driven revenue growth
in 2025 is around -2.0% to -1.0%.
However, there is significant uncer-
tainty about this range as it is subject
Results
2024
Outlook
2025
Outlook
20241
3.7%
13.8
2.9%
131
3.22
-4%P
-1%P
CONTINUED
REDUCTION
REDUCTION
CONTINUED
REDUCTION
REDUCTION
-2.0~ -1.0%
14.5-15.3
2.8-3.2%
90-110
2.8-3.23
STRATEGIC BRANDED VOLUME-
DRIVEN REVENUE GROWTH
REVENUE
EUR BILLION
PROFIT SHARE
EFFICIENCIES
EUR MILLION
SCOPE 1+2 EMISSIONS
PERCENTAGE POINTS
SCOPE 3 EMISSIONS
PERCENTAGE POINTS
LEVERAGE
3.0-4.0%
13.4-13.9
2.8-3.2%
100-120
2.6-2.9
to how the supply and demand of dairy
affects price levels in 2025.
We expect to keep up our firm
momentum from 2024 in our efficiency
delivery due to a strong pipeline of
activities to be implemented in 2025.
We anticipate to deliver savings in the
range of EUR 90-110 million.
Through our climate strategy, we aim
to continuously reduce our climate
impact. We expect to reach our 2030
emission reduction targets – a 63% re-
duction in scope 1 and 2 emissions and
a 30% reduction in scope 3 emissions
per kg of milk and whey. Furthermore,
we foresee a strong scope 3 momen-
tum in 2025 from the incentive point
results of 2024.
1 As announced in the 2024 half-year report.
2 Leverage adjusted for the temporary effect of M&As in the year was 2.9.
3 Excluding in-year M&As.
PAGE 30
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Executive summary
External market overview
Performance overview
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
2025 outlook
SUSTAINABILITY
STATEMENTS
General information
32
Sustainability in Arla
34
Materiality assessment
Environment
40
Climate change and animal welfare
53
Biodiversity and nature
61
Resource use and circularity
Social
68
Employees and workers in the value chain
80
Consumers – healthy and safe nutrition
Governance
87
Responsible business conduct
This year, Castello® introduced
a new series of high-quality
spreadable cheeses: Castello® Fløjl
and Castello® Gnist.
CASTELLO®
SPREADABLE CHEESE
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cop
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an
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cop
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per
kil
o m
ilk
and
wh
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Y
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E
STRONGER
PEOPLE
STRONGER
PLANET
2025
2030
SUSTAINABILITY
IN ARLA
WE ARE COMMITTED TO BUILDING
A SUSTAINABLE FUTURE. OUR
SUSTAINABILITY STRATEGY
DRIVES OUR ACTIONS TOWARDS A
STRONGER PLANET AND STRONGER
PEOPLE.
Our vision is creating the future of dairy
to bring health and inspiration to the
the world, naturally.
Growing our business requires
managing our environmental and social
impacts. Our Future 26 strategy focuses
on sustainable growth by reducing
environmental impacts and creating
value with our farmer owners.
Stronger planet
We believe in the importance of
caring for the environment to ensure a
healthier planet. We are committed to
reducing our carbon footprint through
sustainable dairy farming, aiming to
leave farms in a better condition for
future generations. Our efforts focus
on preserving ecosystems, promoting
biodiversity, minimising emissions and
responsible resource use. We empha-
sise circularity and renewable energy
to minimise impacts and prioritise
reducing food waste.
Stronger people
As the interest in food with health bene-
fits grows, we expect more people to
include our products in their daily diets.
Leveraging our global market position
and extensive customer relationships,
we aim to promote healthier lives
worldwide with nutritious, natural and
affordable products.
Developing the strategy
Arla's unique democratic setup makes
it possible to formulate and execute
strategies together with our farmer
owners.
In developing the overall group strategy
'Future 26' and the underlying sustaina-
bility strategy 'Stronger Planet, Stronger
People', we collaborated closely with
our farmer owners, placing strong em-
phasis on pursuing sustainability-relat-
ed opportunities while addressing and
mitigating associated risks. Find more
on risks and opportunities on pages
34-36, and additional information on
the strategy development process on
page 37.
PAGE 32
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Environment
General information
/ Sustainability in Arla
Materiality assessment /
Governing sustainability
As a dairy cooperative committed to de-
fining the future of dairy, sustainability is
integrated into each part of our business.
BoD responsibilities
The BoD works alongside the EMT on
setting goals and managing sustain-
ability matters. All members of the
BoD are involved in strategic sustain-
ability issues, from discussions to
decision-making. They receive regular
updates on significant topics such as
environmental impact and food safety.
In 2024, the BoD engaged in discussions
on several sustainability-focused topics,
such as climate, biodiversity, health and
safety, and employee remuneration.
EMT responsibilities
In the EMT, the overall responsibility for
leading sustainability efforts lies with
the CEO. The CASO makes sure our
sustainability strategy is put into action.
The functional heads are responsible
for meeting sustainability goals in their
areas and making sure we follow the
plan. As such all material impacts, risks
and opportunities are addressed by the
EMT functional heads as part of their
responsibilities. Find more information
on our governance framework and our
management on pages 91-92.
Competencies of the BoD
Assessing sustainability competencies
is essential when evaluating our BoD
candidates. On average, our BoD
members comprehend the full spectrum
of Arla's value chain impacts and the
complexities influencing the strategy,
such as regulations and market forces.
This entails grasping the connection
between Arla's strategy and contributing
to new views on specific sustainability
impacts, opportunities, risks and frame-
works like the Science Based Targets
initiative, including a focus on carbon
reduction initiatives on farms, which is a
critical aspect of our scope 3 impact.
Diversity of the BoD
In Arla, we recognise that it is the varied
perspectives, innovative ideas and rich
experiences that drive our success. Such
diversity is also important across the BoD.
As an example, the Chair emphasised di-
versity and inclusion considerations in the
presentations to the BoR, which elects
our BoD, prior to the May election period
in 2024. Our goal is to achieve 30%
representation of women on the BoD by
2026, and we are currently at 25%.
Sustainability remuneration
We design our remuneration framework
to support business success in the
immediate future as well as long term.
In alignment with our 2030 corporate
targets we added a fifth component
to the remuneration policies of the
Short-Term Incentive (STI) scheme in
2023, which is also included in the the
COOPERATIVE
GOVERNANCE
CORPORATE
GOVERNANCE
Global sustainability and ESG reporting aimed at developing and improving methodology, reporting and data quality across functions
BOARD OF DIRECTORS (BOD)
EXECUTIVE
MANAGEMENT TEAM (EMT)
Sustainability Working Group (SWG)
Chaired by two Board of Directors (BoD)
members but consisting of elected Board
of Representatives (BoR) members, the
group is consulted on sustainability topics
related to farming
Defines our sustainability
strategy and implementation
SUSTAINABILITY GOVERNANCE IN ARLA
EMT and Executive Board remuneration,
linking to a reduction in our scope 1
and 2 GHG emissions. As a result, 10%
of their short-term incentive plans
depend on this sustainability compo-
nent for 2024.
Agriculture,
sustainability,
communication
Overall sustainability strategy, protecting biodiversity,
animals welfare and Scope 3 on-farm emissions
Supply chain
Scope 1 and 2 emissions, non-farm scope 3 emissions,
health & safety of our operations
Human resources
Working condition, diversity, equal treatment
and opportunities
Marketing
and innovation
Responsible marketing, technology and innovation,
resource use, circular economy, health & nutrition
Finance, Legal,
IT, Strategy
Overall risk & opportunity assessment, responsible and
transparent business practices, annual report including
ESG reporting
Commercial segments
Partnering with customers on sustainability
Commercial segments
Partnering with customers on sustainability
Commercial segments
Partnering with customers on sustainability
Commercial segments
Partnering with customers on sustainability
Responsibility
ESG responsibility
CHIEF AGRICULTURE, SUSTAINABILITY
AND COMMUNICATION OFFICER (CASO)
CHIEF SUPPLY CHAIN
OFFICER (CSO)
CHIEF HUMAN RESOURCES
OFFICER (CHRO)
CHIEF MARKETING
OFFICER (CMO)
CHIEF FINANCIAL
OFFICER (CFO)
CHIEF
EXECUTIVE
OFFICER (CEO)
EUROPE
EMT MEMBERS
INTERNATIONAL
ARLA FOODS INGREDIENTS1
GLOBAL INDUSTRY SALES1
1 Have direct report line to the CEO.
More on EMT biographies on page 96.
PAGE 33
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Environment
General information
/ Sustainability in Arla
Materiality assessment /
Impact materiality
Inside out
1
2
3
4
5
Financial materiality
Outside in
1
2
3
4
5
E3
S3
E2
G1
AW
E1
E5
S4
E4
S1
S2
MATERIALITY
ASSESSMENT
A double materiality assessment is a
strategic and comprehensive approach
to evaluating a company's impacts, risks
and opportunities related to sustainabil-
ity. As a result of the double materiality
assessment we conducted in 2023, all
topics stemming from the European
Sustainability Reporting Standards
(ESRS) were determined to be material,
except for three. The materiality thresh-
old was set at an average score above
three on a one-to-five scale, which we
consider conservative and allows us to
prioritise the most strategic matters.
The topic names listed are aligned with
the ESRS.
Although water, pollution and affected
communities fell below our threshold
WE USE A DOUBLE MATERIALITY ASSESSMENT TO GAIN
AN UNDERSTANDING OF OUR MOST MATERIAL IMPACTS ON PEOPLE
AND THE ENVIRONMENT AS WELL AS ON BUSINESS RISKS AND
OPPORTUNITIES ARISING FROM SUSTAINABILITY MATTERS.
for material topics following the
methodology for our assessment,
we recognise our existing water and
pollution footprint as well as our impact
on communities. Both pollution and
water usage are pressures that drive
biodiversity loss. Our approach to work-
ing with biodiversity focuses on indirect
biodiversity stewardship by addressing
the key pressures on biodiversity.
Therefore, we have included disclosures
on our key water and pollution impacts
and, where applicable, metrics that
are relevant to our stakeholders in the
biodiversity chapter.
Impacts, risks and opportunities related
to animal welfare and food safety are
considered entity-specific for Arla, while
Names of the matters aligned
with the name of the standard
in the European Sustainability
Reporting Standards (ESRS)
Material matters
(threshold 3+)
AW Animal welfare
E1 Climate change
E4 Biodiversity
and nature
E5 Resource use and
circular economy
S1 Own workforce
S2 Workers in the
value chain
S4 Consumers
and end-users
G1 Business conduct
Not material
matters
E2 Pollution
E3 Water and
marine resources
S3 Affected
communities
the remaining impacts, risks and
opportunities are covered by ESRS
Disclosure Requirements.
In 2024, we revised our assessment
to specify the difference between
our potential and actual impacts and
linked it to our risks and opportuni-
ties. However, we did not conduct a
full new assessment, as there were no
significant changes to the business or
business environment.
Find our material impacts, risks and
opportunities with a further explana-
tion on pages 35-37 and descriptive
information in the topic specific
chapters.
PAGE 34
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Environment
General information
Materiality assessment /
/ Sustainability in Arla
E4
E5
E1
AW
ANI
Actual Negative Impact
PNI
Potential Negative Impact
API
Actual Positive Impact
PPI
Potential Positive Impact
Sub topic
Impact
Type
Value chain
Risks /
Opportunities
Climate change
Energy
Energy usage in own production and transport
ANI
Own operations
Climate change mitigation
Scope 3 GHG emissions from the supply chain (especially methane from farms)
ANI
Farm
Regulation to reduce emissions in the dairy sector
Brand value if consumers turn away from dairy due to climate impact
Leveraging climate data to access financing
Scope 1 + 2 GHG emissions from production and logistics
ANI
Own operations
Climate change adaptation
Farm
Physical climate risk on farm
Animal welfare
Animal welfare
Impact on animal health and welfare
PNI
Farm
Biodiversity and
ecosystems
Direct impact drivers of biodiversity loss
Pollution of water and air
ANI
Farm
Stricter regulation on biodiversity and land use
Brand value of consumers turning away due to negative impact
Brand value due to consumers choosing Arla due to biodiversity efforts
Biodiversity loss due to climate impact
ANI
Farm, own
operations
Impact on soil quality due to agricultural activities
ANI
Farm
Water scarcity due to use of water
ANI
Own operations
Biodiversity, natural capital and carbon loss due to land use change
ANI
Farm, own
operations
Land occupation for agriculture
ANI
Farm
Impacts and dependencies on ecosystem services
Farm
Increase cost of feed due to climate change and failing ecosystems
Resource use and
circular economy
Waste
Generating food waste
ANI
Farm, own opera-
tions, consumer
Generating solid waste, especially negative impact from landfill and microplastics
ANI
Own operations
Resource inflow
Depletion of non-renewable resources
ANI
Value chain
Farm
Increase cost of feed due to climate change and failing ecosystems
Land for agriculture becoming more scarce and valuable
Resource outflow
Generating non-recyclable packaging
ANI
Consumer
Brand value if consumers turn away from dairy due to non-circular packaging
E1
E4
E5
AW
Read more on page 53-60.
Read more on pages 61-67.
Read more on pages 40-52.
Impact materiality
Financial materiality
Impact materiality
Financial materiality
Impact materiality
Financial materiality
Impact materiality
Financial materiality
PAGE 35
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Environment
General information
Materiality assessment /
/ Sustainability in Arla
G1
S1
S2
S4
ANI
Actual Negative Impact
PNI
Potential Negative Impact
API
Actual Positive Impact
PPI
Potential Positive Impact
Sub topic
Impact
Type
Value chain
Risks /
Opportunities
Own workforce
Working conditions
Fair and good working conditions
API
Own operations
Not being able to recruit or retain talent
Creating a loyal workforce
Creating a skilled and diverse workforce
Healthy and safe working environment
PNI
Own operations
Equal treatment and opportunities for all
Potential risk of discrimination and harassment
PNI
Own operations
Training and skills development
PPI
Own operations
Other work-related rights
Labour rights in locations outside of the EU
PNI
Own operations
Workers in the
value chain
Working conditions
Potential risk of inadequate working conditions
PNI
Farm and other
suppliers
Brand value if consumers turn away from brand due to negative stories
Health and safety
Healthy and safe working environment
PNI
Farm and other
suppliers
Equal treatment and opportunities for all
Risk of violence or harassment
PNI
Farm and other
suppliers
Other work-related rights
Human rights, specific operations and geographical areas at risk of child and forced labour
PNI
Farm and other
suppliers
Consumers and
end-users
Personal safety of consumers and/or end-users
Food safety
PNI
Consumer
Healthy nutrition for consumers
API
Consumer
Nutrition to vulnerable consumers (e.g babies and malnourished children)
API
Consumer
Business conduct
Political engagement
Own operations
Accusations of unethical conduct or lobbying
Corporate culture
Own operations
The risk of being perceived as engaging in greenwashing (EU)
S1
S2
S4
G1
Impact materiality
Financial materiality
Impact materiality
Financial materiality
Impact materiality
Financial materiality
Impact materiality
Financial materiality
Read more on page 86-89.
Read more on page 68-79.
Read more on page 68-79.
Read more on page 80-85.
PAGE 36
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Environment
General information
Materiality assessment /
/ Sustainability in Arla
many impacts at the farm level. The geographical
scope matches Arla's operational and sourcing
regions.
After identifying them, proxies scored the severity of
impacts, taking their scope, scale and irremediability
into consideration. Risks and opportunities were
scored based on their likelihood of materialising
and their potential financial impact on Arla. Due
to the lack of quantifiable thresholds, qualitative
thresholds for a financial impact assessment
were used. This assessment is separate from
Arla's Enterprise Risk Management (ERM) process,
but in 2024, the ERM process was improved to
better cover sustainability risks and align with the
Corporate Sustainability Reporting Directive (CSRD).
Future ERM results are expected to inform updates
to the double materiality assessment.
Materiality was determined by averaging impact
scores and separately averaging risks and opportu-
nities. If a topic had both a risk and an opportunity,
only the higher score was considered to give it more
weight.
External validation of impact, risk and
opportunity assessment
A draft materiality matrix was created based on in-
ternal proxies' assessments. This draft was validated
by external experts from NGOs, financial institutions
and universities, representing stakeholder groups.
We have a governance process for regular reviews
and updates of assessments, primarily managed by
the ESG Reporting function. The final assessment
results are presented to the EMT for information,
and the BoD approved the double materiality
assessment together with the annual report.
DEVELOPING THE
STRATEGY
During the process of developing our Future 26
strategy and sustainability strategy, our EMT and
BoD ensured that the opinions and concerns of key
stakeholders were considered. The farmer owners
are involved in reviewing our strategy through
various meetings and forums.
MATERIALITY
ASSESSMENT
The process of our double materiality assessment
followed the requirements of the European
Sustainability Reporting Standards (ESRS 1 and 2).
Below, we outline how material impacts, risks and
opportunities were identified and assessed.
Stakeholder and proxy identification
The insights of key stakeholders were used to
identify and assess sustainability impacts, risks and
opportunities. We identified stakeholders affected
by Arla's activities and those using the annual report
information. Key stakeholders include:
· Our farmer owners
· Nature
· Customers
· Consumers
· Affected communities
· Workforce
· NGOs
· Financial institutions
· The media and governments.
Input was collected from all stakeholder groups.
When direct access was not possible, proxies were
chosen based on their role, expertise, relation
to stakeholders and societal position. Some
stakeholders were represented through research
papers, such as consumer opinions assessed via
surveys and discussions with relevant management
team members. Proxies' views were supported by
due diligence on human rights, risk assessments,
environmental impact research and measured data,
including current and historic climate impact.
Assessing impacts, risks and opportunities
related to sustainability matters
Sustainability matters included in the double
materiality assessment were mainly identified based
on the list of topics presented in ESRS 1. Using
stakeholder input, we found positive and negative
impacts, risks and opportunities. Arla's direct and
business-related impacts were included in the
assessment, covering the entire value chain, with
Process and metrics
As part of the strategy development, the EMT has
established and approved company-wide targets
that address material sustainability topics. Progress
towards our climate targets is reported on a month-
ly basis to both the EMT and the BoD. Additionally,
the functional heads provide regular updates on
other sustainability targets.
Additionally, the results of the materiality
assessment are considered during the strategy
update process. Sustainability impacts, risks and
opportunities are also evaluated as part of major
transactions, resulting from comprehensive due
diligence activities.
Our global policies are applicable to entities under
the direct or indirect control of Arla, including
relevant workers, contractors and subcontractors.
STAKEHOLDER
ENGAGEMENT
We engage with our stakeholders directly and indi-
rectly through various channels, teams and proxies
or credible third parties on a global and local level to
understand their concerns and expectations.
· Farmer owners. The views of our farmer owners
are represented by the BoR where sustainability
topics are discussed. Key topics for our farmer
owners are risks arising from impacts on climate
and biodiversity.
· NGOs. We collaborate with local NGOs, universities
and external experts to better understand our
impact on nature, climate and communities in
various countries.
· Customers. Our commercial teams and
sustainability managers regularly communicate
with customers about sustainability, ensuring we
understand their needs. This year, a key focus was
the FarmAhead™ Partnership, aimed at creating
a programme for emission reductions that
aligns with both Arla's goals and our customers'
objectives.
· Consumers. Understanding consumer feedback is
central to our activities, informing our commercial
functions and strategies.
· Employees and value chain workers. We
engage with our own employees through daily
interactions between managers and employees,
dialogue with worker representatives and
unions and our annual barometer survey. For our
employees it is important that Arla provides a
good and safe working environment. We engage
with both our own workforce and workers in the
value chain on human and labour rights issues
through our human rights due diligence process,
which includes direct interviews.
· Financial institutions. Dialogue with financial
institutions on sustainability impacts is part of
the process for securing financing. This year, we
discussed the implications of transitioning to a
low-carbon economy and outlined our climate
transition plans.
· Government. Numerous sustainability-related
regulations affecting the dairy industry are dis-
cussed on an EU level and in individual countries.
Through bilateral engagement with local, national
and international industry associations, we can
support industry growth and address challenges.
The views and interests of our stakeholders,
gathered from the ongoing engagement, serve
as input for our sustainability initiatives, projects
and procedures as well as for due diligence and
materiality assessments.
Core elements of due diligence
Sections in sustainability statements
Page
a)
Embedding due diligence in governance,
strategy and business model
Business model
Sustainability governance and strategy
Employees and workers in the value chain
12
32-33
73,78
b)
Engaging with affected stakeholders in all
key steps of the due diligence
Sustainability governance and strategy
Employees and workers in the value chain
37
73-74
c)
Identifying and assessing adverse
impacts
Materiality assessment
Climate change and animal welfare
Employees and workers in the value chain
34-36
51-52
73-75
d)
Taking actions to address those adverse
impacts
Climate change and animal welfare
Biodiversity and nature
Resource use and circularity
Employees and workers in the value chain
41-46
56-58
63-64
71-75
e)
Tracking the effectiveness of these
efforts and communicating
Climate change and animal welfare
Biodiversity and nature
Resource use and circularity
Employees and workers in the value chain
48-49
59
65
75, 77-78
DUE DILIGENCE
The table below illustrates where we provide
information about the due diligence process in our
sustainability statements.
For us, due diligence involves the identification,
assessment and resolution of both actual and
potential social and environmental impacts
associated with business operations, supply chain
and investments. The main objective is to ensure
the protection and respect of human rights,
labour rights and the environment. It includes
implementing policies and targets, conducting
risk assessments and comprehensive evaluations,
adopting appropriate measures to prevent and
address adverse impacts as well as providing
suitable remedies. Read more about the core
elements of our due diligence process on the pages
outlined in the table.
PAGE 37
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Environment
General information
Materiality assessment /
/ Sustainability in Arla
GENERAL ACCOUNTING
POLICIES
The sustainability statements on pages 31-89
encompass Arla's reporting on Environmental,
Social and Governance (ESG) matters. Starting from
2025 onwards, Arla will be obliged to adhere to
the European Sustainability Reporting Standards
(ESRS) as per the new EU Corporate Sustainability
Reporting Directive (CSRD), which came into effect
in early 2023. However, to ensure better alignment
with the requirements, we proactively revised
the report structure and content. For a detailed
overview of all the ESRS disclosure requirements
addressed in the report, please refer to page 39.
Other reporting standards
The sustainability statements include statutory
reporting on Corporate Social Responsibility (CSR) in
accordance with section 99a of the Danish Financial
Statements Act. Read more on page 11 (business
model), pages 51-52 (climate-related risks) and
page 38 (policies, actions, management systems,
key ESG figures and expectations for the future). Our
statutory statement on section 99d regarding data
ethics can be found on page 99.
We disclose our climate-related risks and opportuni-
ties according to the Task Force on Climate-Related
Financial Disclosures' (TCFD) recommendations in
the climate change and animal welfare chapter on
pages 51-52.
An overview of progress towards the UN Sustainable
Development Goals is included on page 168.
Basis for preparation
Arla's sustainability statements are developed using
regular monthly and annual reporting procedures.
The sustainability statements are prepared on a
consolidated basis following the financial control
approach and the same financial year as the
consolidated financial statements, unless otherwise
specified in the definition and uncertainty sections
for specific KPIs. No information is omitted due to
intellectual property, innovation or ongoing negotia-
tions. Entities such as joint ventures and associates,
where Arla does not hold a controlling influence, are
excluded. For a list of subsidiaries, please refer to the
group chart in the most recent consolidated annual
report. For our definitions of applied time horizons,
please refer to pages 37 and 51 specifically for
climate-related risks.
We obtain reasonable assurance over the following
key sustainability metrics: energy and climate-re-
lated metrics, food safety, animal welfare, accidents
and certain employee-related metrics. We obtained
limited assurance over the remaining disclosure of
the sustainability statements.
Reporting scope
Arla's environmental KPIs cover all production
and logistics sites. However, in accordance with
Arla's consolidation methodology only entities
acquired more than six months prior to year-end
are consolidated into the reporting. In 2024,
this entailed excluding environmental impacts
from the purchased powder tower in Götene,
Sweden, and the acquisition of the Whey Nutrition
business and production facility in the UK from
Volac International Limited. Social KPIs cover all
production and logistics sites as well as office data
unless specified otherwise. Arla reports ESG data for
value chain activities with significant sustainability
impacts, risks or opportunities, including on-farm
activities, purchased whey, ingredients, packaging,
waste handling and transport. Details on specific
value chain activities are provided with each KPI.
All revenue, EUR 13.8 billion, comes from the food
and beverage manufacturing sector, with value
chain impacts linked to agriculture and farming. This
means that all our revenue stems from high climate
impact sectors.
Uncertainties and estimates
We prioritise the use of primary measured data
in our reporting, sourcing information on our
operations from meter readings or invoices, direct
data from our suppliers and specific emission
factors. In certain cases, we may rely on estimates or
extrapolations for specific ESG KPIs, these are clearly
outlined in relation to the accounting practices of
the corresponding KPI. To minimise uncertainty in
our metrics, we focus on collecting data supported
by evidence. Any measurement uncertainties
associated with specific metrics are also detailed
in relation to the accounting practices of the
corresponding KPI.
Metrics further along the value chain have higher
error risks. Therefore, we have implemented the
necessary controls to mitigate this. An example is the
emissions reporting process for farms on page 49.
At the current stage, Arla does not report
quantitative forward-looking data outside of risk
classifications. This information is considered to be
uncertain.
Restatement principles
Arla's Restatement Policy guides the adjustment
of baselines and historical figures. Updated in
2024, it covers all ESG KPIs and provides guidelines
for reporting restatements. Restatements may
occur due to data errors, calculation mistakes or
methodology updates, such as changes in emission
factor sources.
Restatements are made if changes exceed a set
significance threshold. Arla assesses annually
whether changes meet this threshold, with each ESG
KPI having a specific threshold based on materiality.
For instance, GHG emissions metrics require a 2%
impact on baseline emissions for restatement. When
restating, Arla discloses previous figures, differences
and reasons for changes alongside updated figures.
Implementation
The Finance function is responsible for implement-
ing the policy and ensuring its annual review in
conjunction with the update of the ESG Accounting
Manual. During the annual review, the team estab-
lishes restatement thresholds for new ESG KPIs and
reviews the thresholds for existing ones.
ESG reporting risk management
Inadequate ESG disclosure can harm our reputation
and stakeholder trust, so managing ESG information
quality and accuracy is crucial.
The responsibility for comprehending risks and
uncertainties associated with externally reported
ESG KPIs lies with the Finance function responsible
for ESG reporting. An internal ESG Accounting
Manual governs reporting processes and controls.
When a new ESG KPI is set, uncertainties are
assessed, and specific controls ensure data quality.
Key environmental data controls are stored in our
internal control system.
Our risk mitigation prioritisation considers the
materiality of KPIs including their significance
to stakeholder decision-making, relevance to
management, financial impact, linkage to strategic
targets and target stringency. Additionally, identified
risks and uncertainties in data play a crucial role.
Annually, internal and external observations about
data quality are incorporated into an action plan
for improving reporting processes and controlling.
Auditor observations are shared with the BoD as part
of the group audit findings. Ongoing communica-
tion is conducted with individuals responsible for
each KPI, including discussions about risks and
additional control needs.
ESG reporting is part of Arla's risk-based compliance
review for all reporting processes, though it was
not selected for examination in 2024. Compliance
review results are reported to the EMT and BoD.
Targets and progress
GENDER DIVERSITY
BOARD OF DIRECTORS
BoD diversity development
Gender diversity on the BoD is important to ensure
that both genders are represented at a high
level, and to bring a variety of perspectives to the
business. Ensuring gender diversity on the BoD is
also a legal requirement in Denmark. The current
BoD consists of 19 members, including 14 farmer
owners, three employee representatives and two
external members.
Only members elected by the BoR at the general
assembly count in the BoD's gender diversity figure.
The members elected by the BoR are the 14 owner
representatives and two external members. Four of
these 16 BoR-elected board members are women,
reflecting a ratio of women to total in 2024 of 25%
women and 75% men. We are targeting a share of
30% women on our BoD compared to total by 2026.
According to CSRD, we also need to report the
women to men-ratio, which in 2024 was 33%.
Gender diversity on the Board of Directors
2024
2023
2022
2021
2020
Share of women on the Board of Directors
25%
25%
25%
13%
13%
Board meeting attendance
2024
2023
2022
2021
2020
Number of meetings
12
12
12
12
10
Attendance
97%
99%
98%
98%
99%
ACCOUNTING POLICIES
The gender diversity ratio is calculated as the share
of women on the BoD as at 31 December compared
to the total number of members, including only
members elected by the general meeting. It
excludes employee representatives and advisors
to the BoD.
BOARD MEETING
ATTENDANCE
Meeting attendance development
Attendance at the board meetings by the members
of the BoD ensures that all Arla owners and em-
ployees are represented when important strategic
decisions are made. Arla's board members are
dedicated, and as a general rule the board members
attend all meetings unless they are prevented from
doing so. In 2024, there were 11 ordinary board
meetings and one extraordinary meeting. The
board attendance decreased slightly from last year.
Information on board members can be found on
pages 93-94.
ACCOUNTING POLICIES
The board meeting attendance ratio is calculated
as the sum of regular board meetings attended
per board member divided by the total possible
attendance.
The current BoD consists of 14 owners, three em-
ployee representatives and two external members.
When calculating board meeting attendance, all 19
board members are included.
PAGE 38
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Environment
General information
Materiality assessment /
/ Sustainability in Arla
Status
Standard
Page
ESRS 2 BP-1
38
ESRS 2 BP-2
(14) 37-38,
48-48, 51, 59-
60, 85
ESRS 2 GOV-1
(3, 5) 29-32,
37-38, 51 (91-
94, 96)
ESRS 2 GOV-2
31-32, 37, 51
ESRS 2 GOV-3
(8) 32 (97)
ESRS 2 GOV-4
37
ESRS 2 GOV-5
38
ESRS 2 SBM-1
(11,) 31, 38
ESRS 2 SBM-2
37
ESRS 2 SBM-3
34-36, 41, 54,
62, 69, 81
ESRS 2 IRO-1
34, 37-38, 51
ESRS 2 IRO-2
34, 37, 39
ESRS E1 GOV-3
31, 41-45,
48, 50
ESRS E1-1
50
ESRS E1 SBM-3
34-36, 41, 54,
62, 69, 81
ESRS E1 IRO-1
34, 37-38, 51
ESRS E1-2
37, 50
ESRS E1-3
41-46
ESRS E1-4
31, 33, 41-43,
45, 48-50
ESRS E1-5
49-50
ESRS E1-6
38, 48-50
ESRS E1-7
48-49
ESRS E1-8
51
Status
Standard
Page
ESRS E1-9
ESRS E2 IRO-1
ESRS E2-1
ESRS E2-2
ESRS E2-3
ESRS E2-4
ESRS E2-5
ESRS E2-6
ESRS E3 IRO-1
ESRS E3-1
ESRS E3-2
ESRS E3-3
ESRS E3-4
ESRS E3-5
ESRS E4 SBM-3
ESRS E4 IRO-1
ESRS E4-1
35, 54, 56, 59
ESRS E4-2
50, 54, 60
ESRS E4-3
54-58
ESRS E4-4
54, 56, 60
ESRS E4-5
59-60
ESRS E4-6
ESRS E5 IRO-1
ESRS E5-1
35, 37, 60,
62-63, 67
ESRS E5-2
62-65
Status
Standard
Page
ESRS E5-3
62-66
ESRS E5-4
54, 65-66
ESRS E5-5
65-67
ESRS E5-6
ESRS S1 SBM-3
37, 69, 75, 78
ESRS S1-1
37, 71-72, 75,
78-79
ESRS S1-2
71, 73, 78-79
ESRS S1-3
75, 78-79
ESRS S1-4
69, 71-75, 77
ESRS S1-5
ESRS S1-6
76-77
ESRS S1-7
ESRS S1-8
71, 78
ESRS S1-9
76-77
ESRS S1-10
ESRS S1-11
ESRS S1-12
ESRS S1-13
ESRS S1-14
71, 76
ESRS S1-15
ESRS S1-16
77
ESRS S1-17
75, 78
ESRS S2 SBM-3
37, 69, 75
ESRS S2-1
71, 73, 75,
78-79
ESRS S2-2
37,71,73-
75,79
Status
Standard
Page
ESRS S2-3
73,75,78-79
ESRS S2-4
69, 73-75,
78-79
ESRS S2-5
ESRS S3 SBM-3
ESRS S3-1
ESRS S3-2
ESRS S3-3
ESRS S3-4
ESRS S3-5
ESRS S4 SBM-3
37, 81-83
ESRS S4-1
37, 75, 78,
83-85, 88
ESRS S4-2
37, 84-85
ESRS S4-3
75, 78-79, 84
ESRS S4-4
37, 75,79, 81-
83,85
ESRS S4-5
81-85
ESRS G1 GOV-1
87 (93)
ESRS G1-1
50, 75, 79,
87-89
ESRS G1-2
88-89
ESRS G1-3
75, 79, 87-88
ESRS G1-4
88
ESRS G1-5
88-89, 94, 96
ESRS G1-6
88-89
Progress towards compliance
with CSRD requirements:
Under materiality threshold
Internal work initiated
Moderate progress
Advanced progress
DISCLOSURE
REQUIREMENTS TABLE OF
CONTENTS
Starting from 2025 onwards, Arla will be obliged
to adhere to the European Sustainability Reporting
Standards (ESRS) as per the new EU Corporate
Sustainability Reporting Directive (CSRD), which
came into effect in early 2023.
The table on the right shows our progress towards
compliance with the CSRD requirements and where
to find them in this report. We are not compliant yet
with CSRD, but are working towards it and will be the
report covering the year 2025 when we are required
to fully comply with the reporting standards.
PAGE 39
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Environment
General information
Materiality assessment /
/ Sustainability in Arla
Impacts
Policies
PNI
ANI
ANI
ANI
ANI
Actual Negative Impact
PNI
Potential Negative Impact
API
Actual Positive Impact
PPI
Potential Positive Impact
CLIMATE CHANGE AND
ANIMAL WELFARE
ARLA'S IMPACTS
Environmental Policy & Green Ambition
2050
Animal Welfare Whitepaper
SCOPE 3 GHG EMISSIONS
SCOPE 1+2 GHG EMISSIONS
ENERGY USAGE
IMPACT ON ANIMAL
HEALTH AND WELFARE
97% Total scope 3 emissions
79% Farms
12% Externally sourced whey
1%
Waste and other
3%
Packaging
2%
Transport (upstream)
3%
Total scope 1+2 emissions
2%
Scope 1 – transport (own fleet)
and production
1%
Scope 2 – purchased energy
PAGE 40
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
Targets and ambitions
2023
2022
2024
2025
69%
52%
75%
Target: 100%
2015
2024
37%
2023
33%
2030
63% TARGET
2015
2024
13%
2023
12%
2030
30% TARGET
CONTINUED
FOCUS ON
CLIMATE
ARLA'S AMBITION
SCOPE 1+2 EMISSION REDUCTIONS
Direct greenhouse gas emissions (scope 1) and
emissions related to purchased energy (scope 2)
should be reduced by 63% in absolute terms.
Read more on page 45.
We have been collecting climate data
at the farm level for years and by lever-
aging this data to access financing and
identify potential reduction levers to
enable our farmer owners to transform
their farming practices sustainably,
we plan to accelerate our emission
reduction efforts. More details on this
topic on page 44.
Strategy
Science-based climate strategy
Addressing climate change and aligning
our targets with the Paris Agreement's
goals is our top priority.
As one of the largest dairy companies
globally, Arla possesses the size,
Impact, risk and opportunities
Climate change influences our
business, supply chain and
ecosystems
As a dairy company we contribute to
greenhouse gas emissions through our
scope 3 emissions, including methane
from cow digestion, and through scope
1 and 2 emissions from fossil fuel use
in production and logistics. At the same
time, we rely on good climate condi-
tions for feed cultivation and healthy
dairy herds. Therefore, we have a need
and responsibility to lead the transition
to a low-carbon economy.
We identified different impacts, risks
and opportunities through our double
materiality assessment related to
climate and energy, primarily stemming
from our upstream activities on dairy
farms.
Until our energy transformation is
complete, we rely on fossil fuels for
transport, processing and agricultural
machinery. Reducing fossil fuel depend-
ency is in our interest.
Climate change poses risks to Arla,
such as regulatory pressures and shifts
in consumer preferences, which could
affect profitability and brand value.
Physical risks like floods and droughts
also potentially threaten our farms.
We see an opportunity to lead the
transition to a low-carbon economy by
actively reducing our carbon footprint.
strength and influence to lead in
sustainability and environmental
protection. We recognise our responsi-
bility, aiming to achieve carbon net zero
across our value chain by 2050 and
committing to setting a science-based
net-zero target.
We are currently reviewing our scope 3
target to align with the newly published
Forest, Land and Agriculture Guidance
from the Science Based Targets
initiative. Once approved, this will be
included in our external reporting.
Data is key to reducing our carbon
footprint. As scientific advancements
continue, we strive to utilise the
best available data, technology and
methodologies. Updates in methodol-
ogies and data sources are reflected in
our reported figures, and we obtain rea-
sonable assurance regarding our scope
1, 2 and 3 greenhouse gas emissions.
For both of our emission targets we
have built detailed roadmaps, detailing
specific reduction levers, their impact
and individual contributions to achieving
the target. These roadmaps include
assumptions of future effects of product
volumes and mixes as well as expected
developments in raw milk intake.
Our climate change mitigation targets
and strategy have been approved by
the BoD.
SCOPE 3 EMISSION REDUCTIONS
PER KG OF MILK AND WHEY
Our scope 3 science-based target is mainly related to
reducing the carbon footprint at farm level by 30%
per kg of standardised milk and whey.
Read more on page 43.
RENEWABLE ELECTRICITY BY 20251
Switching from fossil to renewable energy is an important lever
to fulfil our scope 1 and 2 reduction ambition. Our key focus is
to secure renewable electricity for all our sites in Europe.
Read more on page 45.
4%p
REDUCTION
IN 2024
1%p
REDUCTION
IN 2024
1 Target is set for the end of the year. Since the KPI is based on 12 months of
data, target achievement will not be reflected in the 2025 annual report.
PAGE 41
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
2023
Scope
1+2
Scope 3
- milk
Scope 3
- whey
Scope 3
- other
2015
2024
21,339
18,801
-42
-415
30
336
18,710
Our CO2e reduction journey
Our targets and transition plan for 2030
will guide us toward achieving our ambi-
tions to reduce scope 1 and 2 emissions
by 63% in absolute terms and scope 3
emissions by 30% per kg of milk or whey
compared to our baseline year.
In 2024, we achieved a reduction of our
scope 1 and 2 emissions by 4 percentage
points, leading to a total reduction
of 37% from our 2015 baseline. This
progress was driven by a combination of
energy optimisations, such as behavioural
changes and investments in more ener-
gy-efficient equipment. Key contributions
included the switch to district heating at
one of our Swedish sites and the full-year
impact of the district heating change in
Taulov in 2023. Additionally, investments
in heat pumps and an e-boiler at several
Danish sites, along with power purchase
agreements and renewable electricity
certificates, played a role in achieving the
reduction.
The FarmAhead™ Technology and the
commitment of our farmers led to a 1
percentage point decrease in scope 3
emissions per kg of milk and whey. This
contributed to an overall reduction of
13% from the 2015 baseline value of
1.29 kg CO₂e per kg of milk and whey.
Emissions specifically from Arla's
owners amounted to 1.06 kg CO₂e per
kg of owner milk, corresponding to an
additional decrease of 1.4 percentage
points in 2024. Reductions, achieved in
nearly all owner countries, are driven by
increased use of renewable electricity,
utilisation of biogas and improvements
in the big five efficiency levers. With the
CO2e emission development 2015-2024
Thousand tonnes (mkg)
CO2e emissions development 2023-20241
support of our FarmAhead™ Technology,
Arla farmer owners succesfully continued
to reduce carbon emissions in 2024
despite challenges from weather and
uncertainties around future legislation.
Absolute emissions related to milk
decreased by 3% compared to 2023,
totaling 415 thousand tonnes of CO₂e.
This reduction was primarily due to
efforts on farms and also influenced by
decreased milk volumes from owner and
contract farmers. A substantial increase
in the purchase of external whey for our
growing ingredients business led to only
a modest decrease in total emissions
compared to 2023. Overall, in 2024,
total emissions saw a slight decrease of
91 thousand tonnes CO₂e compared to
2023. Since our baseline year in 2015,
emissions have been reduced by over 2.6
million tonnes.
On-farm activities resulted in reductions
of 1.2 million tonnes CO₂e over the past
three years, regardless of volume chang-
es, and we are confident that we will reach
our target through FarmAhead™ (find
details on page 44). In 2024, the average
number of points achieved increased to
53 from 50 in 2023. The points rose from
49 in the programme's first quarter (Q3
2023) to 54 in Q4 2024. For an average
Arla farm with an annual milk production
of 1.6 million kg, this translates to approxi-
mately EUR 41 thousand per year. In total,
EUR 337 million were paid out through
the FarmAhead™ Incentive, including
an additional 1 EUR-cent/kg of milk for
submitting FarmAhead™ Check data.
Packaging emissions was unchanged,
while scope 3 transport emissions in-
creased partly due to growing sales in our
Thousand tonnes (mkg)
2024
2023
Development
CO2e scope 1+2
618
660
-6%
CO2e scope 3:
Milk
14,781
15,196
-3%
Externally sourced whey
2,323
1,987
17%
Other including packaging and sourced transport
988
958
3%
CO2e scope 3
18,092
18,141
0%
Total CO2e
18,710
18,801
0%
1 Find more details on page 48.
international markets. Scope 3 emissions
accounted for 97% of Arla's total carbon
footprint in 2024.
With the reductions achieved in 2024, we
are on track to meet our 2030 targets and
are confident that our climate strategy,
including the FarmAhead™ Incentive
model, will support our goals.
PAGE 42
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
2024
Big five
Renewable
electricity
Carbon
farming
Sustainable
feed
Biogas
Other1
2015
2030
-13%
-17%p
Total: -30%
10%
MANURE
STORAGE
4%
ENERGY
8%
PEAT SOIL
33%
FEED
PURCHASED AND
HOME-GROWN
N2O
N2O
CO2
CO2
43%
COW'S DIGESTION
CH4
DAIRY IS A NUTRIENT-DENSE FOOD,
BUT IT ALSO COMES WITH A CARBON
FOOTPRINT. TO ACCELERATE CO²E
REDUCTIONS, WE CREATED THE
FARM AHEAD ™ PROGRAMME.
Actions and resources
SUSTAINABLE
DAIRY FARMING
Scope 3 emissions reduction
per kg of milk and whey
Where our emissions came from
on a farm in 2024
We constantly strive to reduce our farm
emissions to decrease our environmental
impact through different levers, such as
the Big 5, sustainable feed, renewable
electricity or biogas. Other reduction
levers include breeding, green fertiliser,
feed additives and biochar.
Our journey towards 2030 and net zero
by 2050 is not linear, it fluctuates as
reflected in our year-over-year results.
Increasing droughts and unpredictable
weather due to climate change, along
with economic uncertainty and poten-
tial legislation, can affect our reduction
pace and farm investments. Despite
these external challenges, our farmer
owners adapt and learn continuously.
Reducing emissions
on farm
This year, our farmer
owners cut 1 more
percentage point off
scope 3 emissions
per kg of milk and
whey.
Other emissions, 2%, include capital goods and
destruction of animal remains.
1 "Other" includes among others breeding, green fertiliser, feed additives and biochar.
PAGE 43
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
5
our farmer owners are rewarded for
implementing sustainable practices on
their farms.
FarmAhead™ Check: Measuring the
carbon footprint on the farm
Reducing farm emissions requires
knowledge. The FarmAhead™ Check is
a tool that collects data to understand
farm emissions better, covering 99%
of our milk pool. The farmer owners
provide over 200 data points by answer-
ing questions, which are then verified
by a third-party advisor and stored in
a comprehensive dataset. This offers
valuable insights into dairy farming
practices across seven Northern
European countries, supporting our
farmer owners in their sustainability
efforts and sharing learnings with
industry stakeholders, policymakers
and researchers. Submitting the
FarmAhead™ Check is rewarded with an
additional 1 EUR-cent/kg of milk.
FarmAhead™ Incentive: Rewarding
farmers for sustainability activities
We recognise and reward our farmer
owners for their efforts to reduce
the carbon footprint of their milk
and to protect biodiversity. Through
our FarmAhead™ Incentive model,
farmer owners can earn up to 80 points
across 19 categories on their activities
to reduce climate impacts such as
efficient cow feeding, effective manure
handling and the use of renewable
electricity. Each point triggers a 0.03
Taking steps today for tomorrow
with FarmAhead™
We are committed to producing
high-quality dairy products while
prioritising the well-being of our
animals and the land we depend on.
We have developed FarmAhead™
Technology, a toolbox of data-driven
and science-based technologies con-
sisting of the FarmAhead™ Check, the
FarmAhead™ Incentive, FarmAhead™
Innovation and the FarmAhead™
Customer Partnership. It is designed to
enable our farmer owners to measure,
understand and advance their individual
sustainability transitions on the farm.
Through this initiative, which builds on
the former Arla Sustainability Incentive
model and the Arla Climate Check,
EUR-cent/kg increase in payment for
the delivered milk. Activities with the
highest potential for CO2e reductions
earn the most points. As the sustainabil-
ity agenda and science matures, we will
add more options to the model.
We have allocated up to EUR 500
million annually to reward our farmer
owners for their sustainability actions
and encourage them to utilise the
FarmAhead™ Technology toolbox to
further increase climate- and na-
ture-improving activities.
FarmAhead™ Innovation: Exploring new
approaches to sustainability
To ensure that FarmAhead™ Technology
remains at the forefront of sustainable
dairy farming, we explore cutting-edge
research and development to further
reduce emissions on farm and protect
biodiversity. Our projects include,
among others, a four-year regenerative
farming pilot in collaboration with FAI
Farms. It involves Arla farmer owners
from various European countries and
aims to explore regenerative farming
methods in a structured manner. Such
projects demonstrate our dedication
to finding sustainable solutions for the
dairy industry.
FarmAhead™ Customer Partnership:
Collaborating with customers for a
sustainable future
Through the FarmAhead™ Customer
Partnership, our customers can join
FarmAhead™ Technology: A data-driven toolbox for facilitating sustainability transitions on farms
MANURE
HANDLING
6 POINTS
KNOWLEDGE
BUILDING
1 POINT
RENEWABLE
ELECTRICITY
5 POINTS
THE BIG 5
49 POINTS
SUSTAINABLE
FEED
11 POINTS
CARBON
FARMING AND
BIODIVERSITY
8 POINTS
TOTAL
80 POINTS
FARMAHEAD™
FARMAHEAD™
TECHNOLOGY
FARMAHEAD™ CHECK
POINTS ACHIEVABLE IN OUR SUSTAINABILITY INCENTIVE MODEL
FARMAHEAD™ INCENTIVE
FARMAHEAD™
INNOVATION
FARMAHEAD™
CUSTOMER PARTNERSHIP
climate reduction and nature-improving
projects on our owners' farms. Through
this partnership, they contribute to
decreasing emissions by investing in
reduction activities on farm, which in
turn helps them reduce emissions in
their own value chain. Initially launched
in the UK, the programme already has
agreements covering over 4 billion kg
of milk. Participants gain a closer link to
Arla's farmer owners through research
projects, access to accurate on-farm
data and associated claimable emission
reductions. Those are based on the
farm data from the FarmAhead™ Check
and FarmAhead™ Incentive, and include
customised reports for ESG reporting
with product-specific carbon footprints.
PAGE 44
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
2024
Volume
/ mix
Energy
efficiencies
Renewable
electricity
Transition
away from
fossil fuels
Logistic
and fuel
efficiencies
2015
2030
-37%
983
618
364
-26%p
Total: -63%
OUR LONG-TERM AMBITION FOR OUR DAIRY PRODUCTION SITES AND
LOGISTICS NETWORKS IS TO ACHIEVE CARBON NET ZERO OPERATIONS
BY 2050. TO ACCOMPLISH THIS, OUR STRATEGY FOCUSES ON THREE
CORE ELEMENTS: UTILISING RENEWABLE ELECTRICITY, ENHANCING
ENERGY EFFIECIENCY AND TRANSITIONING AWAY FROM FOSSIL FUELS
IN BOTH PRODUCTION AND LOGISTICS OPERATIONS.
4
PERCENTAGE POINTS
Scope 1+2 CO2e reductions since 2023
Strategic ambition: We aim for a 63%
reduction in scope 1+2 emissions by 2030
compared to 2015.
Our long-term plans to shift from fossil
fuels to renewables remain on track.
Initiatives like energy optimisation and
electrification, along with the use of
renewable electricity and the transition
to alternative sources of thermal energy,
are key drivers of this transition. We have
not identified any specific assets or busi-
ness activities that are incompatible with
a transition to a low-carbon economy.
More renewable electricity
Renewable electricity is a vital compo-
nent in achieving our emission reduction
targets. In 2024, 75% of our electricity
consumption in Europe originated from
renewable sources. From the end of
2025 and beyond, we will exclusively rely
on electricity generated from renewable
sources in Europe. For more detailed
information, please refer to pages 49-50.
To secure more renewable electricity, we
are actively supporting the development
of new solar and wind farms as a buyer of
that electricity. In addition to ten already
signed power purchase agreements in
Denmark, Sweden, the UK and Germany,
SUSTAINABLE PRODUCTION
AND LOGISTICS
Scope 1+2 reductions
Mkg/thousand tonnes
we successfully signed five more in the
UK, Denmark and Germany in 2024,
demonstrating our commitment to
reducing our carbon footprint and
transitioning to a more sustainable
energy future.
Energy efficiency
To reduce our dependency on
fossil-based energy sources, we are
taking different actions, such as UV
water treatment. At Rødkærsbro Dairy
in Denmark, a UV-treatment solution
has replaced the previous natural gas
heating method to decontaminate the
More renewable
electricity
In 2024, we signed
five power purchase
agreements in the
UK, Denmark and
Germany.
PAGE 45
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
13%
LOGISTICS
87%
PRODUCTION
cooling water in the cheese production.
This solution helps prevent the growth
of bacteria and minimises the site's
energy use by switching to only using
electricity, saving around 800 tonnes of
CO2 per year.
In 2024, we maintained our focus on
identifying areas for improvement
within our production sites and logistics
centres. Through a screening and
assessment led by our suppliers, we
pinpointed three key areas for action:
Enhancing cooling systems efficiency
by evaluating set points and identifying
solutions to optimise energy usage, ex-
ploring the adoption of more energy-ef-
ficient milk agitators or optimising their
running speed and operational times to
minimise energy consumption and con-
ducting a secondary phase of insulation
implementation, extending to both cold
and hot pipes and equipment to reduce
energy losses.
Transition away from fossil fuels
We believe in the necessity of tran-
sitioning away from fossil fuels. Our
vision for the future energy supply is to
embrace a range of renewable sources.
This ensures resilience, cost competi-
tiveness and aligns with the availability
of renewable energy sources. As part
of our sustainability strategy, we made
Where our emissions came from
(scope 1+2) in 2024
In organic milk production, cows
are fed a 100% organic diet and
allowed to roam on lush green
fields during the grazing season.
ARLA®
ORGANIC
investments in alternative solutions
that align with our vision for a sustaina-
ble future. To move towards this target,
Vimmerby Dairy's heat supplier has
phased out the last fossil energy source,
making it another Arla production site
in Sweden that uses 100% renewable
energy, while Akafa Dairy in Denmark
installed a high temperature heat pump
in 2024. By utilising waste heat from
one of their spray dry towers and by
producing ice water, 67 tonnes of CO2
can be saved annually.
Logistics and fuel efficiency
Logistics and fuel efficiency remain
a key focus area for us. Over the past
years, we have equipped Arla's own and
leased truck fleet with an eco-driving
system, providing drivers with feedback
on their economic performance. We
anticipate that the system will reduce
overall fuel consumption.
In addition, we have further expanded
our electric and biogas-driven vehicle
fleet in the UK, Finland and Sweden.
In 2024, Sweden received 16 new
biogas trucks and 15 electric trucks,
while the UK added 12 biogas trucks.
We also remain committed to creating
opportunities for Arla farmer owners
to utilise their cow manure for biogas
production, further contributing to our
sustainability efforts.
Transition away
from fossil fuels
in 2024, Sweden
has received 16
new biogas and 15
electric trucks, while
the UK added 12
biogas trucks.
PAGE 46
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
99.1%
99.9%
99.7%
99.6%
WE CONSIDER MILK AS OUR
ESSENTIAL RAW MATERIAL.
THEREFORE, IT IS OUR AIM
TO ENSURE RESPONSIBLE
PRODUCTION WITH A FOCUS
ON THE WELL-BEING OF COWS,
THE DAIRY HERD AND THE
ENVIRONMENT.
We can directly influence animal
welfare
As a producer of dairy products and a
cooperative of dairy farmers, we are
highly dependent on our cows being
able to produce milk. Additionally,
we can potentially have a negative
impact on the cow herds' well-being,
depending on how they are treated.
Therefore, we identified 'animal welfare'
as an entity-specific topic for Arla in
our double materiality assessment (see
pages 34-35).
Mobility
Cows walk
without any
problems, and
have no pain
in their legs
and hooves.
Good body
condition
Fit cows have
the perfect
amount of fat
reserves on
their bodies:
not too little
and not too
much.
Cleanliness
Clean cows
have a lower
risk of being
infected by
disease.
No injuries
An injury on a
cow can be a
lump, bump,
ulcer or sore.
ANIMAL
WELFARE
Our farmer owners are dedicated to en-
suring the health and happiness of their
herds, investing time and resources to
maintain high animal welfare standards.
Ensuring animal welfare through
our Arlagården® programme
In 2003, we introduced the Arlagården®
farm quality assurance programme
to strengthen our commitment to
animal welfare. Over the years, we have
continuously updated and adapted
Arlagården® to meet the evolving
expectations of our customers and
consumers as well as the changing
conditions on the farm. To prioritise
animal welfare, Arlagården® requires
Arla farmer owners to regularly submit
a comprehensive report on the health
status of their herds. Farmer owners
undergo external animal welfare audits
at least every three years. Additional
audits are conducted if any indications
of welfare breaches arise.
We aim for no major findings. To
estimate cow well-being, we use four
science-based indicators on the most
common dairy cattle issues. Even if
we are satisfied with our results, we
constantly strive to strengthen our
requirements. The data shows the share
of audited farmer owners without major
issues within each welfare indicator in
2024.
The specific Arlagården® requirements
are communicated to each new farmer
owner joining Arla. Read more about
the audit on page 50.
Enhancing animal robustness
In our FarmAhead™ Check and
Incentive (see page 44), animal robust-
ness is a significant lever. Therefore, we
initiated a pilot project in 2022 involv-
ing 18 farms where farmer owners, with
the support of veterinarians, focused
on preventing common cow diseases
and animal accidents. On average,
the project resulted in a decrease in
mortality of 21% from summer 2022
to summer 2024. To expand on the
knowledge gained from the pilot, we
organised a series of workshops across
our seven owner countries in 2024 to
disseminate the insights and findings.
In comparison to 2023, the payments
to farmer owners specifically for their
efforts in improving animal robustness
were stable, leading to a total disburse-
ment of EUR 9 million in 2024. This
payout corresponds to an average of 2
points in the FarmAhead™ Incentive.
Currently, many Arla cows wear collars
or other measuring tools that collect
various data, monitoring activity levels
and patterns. This valuable information
provides insights into the health of
individual cows, enabling farmer owners
to respond promptly if any issues arise.
Ultimately, this technology empowers
them to prioritise the well-being of their
cows.
Stating our commitment
to animal welfare
In 2024, Arla released a white paper on
animal welfare. This paper, which serves
as a policy, states that the requirements
set out in Arlagården® must be adhered
to by all of our farmer owners and
states our commitment to only using
antibiotics when needed.
It elaborates on our stakeholder
engagement with employees, external
assessors and our farmer owners on
animal welfare through training and de-
velopment. As a democratic business,
elected farmer representatives on the
Preparatory Working Group regularly
meet five to six times annually to review
Arla's animal welfare requirements
and proposed developments to ensure
Arlagården® remains relevant and
progressive. The white paper will be
updated accordingly with more KPIs on
an annual basis and is publicly available
on our homepage.
SHARE OF FARMER OWNERS WITH NO
MAJOR ANIMAL WELFARE ISSUES IN 2024
Impact, risk and opportunities
PAGE 47
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
Arla has two emission reduction targets. The
scope 1 and 2 target intends to reduce 63% of
absolute emissions by 2030 and is modelled using
the 'Absolute Contraction' approach. The target is
aligned with limiting global warming to 1.5°C. The
scope 3 target intends to reduce 30% of emissions
intensity by 2030. The goal is modelled using the
2% physical intensity approach and follows the
sectoral decarbonisation approach for agricultural
commodities developed by Ecofys for the SBTi. The
target is aligned with the well below 2°C tempera-
ture rise. Both targets are validated by SBTi.
The baseline year for Arla's science-based targets
is 2015. No significant changes have occurred in
operational boundaries that have not been correct-
ed towards the baseline. Thus, no restatements
took place in 2024 following the guidelines of
Arla's Restatement Policy, please see description
on page 38.
Arla does not purchase carbon credits and in line
with Arla's science-based targets, the group does
not reduce its CO₂e emissions with carbon credits.
Additionally, Arla does not make carbon neutrality
claims for commercial use dependant on carbon
credits.
Scope 1 – All direct emissions
Scope 1 emissions relate to activities under the
group's control. This includes transport using Arla's
vehicles and direct emissions from our production
facilities. Of the total scope 1 emissions, 32% were
covered by the EU emission trading scheme in
2024.
Scope 2 – Indirect emissions
Scope 2 emissions relate to the indirect emissions
caused by Arla's energy purchases, i.e. electric-
ity or heat. Arla reports in accordance with the
market-based methodology. The market-based
allocation approach reflects the use of contractual
instruments such as power purchase agreements
and certificates purchased by Arla, which may
differ from the average electricity and other energy
sources generated in a specific country. This gives
Arla the opportunity to purchase electricity and
other contractual instruments which emit less
greenhouse gases than the country average. In
accordance with the GHG Protocol, Arla discloses
scope 2 emissions according to both the market-
and location-based method.
Out of the renewable electricity, heat, steam and cool-
ing, 0.5% is self-generated and 99.5% is accounted for
through contractual instruments. Of these 46% is from
bundled renewable energy instruments such as power
purchase agreements and 54% from unbundled
instruments.
Scope 3 – Other indirect emissions
Scope 3 emissions relate to emissions from
sources that Arla does not directly own or control.
They cover emissions from purchased goods and
services (e.g. raw milk purchased from owners and
contract farmers, whey, packaging and transport
services purchased from suppliers), but also waste
processing from production sites.
Emissions from whey relate to externally purchased
whey for Arla Foods Ingredients. The whey included
is standardised and recalculated based on the milk
solid content to consider the difference in quality
and fractions purchased by Arla. The emission factor
related to externally purchased whey remained
at 1.0 kg of CO₂e per kg of whey, a conservative
estimate (Flysjö, 2012) that is less precise than
using a country-specific factor.
Arla collects data from transport and packaging
suppliers covering a minimum of 95% of the spend.
Based on the collected data, results are scaled up to
cover 100%. For transport and production, emission
factors are updated annually and based on Defra
2024 and Ecoivent 3.10. However, the emission
factors for packaging still reference Ecoinvent
3.9.1. In the latest database, the methodology for
calculating plastic emission factors has undergone
significant changes. Therefore, Arla is currently
exploring how to implement these new emission
factors and adjust historical data to enable year-
over-year comparisons.
Scope 3 – Emissions on farm
Scope 3 emissions from raw milk are calculated in
accordance with the International Dairy Federation's
guidelines for the carbon footprint of dairy products
(IDF 2015). The tool used for calculating the carbon
footprint of milk is based on an attributional life-cycle
assessment (LCA) that has been developed during the
last decade in collaboration with 2.-0 LCA consultants,
a Danish consultancy firm formed by academics. A de-
tailed methodology is available in Schmidt and Dalgaard
(2021) on 2.-0 LCA consultants' website. Farm-level
emission factors are sourced from 2.-0 LCA consultants.
Progress towards targets
Greenhouse gas emissions progress
Thousand tonnes (mkg)
2024
2023
2022
2021
2020
CO₂e scope 1+2 market-based
618
660
695
733
751
CO₂e reduction scope 1+2 (baseline: 2015)
37%
33%
29%
25%
24%
CO₂e scope 3 from owners per kg of owner milk (kg) 2
1.06
1.08
1.12
1.15
1.15
CO₂e scope 3 per kg of milk and whey (kg)
1.12
1.14
1.18
1.20
1.21
CO₂e reduction scope 3 per kg of milk and whey (baseline: 2015)¹
13%
12%
9%
7%
7%
1 The calculation of CO2e emissions in 2015 was based on national statistical data, the best available source at that time. In 2016, we started to do climate measurements on Arla
farms and gradually replaced the national statistical data with Arla-specific data in the CO2e calculation model. Read more on pages 48-49.
2 The figure is Arla Foods' average CO2e per kg of owner milk. Arla has developed sourcing regions (and category/product) specific carbon footprints for customers in our FarmAhead™
Customer Partnership to use in their carbon emissions reporting. It would be incorrect to use the Arla Foods average CO2e per kg of owner milk for carbon emissions reporting as it
considers only emissions on farm level and not cradle-to-gate life-cycle emissions.
Greenhouse gas emissions (scope 1, 2, 3)
Thousand tonnes (mkg)
2024
20233,4
2022
2021
2020
Production
404
426
399
368
381
Transport
78
82
78
79
93
CO₂e scope 1
482
508
477
447
474
CO₂e scope 2 – market-based
136
152
218
286
277
Milk
14,781
15,196
15,571
16,386
16,645
Externally sourced whey
2,323
1,987
1,859
1,751
1,133
Packaging
455
459
444
417
396
Purchased goods and services (category 1)
17,559
17,642
17,874
18,554
18,174
Fuel and energy-related activities (category 3)
160
159
177
125
120
Upstream transport and distribution (category 4)
365
331
346
347
306
Waste generated in operations (category 5)
8
9
10
24
25
CO₂e scope 32
18,092
18,141
18,407
19,050
18,625
Total CO₂e
18,710
18,801
19,102
19,783
19,376
CO₂e scope 2 – location-based
168
192
165
243
237
Total CO₂e – location-based
18,742
18,841
19,049
19,740
19,336
3 Scope 3 emissions from categories 2, 6, 7, 8, 9, 13 and 14 are individually less than 0.5% and not included in the emission figures. Categories 10, 11 and 12 have minor impacts above
0.5%. Arla will not report voluntarily in 2023, but is improving data quality for future reporting. Category 15 has around a 5% impact, data is being analysed for future reporting.
4 Biogenic emissions and removals not included in the table totalled 402 thousand tonnes of CO2e from scope 1, 147 thousand tonnes from scope 2 (location-based), 96 thousand
tonnes from scope 2 (market-based) and 41 thousand tonnes from scope 3, specifically related to upstream transport. In 2023, Arla reported only scope 1 biogenic emissions. A
calculation error for compressed biogas led to an understated figure being reported for 2023.
GREENHOUSE GAS
EMISSIONS (CO²E)
We rely on the latest scientific methodology and
understanding of our ecosystem to ensure our goals
are robust, actionable and in line with the planet's
needs. Read about emission reductions for 2024 on
page 42.
ACCOUNTING POLICIES
Greenhouse gases are gases that contribute to
the warming of the climate by absorbing infrared
radiation. Besides the widely known carbon dioxide
(CO₂), there are two other major greenhouse gases
associated with dairy production: Methane (CH₄)
from digestion and manure storage and nitrous
oxide (N₂O) from fertiliser and manure usage. In
order to calculate Arla's total greenhouse gas
emissions (carbon footprint), different greenhouse
gas emissions are converted into carbon dioxide
equivalents (CO₂e). The conversion of different
gases reflects their global warming potential.
The potency of the different gases is taken into
consideration according to the following calcula-
tions (based on the IPCC Fifth Assessment Report,
Climate Change 2013):
1 kg of carbon dioxide (CO₂) = 1 kg of CO₂e
1 kg of methane (CH₄) = 28 kg of CO₂e
1 kg of nitrous oxide (N₂O) = 265 kg of CO₂e
Emission targets and reporting
Emission reduction progress is tracked through annu-
al reporting on greenhouse gas emissions. The scope
of the targets is the same as the scope of the reported
emissions. Emissions are categorised into three
scopes according where they appear across the value
chain, and what control the company has over them.
Arla follows the methodology of the Greenhouse Gas
Protocol Corporate Standard (GHG Protocol).
We acknowledge the significance of addressing
locked-in emissions as we work towards our carbon
reduction targets. Locked-in emissions refer to
the cumulative scope 1 and 2 emissions until the
target year.
PAGE 48
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
GREENHOUSE GAS EMISSIONS
(CO²e) CONTINUED
For non-owner milk, emission factors remain
unchanged from 2015 levels, calculated by multiplying
milk volume by national inventory-based emission
factors. and not Arla-specific data. The calculations are
based on an earlier version of the farm tool following
IDF 2010 (Dalgaard R, Schmidt J, Cenian K, 2016).
Emissions from raw milk include both on- and
off-farm activities, linked to cow digestion, feed pro-
duction and purchase, manure storage, energy use,
capital goods and peat soils. Feed-related emissions
involve fertiliser for home-grown and purchased
feed as well as feed transport. Manure storage can
result in methane and nitrous oxide emissions. The
amount of emissions varies depending on how
manure is covered, and whether it is used for biogas
production. Peat soils are wetland with a high CO₂e
content. When soils are drained and used in crop
production, CO₂ and N₂O are released.
The emission figure for raw milk in this report is a
weighted average of CO₂e per kg of milk, calculated
based on climate data from farms where the data
has been validated by external climate experts, mul-
tiplied by the fat and protein-adjusted milk intake.
Farm data validated by external climate experts is
statistically representative of all Arla farms.
UNCERTAINTIES AND ESTIMATES
Scope 1 and 2
The baseline values for scope 1 and 2 emissions
are not weather adjusted but still considered
representative as the energy concerns are mainly
related to production and thus do not fluctuate due
to temperature anomalies such as building heating
needs.
Scope 3
In 2024, 96% of Arla's active farmer owners, cov-
ering 99% of Arla's owner milk volume, submitted
a detailed FarmAhead™ Check questionnaire.
Their responses were validated by external climate
experts.
Farmer owners complete the FarmAhead™ Check
annually using data from their latest financial year.
This varies from farm to farm, some have financial
years running from January to December, while
others run from for example July to June. Therefore,
the figures presented are not necessarily based on
farm data covering the same period. The majority
of data, 63%, relates to the period 1 January 2022
to 31 December 2023, while 10% relates to earlier
periods.
An uncertainty analysis was carried out to under-
stand the biggest areas of uncertainty related to
self-reported farm emission data. The analysis was
centred around four key levers: herd, feed, crops and
manure handling, and addressed the parameters
with the highest impact on emissions on farm. The
analysis concluded that results on individual farms
could be misstated by a maximum of 10-12%, but
only if the farmer owner had a starting point of high
emissions and claimed to change from no biogas
treatment to full biogas treatment of slurry.
Arla has a robust control process in place to reduce
uncertainties and improve data quality. The control
process is twofold, including the validation process
of the external climate experts and an internal con-
trol performed by Arla to catch statistical outliers
or abnormalities in data. All outliers are flagged and
need to be investigated before the result of the
FarmAhead™ Check is available. Numbers are only
released for reporting after thorough investigation.
Smaller farms and farmer owners using extensive
grazing systems do not always measure the amount
of feed that the cows eat or the dry matter content
of the grass on the fields. To enable these farmer
owners to report, the system contains a model
which calculates feed consumption based on herd
size and milk yield.
Reporting on peat soils is a developing field and still
subject to higher uncertainty than other areas. Due
to their relatively high climate impact, uncertainties
related to peat soils could have a significant impact
on the total reported greenhouse gas figure. The
risk of errors is minimised by external climate
experts validating the data supported by detective
analytical controls.
The methodology used to calculate emissions on
farm develops over time. Currently, factors that
potentially could lower total net emissions, such as
carbon sequestration on farm and direct land use
change, are not included. IDF 2015 suggests that
direct land use change should be included in the
calculations.
The baseline year for our scope 3 science-based
target is 2015. To calculate the baseline as well as
follow up on the reduction target, the type of data
used was differed. For the 2015 baseline, national
statistical data for 2012 was used, which was the
best available data at the time. From 2016, national
statistics were gradually replaced by data from
climate measurements at Arla farms. The change
happened for Denmark, the UK and Sweden in
2016, Germany in 2019 and for the rest of the own-
er countries in 2020. The reporting year 2020 was
the first time when most Arla farms were included.
The farm-specific data is always one to two years
behind, which is why the 2024 reporting was based
on farm data from primarily 2023.
To calculate emissions from packaging and
transport as well as packaging volumes, Arla gathers
data directly from suppliers. Each quarter, Arla
sends its suppliers detailed requests to provide the
necessary data, accompanied by a manual on how
to complete the related documentation. Manual
data entries from different sources are a risk to data
quality. The information is also subject to a higher
level of measurement uncertainty, as the ability to
control the quality of the data is limited. Controlling
is conducted by comparing data received between
periods and with procurement data.
ENERGY CONSUMPTION
AND MIX
The renewable electricity share increased to 75%
in 2024 compared to 69% last year. The increase
was a result of new power purchase agreements
and investments in on-site solar plants. To a smaller
degree this was also a result of the purchase of
renewable electricity certificates. Read more about
the accounting treatment of power purchase
agreements on page 48.
ACCOUNTING POLICIES
Energy used at Arla's production sites and warehouses
originates from different sources, including biogas, bio-
mass, natural gas, district heating and grid electricity.
GHG intensity per net revenue1
Thousand tonnes of CO₂e per million EUR
2024
2023
2022
2021
2020
Total GHG emissions (location-based) per net revenue (thousand tCO2e/mEUR)
1,36
1.38
1.38
1.76
1.82
Total GHG emissions (market-based) per net revenue (thousand tCO2e/mEUR)
1.36
1.37
1.38
1.77
1.82
1Net revenue corresponds to revenue in the financial statements, Note 1.1 (page 112), excluding revenue from the M&A of a whey business, UK.
Electricity from renewable sources includes
certificates related to self-produced electricity from
biogas, solar, electricity certificates purchased from
farmer owners and open market certificates. Arla
follows market-based accounting and accounts for
the purchase of green electricity by contractual
agreement, i.e. certificates.
Energy data is registered monthly and primarily
based on invoice information and automated meter
readings at each site, and therefore there is little
uncertainty associated with these figures.
Renewable energy share
To calculate the share of renewables, renewable en-
ergy use is divided by the group's total energy use.
Arla does not account for energy losses, therefore
all energy purchased is included in the figures. The
energy sold was not deducted in the calculation of
the renewable energy share.
Energy consumption
(thousand MWh)
2024
2023
2022
2021
2020
Coal and coal products
-
-
-
-
-
Crude oil and petroleum products
346
349
454
346
462
Natural gas
1.944
1,906
1,738
1,723
1,695
Other fossil sources
0
0
0
0
0
Purchased or acquired electricity, heat, steam or cooling from fossil sources
246
302
420
488
465
Total energy consumption from fossil sources
2,536
2,557
2,612
2,557
2,622
Total energy consumption from nuclear sources
31
45
97
185
185
Renewable sources, including biomass, biofuels,
biogas, hydrogen from renewable sources etc.
483
545
554
598
614
Purchased or acquired electricity, heat, steam and cooling
from renewable sources
1073
974
796
611
531
Self-generated non-fuel renewable energy
5
4
2
0
0
Total energy consumption from renewable sources2
1,561
1,523
1,352
1,209
1,145
Total energy consumption
4,128
4,125
4,061
3,951
3,952
Renewable sources' share of total energy consumption (%)
38%
37%
33%
31%
29%
2 Target is set for the end of the year, but since the KPI is based on 12 months of data, target achievement won't be reflected in the 2025 annual report
Renewable electricity share
The renewable electricity share is calculated as
the share of consumed electricity, both purchased
and self-produced, that originates from renewable
energy sources or renewable electricity certificates.
The renewable electricity share follows the RE100
guidelines. Some Arla sites produce and sell excess
electricity. The electricity sold was deducted from
the calculation of the renewable electricity share.
Renewable electricity in the grid mix not covered
by contractual instruments is not counted as
renewable.
PAGE 49
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
Animal welfare indicators
2024
2023
2022
2021
2020
Somatic cell count (thousand cells/ml)
183
184
184
191
194
Share of audited farmer owners with no major cleanliness issues
99.1%
99.1%
98.6%
98.4%
Share of audited farmer owners with no major mobility issues
99.9%
99.8%
99.8%
99.5%
-
Share of audited farmer owners with no major injury issues
99.6%
99.7%
100.0%
100.0%
-
Share of audited farmer owners with no major issues related to body condition
99.7%
99.9%
99.9%
99.8%
-
ANIMAL WELFARE
Animal welfare development
Animal welfare is a key priority for Arla's farmer own-
ers, and for Arla as a company. Animal welfare KPIs
include somatic cell count, which is a good indicator
of disease and stress in cows, and four indicators
associated with the physical well-being of cows.
Animal welfare is audited at least once every three
years for each farm by a world-leading quality
assurance and audit firm, SGS, specialising in animal
welfare. In 2024, the percentage of audited farms
was 34%, corresponding to 2,610 audited farmer
owners. The results of the audit can trigger a fol-
low-up audit or activity, depending on its outcome.
In case of severe issues or repeated animal welfare
breaches, Arla suspends milk collection from
the non-compliant farm, and, in extreme cases,
terminates its membership. During 2020, the audit
process was upgraded and harmonised across all
owner countries to ensure that auditors follow
the same procedures and standards everywhere.
Therefore, only 2021-2024 data is reported.
The average somatic cell count across Arla geogra-
phies decreased slightly to 183 thousand cells/ml in
2024 (2023: 184).
ACCOUNTING POLICIES
Somatic cell count (average):
Somatic cells in milk are primarily white blood cells.
An elevated level of somatic cells can indicate
inflammation (mastitis) of the cow's udder, which
causes the animal pain and stress and also lowers
milk quality. Arla monitors the somatic cell count
(SCC) by analysing milk at bulk tank level each
time milk is collected from the farms. Levels are
continuously reported to safeguard milk quality.
The figure reported is a weighted average of Arla's
entire milk intake in a given year. The SCC count
is received from several laboratories across owner
countries. A SCC above 300 reduces the milk price
to the farmer owner, while a supplement is given for
a SCC below 300.
Audit on farms and animal-based indicators
Animal welfare on Arla farms is audited, covering
herd health, well-being, feeding and housing, based
on WelfareQuality® criteria. Audits evaluate four
animal-based indicators: body condition, mobility,
cleanliness and injuries. These indicators were
developed based on scientific research on the
most common dairy cattle issues. Audits include
routine audits (performed at least every three years),
spot checks, start-up visits, attention and special
attention audits. Audited farmer owners are those
who received at least one audit in the reporting year.
Animal-based indicators evaluated by auditors
The KPIs show the share of audited farmer owners
with no major issues in each category. During audits,
the auditor assesses the cattle on the farm, and
identifies whether there are any welfare concerns.
If concerns are identified, the cattle are scored
according to Arla's welfare indicators. The auditor
scores the cows on the four core welfare indicators
on a scale of 0-2, where 0 means no issues identified,
1 means minor issues and 2 means major issues. The
results are reported to Arla. Major welfare incidents
are reported if over 5% of cows are too thin, over 25%
too dirty, over 15% lame or over 10% injured.
UNCERTAINTIES AND ESTIMATES
Farms are audited every three years, so year-over-
year comparisons may vary since different farms are
audited each year.
Policies and other
Environmental Policy & Green Ambition 2050
Our sustainability strategy is supported by our
Environmental Policy and Arla's Green Ambition
2050. Together, these guiding policies address
critical environmental issues. In 2024, we updated
our Environmental and Energy Management Policy
to encompass a broader range of Arla's activities
and environmental topics, renaming it to the
Environmental Policy.
These policies apply to Arla's direct operations,
and we encourage all partners in our value chain
to adopt the same principles, as outlined in our
Supplier Code of Conduct. For our farmer owners,
climate and nature requirements are outlined in our
Arlagården® Quality Management programme.
Our Green Ambition 2050 is available on our
website, and the updated Environmental Policy is
available to all Arla employees on our intranet and
to externals upon request.
The production of dairy products is not among the sec-
tors excluded from the EU Paris-aligned benchmarks.
Better climate
Arla is dedicated to reducing environmental impacts
and combating climate change through sustainable
practices across our value chain. We focus on reduc-
ing GHG emissions, enhancing energy efficiency and
transitioning to renewables. Our policies on climate
adaptation focus on supporting our farmer owners
in their efforts to facilitate the adaptation to effects
of climate change by building resilient food cycles.
Achieving these goals requires strong partnerships
throughout and beyond our value chain, leveraging
cooperative efforts with researchers, suppliers and
customers to advance sustainable dairy.
Policy governance
The Chief Agriculture and Sustainability Officer
(CASO) and Executive Vice President, Supply Chain
are responsible for approving the Environmental
Policy, while the Global Director of Environment,
Health and Safety is responsible for its bi-annual
updates. Arla's Green Ambition 2050 is anchored
under the CASO, who oversees and coordinates the
implementation of Arla's sustainability strategy.
Animal Welfare White Paper
The Arlagården® programme, the Code of Conduct
and Green Ambition 2050 underline our commit-
ment to animal welfare. In 2024, Arla released a
white paper on animal welfare, publicly describing
our commitment on the topic.
Currently, our key focus areas are responsible
antibiotic use, comfortable housing, cow and
calf connection, reducing close confinement and re-
ducing the climate impact on farm. Arla recognises
cattle as sentient beings and has a dedicated global
function that works with local employees to ensure
animal welfare compliance and drive improve-
ments. Arla prioritises training and development
for employees and external auditors involved in
animal welfare. Training includes topics such as
cow signals, animal-based indicators and animal
welfare requirements. External auditors undergo
training, calibration and annual alignment. Arla also
leverages the knowledge of animal welfare experts
to improve standards on farms and encourages
farmer owners to implement tether-free systems
and provide enrichment tools for animals.
Electricity consumption in Europe
(thousand MWh)
2024
2023
2022
2021
2020
Non-renewable sources
269
329
500
628
621
Renewable sources
808
730
551
401
412
Total electricity consumed
1,077
1,059
1,051
1,029
1,033
Renewable electricity share
75%
69%
52%
39%
40%
Energy intensity based on net revenue1
(thousand MWh)
2024
2023
2022
2021
2020
Energy intensity (total energy consumption per net revenue)2
300
302
294
353
371
1 Net revenue corresponds to revenue in the financial statements, Note 1.1 (page 112), excluding revenue from the M&A of a whey business, UK.
2 From activities in high climate impact sector. We operate in the high climate impact sector 'Manufacture of dairy products'.
Policy governance
Overall responsibility for animal welfare sits
within the Animal Welfare function led by the Milk
Quality and Arlagården® Director, reporting to our
Agricultural and Sustainability Vice President, who
reports directly to our Executive Vice President,
CASO. Elected farmer representatives meet regular-
ly to review Arla's animal welfare requirements and
developments.
EU Taxonomy
The EU Taxonomy Regulation (EU) 2020/852 aims
to increase transparency and alignment across
companies and sectors and provides a scientific
definition of what is 'sustainable'. It sets reporting
obligations for businesses, reporting on EU
taxonomy eligible and aligned revenue, OpEx and
CapEx, with eligibility referring to inclusion in the
EU Taxonomy Regulation and alignment referring to
fulfilling specific technical criteria.
Revenue
Currently, the food and beverage manufacturing
industry is not included in the EU Taxonomy,
resulting in 0% eligible revenue for Arla.
CapEx and OpEx
The analysis of OpEx and CapEx has been initiated,
however, we do not plan to pre-implement the
elements before 2025 when reporting will
become mandatory as part of the EU's Corporate
Sustainability Reporting Directive.
Minimum safeguards
Minimum safeguards require companies to meet
specific social standards in addition to technical
environmental criteria to align with the EU Taxonomy.
This includes adherence to labour laws, human
rights conventions and anti-corruption measures to
ensure sustainability and social responsibility. The
framework references international labour laws, such
as the ILO's core conventions, covering rights like the
abolition of child labour, elimination of forced labour,
non-discrimination and freedom of association. It
also aligns with human rights conventions like the
Universal Declaration of Human Rights and UN Guiding
Principles on Business and Human Rights. While docu-
menting compliance has been started, the information
will be disclosed once mandatory in 2025.
PAGE 50
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
POLICIES AND OTHER
CONTINUED
Climate impact of our investments
In Arla, we essentially use a carbon pricing scheme
to incorporate the carbon impact into investment
decisions for every investment above EUR 500,000.
By calculating the carbon footprint of the potential
investment, we can assess whether the investment
aligns with our climate trajectory as planned.
Furthermore, by demonstrating the carbon impact
to the investment board, the goal is to make
investments with a positive carbon impact more
attractive. Our current carbon price is EUR 90 per
tonne of CO₂e. This carbon price is updated once
a year as the weighted average of the one-year
average EU Emissions Trading System (ETS) price
and the one-year average weighted Guarantee of
Origin (GoO) certificate price. The chosen sources
are relevant to Arla as they align with the regulations
that our largest sites must adhere to, and they rep-
resent the indirect emission reduction instrument
costs utilised by Arla. Our carbon pricing scheme
adheres to our internal standards and is not aligned
with the screening criteria in the EU Taxonomy.
The carbon price we use is considered a shadow
price. It is not only utilised to assess investments but
is also employed by our operations for modelling
business cases and serves as a benchmark for
on-costs in various projects with emission reduction
potential, such as fuel type changes in logistics.
The calculation of the carbon footprint assessment
covers all scope 1, 2 and 3 emissions associated
with the assessed investments. In 2024, 42% of
our investment spending was subject to the carbon
pricing assessment.
Furthermore, alongside the carbon price, Arla has an
internal classification system for sustainability-re-
lated investments. Specific funds are earmarked
for these investments, and the system serves the
purpose of effectively tracking and incentivising
continued investment with sustainability gains.
Today, Arla does not use carbon prices in the
preparation of the financial statements.
Risk and opportunities
CLIMATE-RELATED RISKS
AND OPPORTUNITIES
Identifying and assessing Arla's key climate-related
risks and opportunities is a prerequisite for success-
fully executing our climate strategy.
We assess climate risks using a scenario analysis,
involving the EMT and BoD. This assessment follows
the recommendations of the Task Force on Climate-
Related Financial Disclosures (TCFD). The results
feed into the double materiality assessment process
(see pages 34-37).
The climate-related risk assessment for the consol-
idated financial statements uses the same risks and
scenario analysis as the sustainability statements.
For more information, see the introduction to the
notes on page 109.
Transitional climate risks
When assessing transitional climate-related risks,
in line with ESRS E1 requirements, we take into
consideration a strict regulatory scenario adhering
to the 1.5°C global warming target of the UN Paris
Agreement. Under such a scenario, we assume the
strictest possible regulatory environment in Europe
where our core business is located. This means, for
example, high taxation on CO₂e emissions, stringent
nature conservation laws that prohibit certain uses
of land or agricultural activities and mandatory
climate or nutrition labelling on food products.
The time horizon for transitional risks is defined until
the end of our current strategy period (2026). As
the national and EU level regulatory environment
is expected to change dynamically, the assessment
of the likelihood and potential financial impact of
transitional risks and opportunities in the medium
and long term is too uncertain to create value for
Arla's climate planning. Therefore, such an assess-
ment was not conducted. The transitional risks were
assessed based on the likelihood, magnitude and
duration of specific transition events.
The transitional risk assessment takes into
consideration our dependencies. In Arla, we are
working towards transitioning from fossil energy
to renewables. However, at present we are still
dependent on fossil-based energy related to our
production and packaging materials. We further
depend on our farmer owners' milk production.
The transition risk assessment is updated
bi-annually.
Physical climate risks
For physical climate-related risks, we considered
multiple climate scenarios defined as Shared
Socioeconomic Pathways (SSPs), combined with
the Representative Concentration Pathways (RCPs)
scenarios developed by the IPCC; SSP1 (RCP 2.6),
SSP2 (RCP 4.5) and SSP5 (RCP 8.5). The fourth
available scenario SSP3 (RCP 7.0) was not used
as the climate conditions by 2050 are similar to
SSP2. In alignment with ESRS E1, in this report we
present the results of the worst case SSP5 scenario
where the climate would warm by 2°C by 2050. The
analysis, conducted based on the latest scientific
evidence and methodologies (see Guzman-Luna
et al. 2021), focused on how a certain level of
climate warming would impact the dairy sector
in our seven milk-producing countries in Europe.
The assessment was conducted at the level of
biogeographical regions.
The time horizon chosen for the physical risk
assessment is 2050, which is considered to be a
long-term period. This selection is based on the
understanding that by 2050, the impacts of climate
change are expected to become more pronounced
and have a more significant effect. Climate science in
general focuses on climate change's impact on the
environment by 2050 and beyond, therefore assess-
ing the short-term (until 2026) and medium-term
(until 2035) impacts on dairy production in Europe
would lack the necessary scientific evidence. Thus,
we decided to focus on the long-term impacts of
climate change.
Milk is our most important raw material, and within
our value chain, dairy farming is most vulnerable to
negative impacts from climate change, whereas our
production is more resilient to such changes. Thus,
currently, we have not conducted a comprehensive
assessment of the physical climate risks related to
our own operations. Our focus has been primarily on
understanding the impact of physical climate risks
on our key raw materials as this is known to have a
larger impact.
Physical hazards for the dairy farms were identified
based on a literature review, and it was concluded
that water stress, floods, crop pest, climate
variability, cow heat stress and cow diseases are the
major physical hazards that will cause biophysical
impacts on dairy farms, leading to raw milk losses,
crop losses and changes in dairy farm performance.
The physical risk assessment is updated when
scientific evidence suggests that our results would
differ.
Uncertainties and limitations
Due to uncertainty following future legislation,
Arla has not been able to conduct a quantitative
assessment of the potential financial impacts of
climate-related risks and opportunities, and uses a
qualitative scale of moderate to critical to illustrate
the expected profit impact. Qualitative thresholds
used for climate-related risk and opportunity
assessments are not the same thresholds as the
ones used in the global risk assessment presented
on pages 15-16.
PAGE 51
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
Risk description
Financial impact
Likelihood
Category
Potential impact
Mitigating actions
Regulations to
reduce emissions
in production and logistics
The EU decided to expand ETS to cover fuel combustion
from buildings and road transport. The EU has discussed the
development of an agricultural ETS targeted at processing.
Transitional risk
(regulatory)
· Increased production and logistics costs in countries with CO2e
regulations, such as a CO2e tax.
· We are constantly lowering our CO2 emissions in our production.
Our science-based target is to lower scope 1 and 2 emissions by
63% by 2030.
· We are also aiming at running our European operations solely on green
electricity by the end of 2025.
Negative impact from regu-
lation to reduce emissions
from agricultural activities
The Danish Tripartite agreement on a new carbon tax on
methane and nitrous oxide emissions from agriculture has
been finalised.
· Our farmer owners will encounter higher production costs, and
with decreased land available for dairy farming, milk volumes
may decline, leading to raw material sourcing challenges.
· Reducing emissions on farm is part of our business strategy. Farmer
owners continuously work on reducing emissions and are rewarded for
their climate actions through our FarmAhead™ Incentive model.
Land use regulation
EU level proposals on land use and land use change are being
discussed. EU's Nature Restauration Law adopted in 2024,
aiming at restoring 20% of land and sea by 2030. The Danish
Tripartite agreement on land use changes finalised.
· These regulations would mean less land for producing feed for
cows, which could lead to herd size and milk volumes dropping.
· Reducing livestock numbers would also negatively affect milk
volumes.
· To understand the potential impact of such regulation better, and
to provide our farmer owners with solutions, we collect data in
the FarmAhead™ Check and analyse the results. Arla has also set a
deforestation- and conversion-free commitment.
Animal welfare regulations
Animal welfare is linked to the emission intensity of
animal-based products. Consequently, countries like Denmark
plan to implement stricter regulation on animal housing from
2034.
· Stricter EU-wide legislation would impact our farmer owners in
terms of increased investment levels.
· Arla farmer owners in general are forerunners in good animal welfare
through their extensive work with Arlagården® over the past 20 years.
Sustainability claims and
origin product labelling
Governments and the EU are increasingly considering the
introduction of mandatory sustainability-related labelling for
claims and origin.
· Mandatory origin labelling will increase the complexity of our
operations and reduce our efficiency as we collect milk from
seven European countries.
· Unintentional misrepresentations in sustainability-related
claims could pose a reputational risk to our brands.
· We are working on establishing methodologies, processes and systems
to calculate the environmental footprint of products.
· We are also exploring possibilities to scale our current capacities in
separating different types of milk in order to comply with potential
origin labelling legislations.
Extreme weather
events
Heat waves, draughts, floods and other extreme weather
events are becoming more and more common due to
climate change. New animal diseases and pests are also a
consequence of climate change that the agricultural sector
has to face.
Physical risk
· Extreme weather events could have an adverse effect on crop
yield, and disrupt operations or the distribution infrastructure.
· Heat waves are especially detrimental to the cows' productivity,
and could affect milk volumes.
· Our core milk production countries are relatively resilient to extreme
weather events, however, we are, together with our farmer owners,
working on better understanding and mitigating the impact of
changing weather conditions.
PAGE 52
ARLA FOODS ANNUAL REPORT 2024
I.
II.
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General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
/ Climate change and animal welfare
Biodiversity and nature
Resource use and circularity /
Governance
Social
N2O
CO2
CH4
Impacts
Policies
ANI
ANI
ANI
ANI
ANI
ANI
ANI
Actual Negative Impact
PNI
Potential Negative Impact
API
Actual Positive Impact
PPI
Potential Positive Impact
BIODIVERSITY
AND NATURE
ARLA'S IMPACTS
Responsible Sourcing
Policy for Palm
Responsible Sourcing
Policy for Soy
Responsible Sourcing
Policy for Forest Fibre
Code of Conduct for
Suppliers and Business
Partners
Environmental Policy &
Green Ambition 2050
BIODIVERSITY LOSS DUE
TO CLIMATE IMPACT
BIODIVERSITY LOSS DUE
TO LAND USE CHANGE
WATER SCARCITY
POLLUTION OF
WATER AND AIR
LAND OCCUPATION
SOIL QUALITY
PAGE 53
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Resource use and circularity /
Governance
Social
Biodiversity and nature
/ Climate change and animal welfare
Targets and ambitions
2025
2025
Target: 100%
Target: 100%
2023
2024
2025
96%
96%
Target: 100%
ARLA'S AMBITION
BIODIVERSITY
AND NATURE
IN FOCUS
Impact, risk and opportunities
We depend on biodiversity and
healthy ecosystems
For Arla, biodiversity refers to the variety
of plants, animals and microorganisms
near our sites, on dairy farms and
throughout our value chain. We depend
on it and the broader nature scope for
many business aspects, particularly
for sustaining the ecosystems that
provide our raw materials. Therefore,
healthy and resilient biodiversity is the
goal of our holistic focus on nature and
sustainability.
In our double materiality assessment
(see pages 34-37), we have identified
actual negative impacts along with risks
and opportunities regarding biodiver-
sity. The majority of impacts derive
from the upstream activities in our
value chain, such as sourcing raw milk,
contributing to biodiversity loss through
methane and ammonia emissions,
pollution from nitrogen phosphorus,
and land degradation or conversion.
Agricultural activities can further
degrade soil quality and organic carbon
levels, contributing to land degrada-
tion and further carbon emissions.
Additionally, land use for agriculture
restricts land from being utilised for
biodiversity-enhancing purposes.
Water scarcity and global biodiversity
loss due to land use changes, such
as deforestation for agriculture, are
additional concerns. While no impacts
on threatened species by our produc-
tion sites have been identified, there
are risks of increased raw material costs
and regulatory changes. Additionally,
failing to address our biodiversity
impact could reduce our brand value.
Conversely, by leading in our biodi-
versity and nature initiatives, we have
the opportunity to enhance our brand
value.
Strategy
Biodiversity and nature strategy
Milk and dairy products have been
essential to our diets for thousands of
years. To stay relevant in healthy diets,
dairy production must align with nature.
Arla's approach to defining the most
meaningful future actions towards
biodiversity is to focus on the holistic
landscape of nature. This includes
climate, air, soil, habitats and water, but
more specifically, indirect biodiversity
stewardship by working on the key
pressures on biodiversity that are
most relevant to Arla: Climate change,
pollution, resource exploitation and
habitat loss.
We encourage our farmer owners to
adopt practices that reduce emissions,
boost carbon sequestration and
promote nature-friendly farming
methods, including optimising fertiliser
use, sourcing deforestation-free soy
and implementing soil health measures
like grazing and perennial crops. We
support ecosystems like grasslands
and peatlands to create a resilient
agricultural landscape and responsibly
source ingredients from afar. Therefore,
Arla is committed to ensuring that our
direct and indirect use of primary risk
commodities (palm, soy and forest fibre)
is deforestation- and conversion-free
by the end of 2025. The commitment
covers the palm, soy and fibre that we
source as well as soy and palm embed-
ded in animal feed used on farms.
Producing dairy can impact nature
if not managed well. We recognise
our dependence on environmental
cycles and diverse species for essential
resources. Therefore, we launched our
Green Ambition framework in 2019
with three focus areas: Better Climate,
Clean Water & Air and More Nature. We
have set Science Based Target initiative
(SBTi) climate targets, developed
roadmaps and created the FarmAhead™
Deforestation- and conversion-free
Deforestation is defined as the loss of
natural forest as a result of conversion
to agriculture or other non-forest land
use, conversion to a plantation or
severe or sustained degradation.
Conversion is defined as the change
of a natural ecosystem to another land
use or profound change in a natural
ecosystem's species composition,
structure or function.
Read more on page 56.
SOY, DIRECT (INGREDIENTS)1
2023
2023
2024
2024
94%
96%
69%
79%
PALM, DIRECT (INGREDIENTS)1
FORREST FIBRE
(PACKAGING AND ENERGY)1
1 Target is set for the end of the year, but since the KPI is based on 12 months
of data, target achievement won't be reflected in the 2025 annual report.
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ARLA FOODS ANNUAL REPORT 2024
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II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Resource use and circularity /
Governance
Social
Biodiversity and nature
/ Climate change and animal welfare
Technology and FarmAhead™ Incentive
(see page 44), which incentivises
actions on farm to primarily drive
carbon reductions, but also to support
biodiversity through improvements in
soil, water, and air quality.
Data is crucial for our sustainability
transition. In 2023, we expanded our
focus to include overall impacts on
nature, using science-based methodol-
ogies to analyse our value chain (both
direct operations and upstream) to
set meaningful targets related to our
nature impact.
Recognising
our impacts
We recognise our
dependencies and
impacts on nature
and biodiversity
through our Green
Ambition framework.
Indirect – 2025
Indirect – 2028
Target: 100%
Target: 100%
SOY, INDIRECT (FEED)2
Indirect – 2023
Indirect – 2023
Indirect – 2024
Indirect – 2024
27%
Not available
48%
Not available
PALM, INDIRECT (FEED)1, 2
The knowledge and science behind
measuring nature impact are still
developing, making this area complex.
Therefore, our current focus is to
establish a solid approach and data
foundation before implementing
concrete targets and activities, with a
goal of having these targets in place
by 2025. When assessing our biggest
biodiversity impacts and how to set
related targets and actions, we have
engaged with local NGOs and universi-
ties to incorporate local knowledge.
1 Deforestation free palm data is not made available from feed companies.
2 Target is set for the end of the year. Since the KPI is based on 12 months of
data, target achievement will not be reflected in the 2025 annual report.
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ARLA FOODS ANNUAL REPORT 2024
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General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Resource use and circularity /
Governance
Social
Biodiversity and nature
/ Climate change and animal welfare
Actions and resources
DEFORESTATION- AND
CONVERSION-FREE
Deforestation- and conversion-free
sourcing commitment
Habitat loss and destruction from
agricultural expansion is a global crisis
that we prioritise through careful action
and collaboration along the value chain.
Land conversion directly alters ecosys-
tems and habitats, while also indirectly
contributing to climate change.
We are committed to ensuring that our
direct and indirect use of primary risk
commodities (palm, soy and forest fibre)
is deforestation- and conversion-free
by the end of 2025 by investing in
both internal and external resources.
Internally, a matrix of different people
across multiple functions allocate time
to activities such as the FarmAhead™
Incentive on soy, regulations, policy and
research, while externally, we employ
consultancy experts to assist with the
In the FarmAhead™
Incentive model, a total
of 11 points are available
for action on sustainable
feed. This equals 0.33
EUR-cent/kg of milk
paid out to Arla farmer
owners who source for
deforestation-free soy.
overall strategy for the commitment. The
commitment covers the palm, soy and
fibre that Arla sources as well as soy and
palm embedded in animal feed used on
Arla farms. Read more on page 59.
Following the announced postponement
of the EUDR in December 2024, Arla is
currently assessing new market challenges
for deforestation-free commodities, and any
perceived barriers towards our commitment.
Advocating for transparency
Over the past year, we have reached out
to suppliers, traders and manufacturers to
understand their unique challenges with
deforestation and work towards joint solu-
tions. We actively participate in industry
initiatives and platforms focused on palm,
soy and fibre and engage with other dairy
companies to collectively achieve our
goals and scale impact.
SUSTAINABLE
FEED
11 POINTS
We have established sourcing policies
for relevant commodities to comply
with our deforestation- and conver-
sion-free commitment.
Spotlight on soy
Soy used in cattle feed poses a chal-
lenge to dairy due to its importance as
a protein source and the lack of viable
alternatives. We believe a multipronged
approach is essential to transition
away from soy-linked land conversion.
Through the FarmAhead™ Incentive, we
encourage our farmer owners to adopt
one of three approaches to soy under
the Sustainable Feed Lever:
1. Use less soy in feed
2. Use no soy in feed, or
3. Use deforestation-free soy.
Farmer owners earn points based on
these options (full points for no soy or
deforestation-free soy, fewer points for
reducing soy). For deforestation-free
soy, farmer owners submit documen-
tation from feed suppliers, which Arla
validates directly. This system is crucial
for advancing Arla's deforestation- and
conversion-free commitment by facili-
tating soy documentation and mapping
beyond farmer owners. In 2024, the
average score related to soy in the
FarmAhead™ Incentive model was
10 points, resulting in farmer owners
receiving a payout of EUR 41 million.
Deforestation- and
conversion-free
sourcing
We are committed
to ensuring that our
direct and indirect
use of primary risk
commodities (palm,
soy and forest fibre)
is deforestation- and
conversion-free by
the end of 2025.
WE STRIVE TO ACHIEVE DEFORESTATION- AND CONVERSION-FREE SOURCING,
FOCUSING ON SUSTAINABLE PRACTICES ACROSS THE SUPPLY CHAIN AND
INCENTIVISING FARMER OWNERS TO REDUCE SOY-LINKED LAND CONVERSION.
PAGE 56
ARLA FOODS ANNUAL REPORT 2024
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II.
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General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Resource use and circularity /
Governance
Social
Biodiversity and nature
/ Climate change and animal welfare
TOWARDS
MORE
NATURE
WE ARE AWARE OF OUR IMPACTS
ON BIODIVERSITY. TO MITIGATE
NEGATIVE IMPACTS, WE TAKE
ACTIONS ACROSS THE BUSINESS
TO UNDERSTAND THEM BETTER
AND FIND NEW WAYS OF SHAPING A
DAIRY INDUSTRY THAT SUPPORTS
BIODIVERSITY AND ECOSYSTEMS.
In early 2025, Melkunie® will begin its
transition to the independent Beter
voor Natuur & Boer certification, initially
focusing on milk, buttermilk and yoghurt.
The certification aims to enhance the
sustainability of agricultural practices in
the Netherlands, with criteria from animal
welfare to increased biodiversity.
MELKUNIE®
Investigating innovative land
use through our Innovation Farm
Network
Arla collaborates with farms to
accelerate agricultural progress and
support our farmer owners in shaping
the future of dairy. We have established
a network of innovation farms in the
UK, Denmark, Sweden and Germany,
bringing dairy industry partners togeth-
er to find solutions for sustainability
and carbon neutrality. Through these
actions, we highlight on-farm activities
and demonstrate how we drive the
sustainable dairy agenda today and in
the future. Nature and biodiversity are
key topics among the innovation farms.
In Sweden, we have initiated a project
to restore natural grasslands, promote
on-farm biodiversity and explore water
management solutions.
Supporting endangered species
through the Finland Swallow
Project
In Finland, together with Arand BirdLife,
we help endangered house martins and
vulnerable barn swallows nest on dairy
farms. Over the last 20 years, swallow
numbers have collapsed in Finland,
primarily due to the changes in their
breeding possibilities and food availabil-
ity, worsened by a decrease in livestock
farms. Dairy farms offer swallows good
living conditions. Launched in spring
2023, the project currently involves 34
dairy farms across Finland. The farms
have committed to actions such as
Finland Swallow
Project
Through this project,
we build nests to
help endangered bird
species find a home
across 34 dairy farms
in Finland.
PAGE 57
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Resource use and circularity /
Governance
Social
Biodiversity and nature
/ Climate change and animal welfare
building artificial nests and monitoring,
while BirdLife experts visit to advise
and evaluate the swallow situation. By
summer 2024, swallows were nesting
on nearly all participating farms, with up
to 40 nests on one individual farm.
Collaborating with key players in
the industry through the Future
Fit Dairy Initiative
Demonstrating the importance of
industry alignment, Arla continues
its engagement with the Future Fit
Dairy Initiative (FFDI). This is a col-
laboration between large European
dairy companies that aims to create a
framework that measures outcomes,
identifies barriers for farmer owners and
enables a sustainable future through
regenerative agriculture. Based on the
SAI Platform's 'Regenerating Together'
framework, FFDI is adapting it for dairy
in North Western Europe and imple-
menting it across several countries.
The five FFDI members represent dif-
ferent parts of the dairy value chain and
are committed to supporting farmer
owners in transitioning to a future fit
dairy sector.
To evaluate FFDI and other regenerative
practices, Arla is testing the approach
on 24 conventional and organic pilot
farms across five countries.
In Arla's FarmAhead™ Incentive model, a total
of 8 points are available for actions on carbon
farming and biodiversity. This equals 0.24 EUR-
cent/kg of milk paid out to Arla farmer owners.
CARBON
FARMING AND
BIODIVERSITY
8 POINTS
Facilitating research with the
Naturtjek project in Denmark
Arla Denmark, together with the
independent research company SEGES
Innovation, launched the Naturtjek
(meaning Nature Check) project, which
involves comprehensively mapping
on-farm nature areas across all organic
farms supplying Arla in Denmark. The
project uses data from Denmark's
'Environmental Portal', a web portal
that contains information about nature
and the environment in Denmark, and
is a collaborative effort between the
Ministry of Environment and Gender
Equality, municipalities and local
regions. After mapping and identifying
7 to 10 areas with the highest nature
quality and potential for conservation
and/or enhancement, SEGES works to-
gether with the farmer owners to create
prioritised lists of areas where they can
focus their nature conservation efforts
to enhance biodiversity on their farms.
Incentivising practices that
support biodiversity
Cows are ecosystem engineers that
transform grass, uncultivable land and
food by-products into valuable food.
Their grazing promotes carbon se-
questration and fertilises the land with
manure. The slight disturbance of soil
by their hooves enhances root growth,
water infiltration and nutrient cycling,
benefiting plant health and diversity.
Grazing cows maintain Europe's
grasslands, creating diverse habitats by
browsing tall grasses and shrubs.
This supports a variety of native plants
and fosters biodiversity, as seen in
the insects, birds and small mammals
thriving alongside them. Therefore,
we incentivise grazing through our
FarmAhead™ Incentive.
Enhancing biodi-
versity through
collaboration
Arla partners with
different relevant
stakeholders to
promote regener-
ative agriculture
and engage farmer
owners in sustainable
practices.
PAGE 58
ARLA FOODS ANNUAL REPORT 2024
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II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Resource use and circularity /
Governance
Social
Biodiversity and nature
/ Climate change and animal welfare
ACCOUNTING POLICIES
Deforestation is defined as the loss of natural forest
as a result of conversion to agriculture or other
non-forest land use, conversion to a plantation or
severe or sustained degradation. Conversion is the
change of a natural ecosystem to another land
use or profound change in a natural ecosystem's
species composition, structure or function. Natural
ecosystems include, for example, grasslands,
wetlands or peatlands. Arla uses the definitions
of the Accountability Framework Initiative which
is recommended by the Science Based Targets
initiative (SBTi).
Commitment scope
Arla focuses on the most relevant risk commod-
ities to make the greatest impact: Palm, soy and
forest fibre, as these have the highest priority for
deforestation- and conversion-free targets within
the value chain.
Soy in feed and ingredients includes all soy-based
products and derivatives, including soy meal, cake,
hulls and soy oil. Palm in feed and ingredients
includes all palm-based products and derivatives,
including palm oil, palm kernel and other deriva-
tives. Soy and palm products used in milk replacers
are not included. Forest fibre includes all wood and
forest fibre-based materials that Arla purchases for
packaging components, energy production and
office material.
All Arla's own operations are in scope for the
commitment on ingredients and forest fibre,
including manufacturing of third-party or licensed
products at Arla sites. The commitment on indirect
purchase of feed includes all Arla owner farms and
non-owner milk.
All companies/partners/traders (referred to as
suppliers), both direct and indirect, are included in
Arla's DCF commitment. Direct suppliers include
those from where Arla sources ingredients and
forest fibre for our operations, whereas indirect
suppliers include upstream third-party suppliers
as well as parties supplying feed products to farms
from where Arla sources milk. The latest cut-off
date at the group level is 31 December 2020 (after
which deforestation or conversion renders a given
area or production unit non-compliant with DCF
commitments). This is in line with the European
Union Deforestation Regulation (EUDR). Some
commodities may be subject to earlier cut-off
dates depending on the sourcing region, national
legislation or certifications. These are outlined in
our Responsible Sourcing Policies for Palm, Soy and
Forest Fibre.
Definition of DCF
Following guidance by the Accountability
Framework Initiative, Arla considers soy, palm and
forest fibre as deforestation- and conversion-free
when they are physically segregated and certified
or verified as DCF, organically produced (for soy) or
originate from areas that are not high-risk according
to the World Wildlife Fund (WWF) (Deforestation
Fronts 2021). This means that Arla reports only
segregated chain of custody models as DCF. Chain
of custody models where there is no physical
segregation, such as book and claim (soy or palm
credits) or mass balance, do not qualify. Arla
only accepts certification bodies that have high
enough standards that meet deforestation- and
conversion-free criteria from the SBTi and the
Accountability Framework Initiative: RTRS, ProTerra,
Europe Soya and Donau Soja for soy, RSPO and
ISCC Plus for palm products, and FSC, PEFC and SFI
for forest fibre when controlled wood is sourced
from low-risk areas. Organic soy ingredients or in
feed on organic farms are considered as DCF due
to the low-risk origins of organic soy supply chains.
Although credits/book and claim models do not
count towards DCF claims, Arla purchases RTRS and
RSPO credits to cover volumes of soy and palm with
an unknown risk of deforestation and conversion.
No biodiversity offsets are used in relation to the
deforestation- and conversion-free target.
Feed
Volumes of soy and palm used in feed are collected
in the FarmAhead™ Check and relate to the farmer
owners' use of feed during their 2023 financial
year. Arla's DCF commitment scope also includes
contract milk (non-farmer owner milk), however,
associated feed volume data is not collected direct-
ly. Instead, volumes of soy and palm for non-owner
milk are estimated by the volumes of fat and
protein-corrected milk (FPCM) solids using a feed
conversion factor based on average FarmAhead™
Check data for each market, or industry averages for
other markets supplying Arla milk.
Deforestation- and conversion-free (direct purchase of ingredients)1
2024
2023
Direct soy
Direct palm
Direct forest fibre
Direct soy
Direct palm
Direct forest fibre
Volumes (tonnes)2
916
37,071
152,430
695
40,033
198,812
Certified, segregated
855
35,540
139,135
-
31,715
189,322
Verified
-
-
-
477
-
-
Low-risk origin
6
-
7,325
-
-
1,509
Organic3
-
-
-
-
-
-
Proportion that is DCF %
94%
96%
96%
69%
79%
96%
Proportion non-DCF
55
1,531
5,969
218
8,318
7,981
Deforestation- and conversion-free (indirect purchase of feed)1
2024
2023
Indirect soy
Indirect palm4
Indirect soy
Indirect palm4
Volumes (tonnes)2
183,212
34,545
178,060
34,223
Certified, segregated
10,136
71
7,355
Not available
Verified
914
Not available
6,813
Not available
Low-risk origin
66,663
Not available
29,022
Not available
Organic3
10,388
Not available
5,462
Not available
Proportion that is DCF %
48%
0%
27%
0%
Proportion non-DCF
95,111
34,474
129,407
34,223
1 Target is set for the end of the year, but since the KPI is based on 12 months of data, target achievement won't be reflected in the 2025 annual report
2 Data on volumes and DCF relating to ingredients and fibre covers the 2024 calendar year, while the data related to feed covers the 2023 calendar year.
3 Organic certification as a criteria of deforestation- and conversion-free only applied to soy.
4 Deforestation free palm data is not made available from feed companies.
DEFORESTATION- AND
CONVERSION-FREE
SOURCING
Arla aims to avoid negative biodiversity impacts
by targeting primary risk commodities (palm, soy
and forest fibre) to be deforestation-free and con-
version-free (DCF) by the end of 2025. This covers
direct and indirect soy and palm in products and
feed as well as forest fibre used in packaging and
energy. For palm in feed, the target for eliminating
other conversion (excluding deforestation) extends
to the end of 2028 due to high uncertainty in the
availability of appropriate documentation. Arla
reported on its DCF target for the first time in 2023,
which is considered the baseline year. In 2023,
we combined direct and indirect purchases in
our report. However, in 2024, these volumes are
reported separately, and the split was also applied
retroactively to the 2023 data.
In 2024, 94% of soy, 96% of palm and 96% of forest
fibre directly purchased by Arla's supply chains
achieved DCF status. This marks an expected
increase from 69% for soy and 79% for palm oil, as
Arla has focused its efforts on purchasing more DCF
products. The level for forest fibre was already high
and remained the same as in 2023.
For indirectly purchased feed, 48% of soy and 0%
of palm achieved DCF status. Soy in feed comprises
99.5% of the total volumes in Arla's supply chain,
while palm in feed comprises 48%. The proportion
of indirect DCF soy increased by 21% from 2023,
primarily due to increased sourcing of DCF soy in
Denmark. We observed an increase in certified and
organic soy as well as soy with low-risk origin, par-
ticularly due to the increased availability of DCF soy
from the USA. The amount of verified soy decreased
due to a lack of transparency in verification process-
es, resulting in a larger share of soy being reported
based on available country-of-origin information. For
palm in feed, data on deforestation fand conversion is
not made available from feed companies, thus marked
"Not available" in the table.
Progress towards targets
To determine the proportion of DCF soy and palm in
feed in each market, Arla collects aggregated indus-
try information for each market, as it is not currently
possible to trace feed purchased on farms back to
the supplier company and beyond. Therefore, for
soy in feed, 2023 data is sourced from:
· Denmark: Dansk Korn og Foder (DAKOFO)
· Sweden: Foder och Spannmål
· Germany: The Ministry of Agriculture
(Bundesanstalt für Landwirtschaft und Ernährung)
· Belgium: Belgian Feed Association (BFA)
· Netherlands: UN Comtrade
· UK: The UK Soy Manifesto
These industry factors are applied to the physical
volumes of soy used in each market as well as
estimated volumes associated with non-owner milk.
No industry data for soy is included for Luxemburg, the
Netherlands and Belgium.
Ingredients and forest fibre
Volumes of soy, palm and forest fibre sourced
directly by Arla reflect consumption during the
2024 financial year, and are collected during the
year in Arla's internal procurement systems. Arla
determines the level of DCF for these commodities
through a combination of supplier surveys and
direct requests for documentation of origin and/or
certification. For fibre used in packaging, the suppli-
ers relevant for DCF reporting represent at least 95%
of fibre-related packaging spend. Volumes from
non-respondent suppliers are considered to have an
'unknown' risk of deforestation. Forest fibre volumes
embedded in office material are only collected from
Arla's main offices (Viby, Leeds, Stockholm).
Cocoa
Cocoa is outside the reporting scope of Arla's
deforestation- and conversion-free commitment,
however, our policy is to use 100% UTZ/Rainforest
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ARLA FOODS ANNUAL REPORT 2024
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SUSTAINABILITY STATEMENTS
INTRODUCTION
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ABOUT ARLA
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Environment
Resource use and circularity /
Governance
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Biodiversity and nature
/ Climate change and animal welfare
Alliance-certified cocoa for our branded products,
and we continue to comply with this goal. Cocoa
will be reconsidered during the coming year to
potentially be included in Arla's DCF ambition.
UNCERTAINTIES AND ESTIMATES
Volumes collected in the FarmAhead™ Check during
2024 relate to the farmer owners' use of feed during
their 2023 financial year, which varies from farm
to farm. Volumes of soy and palm from the small
number of farmer owners who do not submit data to
FarmAhead™ Check are not considered in reporting
towards this commitment.
Reporting on the level of deforestation- and
conversion-free supply chains for commodities
is a developing field and is subject to a degree of
uncertainty. Arla is making progress to improve
the transparency of supply chains, for example
through the FarmAhead™ Incentive. However, this
year industry average data on the level of DCF
soy and palm in feed is still used. This will likely
generate conservative estimations of soy and palm
proportions that achieve DCF, since industry data
includes all streams of the commodities without
differentiating between GM (genetically modified)/
non-GM soy, which will have varying contributions
to deforestation and conversion. We expect the
industry average information to give a fair view as
Arla has such a large market share in the countries
where we operate. However, we plan to move
towards using information directly from suppliers
gathered through our FarmAhead™ Check as soon
as we deem data quality to be adequate.
There are several exclusions from the scope of Arla's
deforestation- and conversion-free commitment
and reporting on feed. These exclusions include
embedded soy and palm associated with externally
sourced whey or milk powder, as the related feed
is several steps back in the supply chain and there
is currently little to no data available. In addition,
soy and palm products used in milk replacers are
not included, as milk replacers are not considered
within the context of feed. For ingredients and forest
fibre, the key exclusion is Arla products produced
at the site of third-party companies, which are not
included due to the unavailability of data.
To determine the level of DCF achievement for
forest fibre, Arla relies on certification information
submitted from suppliers of such materials. There
is limited ability for Arla to verify such data. Forest
fibre volumes from third-party manufacturing are
not included.
WATER WITHDRAWAL
In 2024, water withdrawal rose by 4.6% compared
to the previous year. This change is attributed to
the full-year impact of acquiring MV Ingredients
Ltd., UK in 2023, and a shift in production towards
more water-intensive products, such as extended
shelf-life milk.
ACCOUNTING POLICIES
Water withdrawal covers all water withdrawn to be
used at production sites, warehouses and logistics
terminals. Water withdrawal encompasses two main
sources: water purchased from external suppliers
and water obtained from internal boreholes. The
external water category includes water purchased
from external suppliers before undergoing internal
treatment. Internal borehole water refers to water
sourced from on-site boreholes and is measured pri-
or to undergoing any internal treatment processes.
UNCERTAINTIES AND ESTIMATES
Our water consumption data is collected through
monthly manual input from our sites. For externally
purchased water, we cross-reference the data with
supplier records to ensure accuracy. As for internal
borehole water, we retrieve the data from manual
meter readings. To minimise the risk of manual
errors, we have implemented a comprehensive
internal validation process at both site level and
centrally. This thorough validation process ensures
the reliability and accuracy of the reported data.
DEFORESTATION AND
CONVERSION-FREE SOURCING
CONTINUED
1.4 Water withdrawal
thousand m3
2024
2023
2022
2021
2020
Water purchased externally
11,582
11,107
10,935
11,057
10,918
Water from internal boreholes
8,137
7,754
7,829
7,803
7,745
Total
19,719
18,861
18,764
18,860
18,663
Policies and other
Our ambitions on biodiversity and the ecosystem
are enforced by our Environmental Policy and
our Green Ambition 2050 and especially our
Responsible Sourcing Policies. These support us in
reaching our DCF 2025 target and in addressing our
impacts and risks related to nature.
Environmental Policy & Green Ambition 2050
Improve biodiversity and ecosystems
We acknowledge that the decline in biodiversity
poses a threat to our future well-being and risks ir-
reversible consequences for our planet. Agricultural
activities can negatively affect local biodiversity in
numerous ways. Thus, our policy addresses biodiver-
sity impacts deriving from our own operations and
our value chain.
Arla is dedicated to integrating biodiversity and
nature-related considerations into our operations
and upstream value chain. We strive to promote
sustainable sourcing and minimise our ecological
footprint, particularly around our production sites
in biodiversity-sensitive areas. To this end, we take
active measures to prevent pollution at our facilities
and engage in partnerships and collaborations to
raise biodiversity awareness and contribute to the
preservation and restoration of ecosystems.
We recognise the interdependence between our
milk sourcing and ecosystem services, and we are
committed to enhancing and protecting these ser-
vices for the benefit of both nature and society. We
support our farmer owners in their efforts to protect
the environment and minimise adverse impacts
on biodiversity and nature. This includes reducing
climate impact, implementing regenerative land-
use practices, reducing freshwater use, minimising
pollution and actively monitoring and mitigating
impacts on species and ecosystems. Furthermore,
we support our owners in utilising their farm
resources efficiently to decrease their environmen-
tal impact. This is facilitated through initiatives such
as sustainability incentives, innovation farms and
educational events.
We aim to foster a biodiverse and accessible
agricultural landscape through strong partnerships.
We work together with researchers and scientists
as well as suppliers and customers to find new
technologies and solutions to lead the future of
sustainable dairy.
Clean air and water
Our goal is to keep nitrogen and phosphorus cycles
in balance and secure high groundwater and air
quality. We will reach this by protecting regional
water sources, reducing the need for external
water use and reducing emissions across the whole
value chain. Circular economy principles are our
guidelines, when it comes to our water use and the
carbon, nitrogen and phosphorus cycles.
Social consequences of environmental impacts
We are dedicated to addressing and mitigating the
social consequences of adverse environmental
impacts, ensuring the well-being and welfare of
affected communities.
Policy governance
Please see the description in the climate chapter on
page 50 for policy governance.
Responsible Sourcing Policies
Globally, land use change such as large-scale
deforestation and conversion of natural ecosystems
is driving biodiversity loss, natural capital depletion,
carbon loss and impacting soil quality. Arla has a
Responsible Sourcing Policy covering both our
direct and indirect purchases of palm, soy and forest
fibre. These policies are externally available on our
website.
Responsible Sourcing Policies for Palm
Irresponsible production of palm products can
cause substantial harm to the environment and so-
ciety. We are committed to transparent, responsible
and sustainable palm sourcing.
Specifically, we commit to deforestation- and
conversion-free palm. We further commit to no
burning of forests, and no infringements of the
rights of workers, indigenous people and vulnerable
communities. We expect our direct and indirect
suppliers to respect our no deforestation and no
conversion commitment on palm in the supply
chain.
With regard to monitoring of our procurement
of palm, we follow our Responsible Sourcing
Guidelines.
Responsible Sourcing Policy for Soy
Irresponsible production of soy can cause
substantial harm to the environment and climate.
Soy embedded in feed represents the majority
of the total soy in our supply chain. We in Arla are
therefore committed to transparent, responsible
and high-quality soy sourcing.
Specifically, we commit to deforestation- and
conversion-free soy. We further commit to no
infringements of the rights of workers, indigenous
people and vulnerable communities.
This policy covers all indirect soy embedded in feed
used by farmers who supply Arla as well as ingredi-
ents that contain soy that Arla purchases directly.
We expect our direct and indirect suppliers to
respect our no deforestation and no conversion
commitment on soy in the supply chain.
With regard to monitoring our procurement of soy
ingredients and feed, we follow our Responsible
Sourcing Guidelines.
Responsible Sourcing Policy for Forest Fibre
Forest fibre plays an important part in our produc-
tion chain. We in Arla are therefore committed to
sustainable, transparent and responsible sourcing
of virgin forest fibre in our packaging materials, in
energy production at sites and for other purposes.
Specifically, we commit to no deforestation,
conversion or degradation of natural forests, no
development of high conservation value areas, no
infringements of the rights of workers, indigenous
people and vulnerable communities, and no
conversion of natural forests into forest plantations
or any other land use.
This policy covers all forest fibre used in all entities,
operations and geographies under our manage-
ment control.
With regard to monitoring of our procurement of
fibre-based products, we follow our Responsible
Sourcing Guidelines.
Policy governance
The overall responsibility for deforestation- and
conversion-free related topics lies with the
Sustainability function.
Dairy Sustainability Framework
Arla contributes to global collaboration groups for
dairy, including the International Dairy Federation
(IDF), Global Dairy Platform (GDP) and Sustainable
Dairy Partnership (SDP). As part of Arla's promotion
and use of the SDP, we acknowledge the 11 criteria
of the Dairy Sustainability Framework (DSF) and
commit to addressing materially relevant criteria
throughout our supply chain.
PAGE 60
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Resource use and circularity /
Governance
Social
Biodiversity and nature
/ Climate change and animal welfare
Impacts
Policies
ANI
ANI
ANI
ANI
ANI
Actual Negative Impact
PNI
Potential Negative Impact
API
Actual Positive Impact
PPI
Potential Positive Impact
RESOURCE USE AND
CIRCULARITY
ARLA'S IMPACTS
Environmental Policy & Green Ambition
2050
Responsible Sourcing Policy for
Forest Fibre
DEPLETION OF NON-
RENEWABLE RESOURCES
GENERATING
FOOD WASTE
GENERATING
SOLID WASTE
NON-RECYCLABLE
PACKAGING
PAGE 61
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Biodiversity and nature
Governance
Social
Resource use and circularity /
/ Climate change and animal welfare
Targets and ambitions
2023
2024
2025
95%
94%
Target: 100%
2023
2024
2024
2030
2030
83%
79%
8%
Target: 0%
Target: 50%
ARLA'S AMBITION
WORKING
TOWARDS MORE
CIRCULARITY
Impact, risk and opportunities
We can create a circular economy
by impacting our resource use
As a producer of food and beverages
that require packaging to protect the
food and minimise food waste, we
recognise our influence on resource
use and waste generation. Through
our double materiality assessment (see
pages 34-37), we identified impacts
from our activities and risks related to
our transition to a circular economy.
Food waste is a challenge throughout
our value chain, as well as our impact
on solid waste that occurs at our
production facilities. By tackling waste
generation in our value chain, we can
minimise our impact and contribute
positively to the circular economy.
Our operations depend on renewable
and fossil resources as well as on a
reliable supply chain and access to
fertile land. However, we face risks like
increased feed costs and ecosystem
degradation due to climate change,
alongside the growing scarcity of
agricultural land.
Another challenge is that not all of our
packaging is recyclable in all markets,
risking reducing our brand value as
consumers may turn away.
To minimise or avoid those impacts and
risks, we are committed to advancing
towards fully circular packaging, im-
proving resource efficiency, prioritising
renewable resources and reducing food
and solid waste across our value chain.
For more information on our sustaina-
ble resource use and waste minimisa-
tion policies, please refer to page 67.
Strategy
Circularity approach
In alignment with the waste hierarchy
(see page 64), we strive to optimise our
waste management.
Towards fully circular packaging
'Towards fully circular packaging'
reflects our commitment to utilising
resources effectively to minimise our
climate and environmental impact.
This ambition encompasses enhancing
the recyclability of our packaging
and decreasing the reliance on virgin
fossil-based plastic.
We utilise over 300 thousand tonnes
of packaging materials annually. Our
packaging solutions must ensure the
safety and quality of food products
while maintaining the lowest possible
environmental footprint and minimising
food waste.
The design of packaging is complex due
to strict legal requirements concerning
food safety and hygiene. Additionally, it
must protect our products during distri-
bution, both in stores and at home. It is
also crucial for ensuring global access
to our nutritious offerings. We supply
our products worldwide, reaching 164
countries, each with varying collection
and recycling systems, and in some
markets, certain materials are not yet
recyclable.
Food waste and waste management
Arla aims to support the UN Sustainable
Development Goal (SDG) of halving food
waste by 2030. In our dairies, we contin-
ually optimise production processes to
minimise food waste through advanced
technology and close collaboration with
customers and suppliers. We seek to ei-
ther sell surplus food as animal feed, use
it in biogas plants for energy production
or donate it to charitable causes.
Our waste reduction efforts extend
beyond food waste to include solid
waste, such as packaging materials. We
consistently work towards enhancing
production efficiency and waste
management practices to reduce waste
throughout the production and trans-
port processes, while also collaborating
with waste management suppliers to
improve handling.
RECYCLABILITY OF PACKAGING
Our ambition is that 100% of the packaging used for
Arla's own brands is designed for recycling by 2025.
Read more on page 63.
VIRGIN FOSSIL-BASED PLASTIC
Our ambition is to not use virgin fossil-based plastic
in packaging used for Arla's own brands by 2030.
Read more on page 63.
FOOD WASTE
Our ambition is to reduce our own food
waste by 50% by 2030 compared to our
baseline year 2023.
Read more on page 64.
PAGE 62
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Biodiversity and nature
Governance
Social
Resource use and circularity /
/ Climate change and animal welfare
Actions and resources
SUSTAINABLE
PACKAGING
We have set a voluntary target on not
using any virgin fossil-based plastic in
packaging for our own brands by 2030.
We measured the amount of non-virgin
fossil-based plastic used in our branded
packaging throughout 2024 and were
able to reduce it by 4 percentage points
compared to the previous year.
With further efforts, such as focusing
on switching to recycled PET or
fibre-based cups for yoghurts, sour
creams and desserts we expect a
continuous decrease of virgin fossil
plastic usage for our products. Although
we have made progress on key branded
products since setting the target in
2020, global challenges with the
availability of alternative materials and
the slower-than-expected development
of new technologies have resulted in
slower progress than anticipated.
Working towards 100%
recyclability
Arla's goal is to achieve 100% recycla-
bility across its operations. As an initial
step, our target for 2025 is to ensure
that all packaging used for Arla's own
brands is designed for recycling. This
objective is in line with our Green
Ambition 2050 and our Environmental
Policy.
Considering the various conditions,
particularly in our international markets,
we assess our progress towards packag-
ing recyclability based on two criteria:
1. Designed for recycling
This criterion ensures that a packag-
ing or specific material component
can be recycled in at least one of
Arla's European core markets.
Reducing plastic, improving plastic
Virgin plastic derived from fossilised
materials like crude oil is known as
virgin fossil-based plastic. To minimise
its use, we prioritise reducing plastic
and utilising recycled plastic as well as
renewable materials such as paper and
cardboard.
Recyclability – own brands
Reducing our virgin
fossil plastic footprint
Arla is replacing virgin fossil
plastic with alternatives. In
the UK, Cravendale bottles
switched to recycled PET,
saving 900 tonnes of
virgin fossil-based plastic
annually. In Europe, hybrid
cups are being converted
to recycled plastic. In
Sweden, cooking products
moved to fibre-based cups,
saving 30 tonnes annually.
Recyclable/
Recycle-ready
cheese foils
For our Lactofree
mature cheddar, our
launch of a new foil
has been recognised
as recyclable by the
biggest recyclability
labelling scheme in
the UK (OPRL). We
continue to make
changes to our
cheese packaging
in order to further
increase recyclability
in the future.
Removable sleeves
to boost plastic
bottle recyclability
Adding a zipper for
sleeve removal on
PET bottles improves
recyclability by letting
consumers separate
the sleeve, increasing
recycling chances.
This design prevents
heavy ink sleeves
from disrupting the
PET recycling process,
enhancing recycling
quality and efficiency.
94% Designed for recycling
54% Recyclable in market where sold
40% Designed for recycling, but not in market
where sold
6%
Not recyclable
IN ARLA, WE PRIORITISE RENEWABLE
AND RECYCLED MATERIALS TO
REDUCE VIRGIN FOSSIL-BASED
PLASTIC. WE FOCUS ON DESIGNING
RECYCLABLE PACKAGING AND
STRIVE TO REDUCE NEGATIVE
IMPACTS THROUGH TRANSPARENT
PACKAGING DATA.
2. Recyclable in the market where sold
This ensures that a packaging or
specific material component can be
recycled in the market where the
product is sold. More details can be
found on page 65.
By leveraging our packaging material
data, we can effectively measure recy-
clability. Additionally, we use this data
transparency to prioritise initiatives that
enhance recyclability based on either of
the mentioned criteria.
In Arla, we aim to adhere to commonly
acknowledged references for our
targets. Regarding recyclability, under
the Packaging and Packaging Waste
Regulation (PPWR), 'Design for Recycling'
legislation is currently being agreed
and will be applicable across the entire
EU from 2030. Once this is further
developed, Arla will establish a revised
target and methodology aligned with the
principles of the PPWR.
PAGE 63
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Biodiversity and nature
Governance
Social
Resource use and circularity /
/ Climate change and animal welfare
Disposal
Recover energy
Recycle
Reuse animal feed
Reuse human consumption
Prevention
Most preferable option
Least preferable option
REDUCING
FOOD WASTE
In 2024, we conducted an investiga-
tion to determine the most suitable
approach to updating our food waste
target, considering conversion into
milk equivalents. Due to the inability
to reconcile the historical figures with
the new methodology, we made the
decision to change our baseline year
to 2023. This adjustment allows us to
utilise the first full year of data using the
updated methodology. Consequently,
our voluntary goal of achieving a 50%
reduction by 2030 becomes highly
ambitious, as we are unable to account
for all reductions achieved during our
The waste management hierarchy
indicates an order of preference for actions
to reduce and manage waste. Food waste
is defined as anything not used for either
human or animal consumption.
Waste management hierarchy
FOOD WASTE IS OFTEN THOUGHT OF
AS FINISHED PRODUCTS THAT WERE
DISCARDED INSTEAD OF CONSUMED.
FOR US, THE MAJORITY OF OUR FOOD
WASTE IS DERIVED FROM EITHER
CLEANING OF OUR PROCESSING
EQUIPMENT TO ENSURE THE
HIGHEST POSSIBLE QUALITY OR SIDE
STREAMS THAT WE ARE CURRENTLY
NOT ABLE TO UTILISE.
of food waste, leading to more efficient
production practices.
Over a period from 2022 to 2024,
these sites have achieved a remarkable
reduction of chemical oxygen demand
(COD) of 10%. This reduction in COD is
equivalent to a reduction of food waste
of 355 tonnes, highlighting the signifi-
cant progress made in minimising waste
and promoting sustainability within Arla's
operations.
Overall, the investment in inline sensors
and the integration of data from these
sensors with production line information
have proven to be effective tools in
monitoring and reducing food waste,
contributing to Arla's commitment to
sustainable and responsible production
practices.
Turning food waste into feed for
insects
In 2023, Arla Food Ingredients started
to use delactosed permeate, the
by-product of lactose production, in
collaboration with an insect farm as
insect feed for fly larvae. Through this
action, in 2024 the amount of food
waste of the Denmark Protein site could
be further reduced by 16% compared to
2023 volumes by transforming the waste
into a sustainable source of protein for
animals or humans.
Calcium programme run from 2018 til
2020.
Preventing food waste
Arla's main objective when it comes to
food waste is prevention. We contin-
uously strive to find ways to reduce it
within our own productions through
optimising the processes, innovations
or utilising the waste streams. Where
food waste cannot be prevented, we
aim to redirect it to animal feed.
Optimising processes through use
of sensors in our productions
In 2024, we made progress in reducing
food waste through the implementa-
tion of inline sensors at 10 production
sites. These sensors are designed to
measure the composition of the liquid
flowing through the pipes, distinguish-
ing between water, a mixture of water
and milk/food waste and pure milk/
food waste. The success of this initiative
has led to plans for expanding the
installation of sensors to all Arla sites
to track and reduce the food waste via
effluent streams.
Pride in every
drop of milk
The initiative in the
supply chain focuses
on celebrating suc-
cess and recognising
the passion and effort
behind the products
we have today.
By combining the data collected from
the inline sensors with production line
information, we monitor and take pro-
active measures to reduce food waste
during the production process at these
sites. This integrated approach allows
for better control and management
PAGE 64
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Biodiversity and nature
Governance
Social
Resource use and circularity /
/ Climate change and animal welfare
OUR PROGRESS ON
CIRCULAR PACKAGING
Recyclability refers to the ability of a material or product
to be collected, processed and transformed into new
materials or products through recycling processes.
In 2024, 94% of the packaging used for our branded
products was designed for recycling compared to
95% last year and 93% in 2022, the baseline year.
Despite our ongoing work to enhance the recyclability
of our packaging, this slight decrease could be partly
explained by changes in our sales mix. It highlights the
challenges we face and underline the importance of
our commitment to continually moving towards more
sustainable packaging solutions.
Arla's total recyclability of branded products in market
where sold was 54%, a 10% increase compared to last
year. The improvement is mainly a result of improved
infrastructure related to milk cartons in Europe. In
Arla's markets outside Europe, some materials that are
widely recyclable in Europe, like glass or metal, are not
collected for recycling. For this reason, even though
91% of Arla's branded packaging sold in markets
outside Europe was designed for recycling, in 2024
none of it was recorded as recyclable in the market
where sold.
ACCOUNTING POLICIES
We split the recycling KPIs according to our
commercial segments Europe and International,
please see description of our commercial segments
on pages 24-27.
Recyclability of branded products
These measures are applied to packaging used for
Arla's own brands. A material is recyclable when
there is a proper infrastructure for packaging waste
collection and sorting and a market for the recycled
material.
Designed for recycling, branded products
Packaging is designed for recycling if the packaging
Designed for recycling, branded products
2024
2023
2022
2021
2020
Europe
95%
96%
95%
-
-
International
91%
95%
89%
-
-
Total
94%
95%
93%
-
-
is recyclable in at least one of Arla's core markets in
Europe. The assessment and calculation of designed
for recycling follows the same logic as stated below
under recyclable in market where sold.
Recyclable in market where sold
Recyclable in market where sold means that the
packaging of a branded product or a specific mate-
rial share thereof is recyclable in the market where
the product is sold. A comprehensive assessment
is made for each material to determine whether it
is recyclable in a given market based on commonly
acknowledged references for recyclable packaging
design and recycling systems in that market. The
references used include the 'Mindeststandard'
issued by Zentrale Stelle Verpackungsregister
in Germany, the 'Plastic Packaging Recycling
Manual' published by the Swedish Näringslivets
Producentansvar (NPA), the 'Recycle Checks'
developed by KIDV in the Netherlands and the UK
OPRL scheme. Each assessed product packaging
unit is converted into weights of different compo-
nents used and multiplied by sales volumes. The
consolidated number is calculated as the weight
of recyclable packaging material sold compared
to the total weight of packaging materials used.
Due to materiality, product units that make up less
than 1% of finished product sales volumes within
the subcategory of that product are excluded. By
subcategory we mean butter blends, yellow cheese,
milk etc. The coverage in 2024 was 85%.
Virgin fossil-based plastic for branded products
We reported on our target for zero virgin fos-
sil-based plastic in our branded products portfolio
for the first time in 2023. In 2024, 79% of the plastic
packaging used for our branded products was virgin
fossil-based plastic compared to 83% in 2023, the
baseline year.
These measures are applied to packaging used
for Arla's own brands. Virgin fossil-based plastic is
defined as plastic derived from fossilised material
such as crude oil, coal and natural gas. It excludes
recycled and bio-based plastic as well as plastic for
which the use of bio-based raw materials is certified
by a mass balance chain of custody model.
All packaging components in Arla are classified in
the following ways to determine if they are made
from virgin fossil-based plastic:
· Is the material plastic yes/no?
· Is the material made from recycled material yes/
no?
· Is the material made from renewable material
yes/no?
Additionally, each packaging component has a
weight recorded in grams.
With the above criteria, Arla is able to determine the
amount of plastic in each piece of packaging sold
and, if applicable, how much of that plastic is either
recycled, renewable or virgin fossil-based.
These values are then multiplied by sales volumes to
produce an overall weight of virgin fossil plastic and
non-virgin fossil-based plastic used over an annual
period.
The consolidated number is calculated as the
weight of non-virgin fossil-based plastic compared
to the total weight of plastic materials used. Due
to materiality, product units that make up less
than 1% of finished product sales volumes within
the subcategory of that product are excluded. The
subcategories are butter blends, yellow cheese,
milk etc.
UNCERTAINTIES AND LIMITATIONS
In 2024, the recyclability assessment was
performed based on the recyclability status in
December. There is a risk that a certain material
combination was not recyclable earlier in 2024 but
became recyclable in December. In this case, the
material combination was counted as recyclable for
the full year. This is also the case for the assessment
of virgin fossil-based plastic.
During the past years, Arla improved the processes
and tools used for measuring recyclability and virgin
plastic. Therefore, data related to periods before
2022 and 2023 is not disclosed.
The two packaging-related targets are framed by
Arla due to the lack of agreed global standards.
Progress towards targets
Recyclable in market where sold, branded products
2024
2023
2022
2021
2020
Europe
85%
83%
80%
-
-
International
0%
0%
0%
-
-
Total
54%
45%
54%
-
-
Virgin fossil-based plastic, branded products
2024
2023
2022
2021
2020
Europe
75%
78%
-
-
-
International
98%
98%
-
-
-
Total
79%
83%
-
-
-
PAGE 65
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Biodiversity and nature
Governance
Social
Resource use and circularity /
/ Climate change and animal welfare
MATERIALS USED
In 2024, we produced 6,398 million kg of dairy
products. The total material used for our products
encompasses our primary raw material, milk, along
with other ingredients and packaging materials.
Besides these input materials, energy and water are
integral to our production processes. For details on
our energy consumption, please refer to page 49,
and for our water withdrawal, see page 60.
ACCOUNTING POLICIES
Arla reported on the total volume of input materials
for the first time in 2024. The input materials
include the following;
· Milk: All raw milk collected during the year from
both Arla owners and non-owners.
· Externally purchased whey: All whey purchased
from external providers.
· Other ingredients: All raw materials processed
at our production sites including butter, cheese,
powder, non-milk-based products and water for
recombination.
· Packaging: Packaging materials received directly
from suppliers. The data from the suppliers covers
a minimum of 95% of the spend, results are
scaled up to cover 100%. The share of packaging
material made from recycled material is reported
separately. Wooden pallets are not included in
the figure.
UNCERTAINTIES AND LIMITATIONS
The reported usage data reflects materials in their
original state. Arla makes two exceptions to this
rule; externally purchased whey, which is recorded
as standardised liquid whey due to its varying
consistency at our dairies, and raw milk, which is
presented with standardised fat and protein content
to align with the volumes reported in the financial
statements.
The volume of input materials used does not
correlate with the volume of dairy products because
the reporting on input materials excludes water,
which is either removed from milk or added to our
products. For example when producing milk powder,
water is extracted from the milk, resulting in a
significantly reduced weight.
The packaging volume data utilised is based on
entries manually provided by the supplier.
FOOD WASTE
DEVELOPMENT
In 2024, the amount of food waste decreased to
596 thousand tonnes, which is a 8%-reduction
compared to last year.
ACCOUNTING POLICIES
Food waste includes all material waste along
the value chain that was originally intended for
human consumption, excluding inedible parts.
This definition aligns with the recommendations
provided by the UK-based NGO Waste and Resources
Action Programme (WRAP) for quantifying dairy food
loss and waste. The food waste can either be liquid
or solid. Food waste comprises only non-hazardous
waste.
Arla reports on food waste only in our own
operations, not food waste occurring on farm or
from consumers.
· Liquid waste: Includes any liquid waste that
includes milk, fat and protein. It encompasses
various types of liquid waste, including milk with
quality issues (e.g. antibiotic contamination),
which is considered part of the liquid waste at the
dairy responsible for managing its disposal.
· Solid waste: Includes waste from finished and
semifinished goods, which refer to the disposal
of products that have completed the production
process but are not considered solid waste.
· Sludge before COD measurement: Refers to the
solid waste material that is separated from waste-
water before it undergoes treatment. Examples
of sludge include the quantities obtained from fat
trays, filters or separators and for Arla it primarily
consists of fat.
· Wastewater COD: Includes all organic
material that is left in the wastewater after sludge
is separated. This is assessed by the Chemical
Oxygen Demand (COD) in the wastewater. COD is
a measure of the amount of oxygen required to
decompose organic material in water.
The density of food waste varies significantly both
across and within the different waste categories. To
ensure comparability, the food waste volumes have
been converted into milk equivalents, following the
International Dairy Federation (IDF) guidelines. This
conversion process facilitates accurate recording,
estimation and transformation of various waste
types and by-products into milk equivalents. It
provides a standardised measurement approach
for assessing the environmental impact of waste
within Arla.
UNCERTAINTIES AND LIMITATIONS
Estimating fat and protein percentages for waste
materials like liquid waste and sludge can introduce
uncertainties. These uncertainties depend on data
quality, variations in product mix and deviations
from average percentages.
Furthermore, quantifying waste, such as COD in
wastewater, relies on sampling and analysis meth-
ods. While efforts are made to ensure representative
samples and timely analysis, potential variations in
sampling techniques and laboratory processes, as
well as delays beyond the recommended 12-hour
timeframe, may introduce data variations.
Food waste
(milk equivalents, tonnes)
2024
2023
2022
2021
2020
Liquid waste for landfill disposal
21,880
31,690
-
-
-
Food waste directed to disposal
21,880
31,690
-
-
-
Liquid waste for biogas
236,322
274,815
-
-
-
Solid waste for biogas
39,994
38,027
-
-
-
Sludge before COD measurement
12,971
9,873
-
-
-
Wastewater COD
220,434
221,126
-
-
-
Food waste diverted from disposal
509,721
543,841
Total
531,601
575,531
-
-
-
Resource inflow
(mkg)
2024
2023
2022
2021
2020
Milk (owner + contract)
13,735
-
-
-
-
Externally sourced whey
2,323
-
-
-
-
Other ingredients
550
-
-
-
-
Packaging
309
-
-
-
-
Recycled packaging materials purchased
(mkg)
2024
2023
2022
2021
2020
Total packaging materials
309
-
-
-
-
Recycled packaging materials
99
-
-
-
-
Share of recycled packaging materials
32%
-
-
-
-
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ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Biodiversity and nature
Governance
Social
Resource use and circularity /
/ Climate change and animal welfare
Non-hazardous solid waste
(tonnes)
2024
2023
2022
2021
2020
Waste for incineration
8,165
8,460
8,358
8,683
9,159
Waste for landfill
2,002
2,761
2,616
1,921
1,204
Total waste directed to disposal
10,168
11,221
10,974
10,604
10,363
Recycled plastic materials
2,684
2,388
2,485
2,863
2,787
Recycled paper and cardboard
11,891
11,836
12,276
13,323
13,816
Recycled glass
302
281
284
318
328
Recycled metals
2,054
1,749
1,584
1,704
2,042
Other
2,377
2,365
2,830
3,536
2,761
Total recycled non-hazardous waste
19,308
18,619
19,460
21,744
21,734
Total waste diverted from disposal
19,308
18,619
19,460
21,744
21,734
Total non-hazardous waste
29,475
29,840
30,434
32,348
32,097
SOLID WASTE
DEVELOPMENT
In 2024, the amount of solid waste decreased
slightly to 30,419 tonnes from 30,770 tonnes in
2023, with results remaining stable as expected.
Additionally, the share of non-recyclable solid waste
decreased by 3 percentage points.
ACCOUNTING POLICIES
Solid waste refers to waste from production that is
not food waste, for example packaging. Solid waste
is separated into hazardous and non-hazardous
waste. Furthermore, solid waste can be either
recycled, incinerated or sent for landfill. In Arla, the
majority of solid waste is recycled.
UNCERTAINTIES AND ESTIMATES
Solid waste data is collected on a monthly basis from
external waste handlers. The waste data is provided
by sites via monthly manual upload, partially centrally
based on invoice, supplier system, supplier email,
weighted on site or other. The sourced data is based
on direct measurements. In Denmark and Sweden,
this data collection process is automated, ensuring
accuracy and efficiency. However, for other countries,
the data is reliant on manual entries made by individual
sites, which inherently increases the risk of errors.
To mitigate this risk, appropriate controls have been
implemented to ensure data accuracy and reliability.
Hazardous solid waste
(tonnes)
2024
2023
2022
2021
2020
Waste for incineration
369
283
284
272
523
Waste for landfill
33
50
35
25
35
Total waste directed to disposal
401
332
319
297
558
Recycling
542
598
715
982
820
Total waste diverted from disposal
542
598
715
982
820
Total hazardous waste
943
930
1,034
1,279
1,378
Total solid waste
(tonnes)
2024
2023
2022
2021
2020
Total hazardous waste
943
930
1,034
1,279
1,378
Total non-hazardous waste
29,475
29,840
30,434
32,348
32,097
Total solid waste
30,419
30,770
31,468
33,627
33,475
Total recycled waste
19,849
19,217
20,174
22,726
22,554
Total non-recycled waste
10,569
11,553
11,294
10,901
10,921
Non-recycled waste's share of total solid waste
35%
38%
36%
32%
33%
Policies and other
Circular Policies on Resource Use and Waste
Our sustainability strategy is supported by our
Environmental Policy and Arla's Green Ambition
2050. Together, these guiding policies address
critical environmental issues and emphasise re-
source efficiency and waste management. Circular
economy principles are our guidelines, focusing on
reducing waste and unnecessary resource use as
well as reusing and recycling in line with the waste
hierarchy. This applies to the processing of milk as
well as our packaging materials and water use and
the carbon, nitrogen and phosphorus cycles.
Resource efficiency
Arla is dedicated to producing healthy and sus-
tainable products while minimising environmental
impact. We focus on improving resource efficiency
concerning water, energy, raw materials, capital and
human resources by continuously monitoring and
optimising our operations. We prioritise using re-
newable and recycled resources, and our corporate
strategy focuses on minimising the use of virgin
fossil-based plastic and increasing recyclability.
Waste management
Aligned with our Environmental Policy, we strive to
prevent waste generation. When unavoidable, we
adopt a circular approach, treating waste as a resource
to be reused, recovered or recycled. We aim to mini-
mise food waste within our operations and prioritise
its disposal according to the food waste hierarchy. We
also inspire consumers to reduce food waste through
training and awareness, ensuring packaging meets
consumer needs and is easy to empty. To minimise the
impact from packaging waste, we strive for recyclability
in all markets where our products are sold.
Policy governance
Please see the description in the climate chapter on
page 50 for policy governance.
PAGE 67
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Environment
Biodiversity and nature
Governance
Social
Resource use and circularity /
/ Climate change and animal welfare
PNI
PNI
PNI
PNI
PPI
API
Impacts
Policies
ANI
Actual Negative Impact
PNI
Potential Negative Impact
API
Actual Positive Impact
PPI
Potential Positive Impact
EMPLOYEES AND WORKERS
IN THE VALUE CHAIN
Code of Conduct
Human Rights Policy
Code of Conduct for
Suppliers and Business
Partners
ARLA'S IMPACTS
GENDER EQUALITY
AND EQUAL PAY
RISK OF INADE-
QUATE WORKING
CONDITIONS
FAIR AND GOOD
WORKING
CONDITIONS
HEALTHY AND
SAFE WORKING
ENVIRONMENT
HUMAN RIGHTS
RISK OF
DISCRIMINATION
AND HARASSMENT
LABOUR
RIGHTS
TRAINING
AND SKILLS
DEVELOPMENT
Diversity Policy
Anti-harassment Policy
Working Hour Policy
Grievance Policy
PAGE 68
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
Targets and ambitions
GENDER DIVERSITY IN MANAGEMENT (DIRECTOR+)
We aim to have at least 40% of the underrepresented
gender in management positions from director level
and upwards by 2030.
Read more on page 38.
ACCIDENTS
Our aim is to have zero lost-time accidents
per million working hours every year.
Read more on page 76.
ARLA'S AMBITION
PEOPLE IN
FOCUS
Impact, risk and opportunities
Adressing employee and value
chain impacts
As a global company, our business
activities impact various employee
categories across our value chain in
diverse ways. Through our double
materiality assessment (refer to pages
34-37), we have identified the impacts,
risks and opportunities affecting these
employees.
Our own employees
Impacts on our own employees are
systemic and can be linked to either the
regions where Arla operates or specific
factory operations or both. Our strategic
ambition is to ensure fair and favourable
working conditions for all, including in
factory settings which pose health and
safety risks.
We recognise the potential risk of
discrimination and harassment and
work towards minimising it by fostering
an inclusive culture. Our strategy of
expanding internationally also increases
exposure to labour rights challenges.
We are aware that all Arla employees
as well as consultants and third party
workers on our sites face those risk, and
we pay special attention to the most
vulnerable workers including migrant
workers.
We enhance employee experience
and provide opportunities for personal
growth and development through
training and empowerment.
In our sector, talent acquisition and
retention are key business risks, but our
investment in employee experience
and inclusion provides an opportunity
to build a loyal, skilled workforce.
Workers in the value chain
Workers of our global suppliers and on
our farmer owners' farms are impacted
by Arla's business. These groups include
particularly vulnerable migrant workers.
Value chain workers are not included in
the employee metrics of this report.
Due to the nature of agricultural
labour, certain systemic impacts, such
as health and safety concerns, are
inherent. The work often being labour
intensive, seasonal and requiring more
workers at certain times, underscores
the need for ensuring good conditions,
especially for migrant workers. Sourcing
globally introduces risks like child and
forced labour throughout our value
chain, but especially outside the EU.
A key risk for Arla is consumer backlash
from negative stories about our value
chain, influenced by the nature of our
business and supply chain locations.
Strategy
Caring for people
In Arla, we are committed to caring for
people – our employees, workers in our
value chain and individuals in the com-
munities where we operate. We strive to
build positive relationships with people
and organisations, with mutual respect
2023
2022
2023
2022
2024
2024
2030
29% / 71%
31% / 69%
29% / 71%
4.4
5.5
4.6
Target: 0
Target: 40% / 60%
Underrepresented
gender
Represented
gender
and understanding at the core of all our
interactions. This commitment aligns
with our main objectives of respecting
human rights, promoting diversity and
inclusion and upholding high health
and safety standards. We aim for contin-
uous improvement towards minimising
any potential or actual negative impacts
of our actions and supporting an
increased positive impact.
We are dedicated to providing all
employees with safe and healthy
working conditions, with a goal of zero
workplace accidents, emphasising our
commitment to a secure and support-
ive work environment.
Respecting workers' rights and fostering
collaborative relationships are essential
PAGE 69
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
for creating a harmonious and mutually
beneficial workplace. We believe in fair
and equitable compensation as a key
aspect of our commitment to employee
job satisfaction. Additionally, we fully
support freedom of association and the
right to engage in collective bargaining.
Supporting and developing the
communities we operate in is integral
to our mission. We create jobs, engage
in transparent dialogues with local
stakeholders and support vulnerable
communities. A key focus is assisting
local dairy companies in improving their
Employee
engagement
In 2024, over 18,500
employees partici-
pated in our global
engagement survey,
achieving a response
rate of 88%.
efficiency by developing standards and
practices.
We recognise the importance of attract-
ing talent and maintaining high levels of
engagement and motivation. Through
ongoing initiatives and programmes, we
actively promote diversity, equality and
inclusion throughout our organisation.
By fostering a workplace that values
the uniqueness of each individual, we
aim to attract and retain top talent,
reinforcing our position as a leader in
the dairy industry.
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ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
Actions and resources
EMPLOYEES
IN FOCUS
WE VALUE AND SUPPORT THE WELL-
BEING, SAFETY AND PERSONAL
GROWTH OF OUR EMPLOYEES.
IN DOING SO, WE WANT TO SET A
POSITIVE EXAMPLE WITHIN OUR
INDUSTRY.
Employee engagement
Our annual global engagement survey
is an important tool for gathering
valuable feedback from employees
and ensuring that Arla remains a great
place to work. In 2024, over 18,500
employees participated in the survey,
achieving a response rate of 88%. We
assess employee engagement using
the employee engagement index, which
is derived from employees' responses
to questions about their satisfaction,
engagement and feelings towards
Arla as a workplace. In 2024, the index
reached 85%, surpassing the standard
for companies of our size.
Ensuring employee safety
throughout the value chain
Arla operates in an extensive and di-
verse value chain, offering a wide range
of job opportunities across various
regions. Our employees are crucial to
Arla's success, and we are committed to
providing safe and healthy working con-
ditions for everyone. All our employees
are covered by our health and safety
management system.
In 2024, we continued our efforts
around our behavioural safety
programme 'Cornerstones'. The pro-
gramme, which is designed to assess
our safety maturity level, includes
relevant training, self-assessments, ma-
turity validations and process confirma-
tions. It is executed by our Supply Chain
function, which includes representa-
tives at each production site. Through
systematic reporting, we are able to
see trends and share learnings and best
practices across our network as well as
identify critical areas to be addressed.
Therefore, we paid special attention
to areas with increased accident rates
such as logistics, contributing to a 34%
reduction in lost-time accidents in DK
Logistics in 2024.
We continue to monitor our efforts,
detect hotspots and initiate early
intervention to ensure continued
improvements.
Employee development
In 2024, we maintained to balance
virtual and in-person learning sessions.
We continued to roll out a learning
management system across our
production and logistics sites, ensuring
employees complete mandatory
training and development discussions.
We have a strong tradition of supporting
apprentices and their education.
In 2024, we continued to actively
participate in the European Excellence
in Dairy Learning project, which spans
nine countries and benefits apprentices
and students studying dairy technology.
To address employee-related matters,
Arla has a Global HR function in place
with representatives assigned to each
market where we operate.
Commitment to responsible
employment
We support employees' rights to
unionise and freely form and join organ-
isations of their choice and to engage
in collective bargaining, aligned with
international human rights standards.
Our commitment to these principles is
embedded in our Code of Conduct (CoC)
and Human Rights Policy. At the end of
2024, 61% of our workforce was covered
by collective agreements. However,
regardless of where we operate in the
world, and whether our employees
are represented, Arla is committed to
offering responsible employment and
fair compensation for all employees.
Union collaboration
Our works councils operate at local,
national and European levels, serving as
robust platforms for internal dialogue on
issues related to employee well-being
and safety as well as ensuring the
necessary conditions for the company's
continuous development. Twice a
year, members of the EMT meet with
our European Works Council, which
consists of 17 employee representatives
representing over 15,000 employees
across our production sites in Europe.
This council is the highest forum for col-
laboration between employees and Arla.
Meeting minutes are published on our
intranet. Sustainability was a key topic in
several of these meetings in 2024.
We also engage with international
industry-specific union representatives
on topics aligned with our salient
human rights. The work is led by our
human resource function.
Above industry
standard employee
satisfaction in Arla
The results of our
annual employee
engagement
survey showed a 85%
satisfaction index.
PAGE 71
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
We believe that a team composed
of diverse individuals brings forth a
multitude of perspectives, ideas and
experiences. This, in turn, fuels innova-
tion, sustainable growth and enhanced
performance.
To ensure measurable advancements,
we assess diversity and inclusion
through three key performance indi-
cators: inclusion favourability, gender
equality and ethnicity.
We measure the level of inclusion fa-
vourability by utilising an index derived
from responses collected during our
annual employee engagement survey.
To promote gender equality, we have
set a target to ensure a minimum
representation of 40% of the underrep-
resented gender among approximately
400 members of management in Arla
by 2030. We work on this goal in a very
structured and target-oriented manner
with dashboards ensuring transparency
on gender balance in our teams, appli-
cations, hires, performance, promotions
and equal pay. To ensure increased
progress, the data is discussed quarterly
in our HR function, among others. The
share of women in management
increased to 31% (2023: 29).
This approach aligns with our
dedication to the UN Sustainable
Development Goals (SDGs) on gender
equality.
Market lenses on diversity
and inclusion
In April 2024, Arla participated in the
Danish Diversity Week alongside other
major Danish companies. Throughout
the week, a variety of learning
opportunities were presented to all
Arla employees, focusing on diversity,
equity, inclusion and belonging. The
programme included live learning
events, webcasts and information on
diversity, bias, inclusion, psychological
safety, strategy and action within Arla.
In the UK, Arla UK won the National
Diversity Awards 2024 for their strong
focus and commitment to diversity
and inclusion throughout the business,
highlighting their efforts on the topic.
Ongoing training to create an
inclusive work environment from
top management to ground floor
In 2024, we continued our onboarding
sessions and training for employees
across Arla to foster an inclusive
culture. Throughout 2023 and 2024,
Advancing the D&I
agenda in the UK
In Arla UK, we have
four employee com-
munities dedicated
to advancing the
D&I agenda, each
focusing on gender,
culture and heritage,
LGBTQ+ and veterans.
OUR STRATEGY FOR DIVERSITY AND
INCLUSION AIMS TO CULTIVATE A
WORKING ENVIRONMENT THAT
EMBRACES INCLUSION AND EQUITY,
WHERE EVERY INDIVIDUAL FEELS A
SENSE OF BELONGING.
DIVERSITY
AND INCLUSION
several managers, teams and individ-
uals participated in discussions about
diversity and inclusion, incorporating
the influence of subconscious biases
on decision-making, language barriers,
inclusive behaviours, psychological
safety and actionable focus for each
team to conquer going forward. The
training was divided into two different
workshops called 'Inclusion starts with I'
and 'Inclusive Culture is us' with the pur-
pose of raising awareness and building
commitment.
Addressing unconscious bias in
talent acquisition
We implemented a tailored training
programme for talent acquisition
that addresses unconscious bias and
emphasises the importance of creating
inclusive job descriptions. We also
use a template for job advertisements
that aims to attract a diverse pool of
applicants. We actively work towards
ensuring that hiring panels consist of
individuals from diverse backgrounds
to promote inclusion in our hiring
processes. To show a firm steer on the
importance of a diverse workforce, Arla
has internal targets on equal hiring for
management and talent acquisition.
PAGE 72
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
1
2
3
4
5
6
Human rights action
We are committed to respecting human
rights throughout our value chain,
including our own operations and those
of our suppliers and business partners.
For more details on our Human Rights
Policy, please refer to pages 78-79.
Human rights due diligence
Our human rights due diligence follows
a risk-based approach to identify
vulnerable groups and prioritise our
efforts. Our assessments indicate
that the greatest risk of causing,
contributing or being linked to negative
human rights impacts exists in our
HUMAN RIGHTS
WE ARE DEDICATED TO SUPPORTING
HUMAN RIGHTS, FOSTERING MUTUAL
RESPECT AND UNDERSTANDING OF
GLOBAL INTERACTIONS.
non-European growth markets, due to
national contexts and the complexity
of business operations. Consequently,
we prioritise conducting human rights
impact assessments in these regions
and performing due diligence whenever
we enter a new strategic partnership or
receive an allegation.
The effectiveness of our engagement
with value chain workers is measured
by the results of our human rights due
diligence assessments and supplier
audits and visits. During the audits
and visits, we engage with suppliers'
workers to discuss working conditions
and awareness of grievance channels
including Arla's Ethics Line. Input from
these efforts can feed into the update
of our Human Rights Policy.
As a result of our due diligence
assessments, we determine actions to
take in response to particular actual
or potential negative impacts related
to human rights and labour rights.
These are documented in a prevention
and mitigation plan. As part of the
due diligence it is also assessed if any
remediation is required.
We are continuously enhancing and
implementing our systematic human
rights due diligence process in line with
the UNGP and OECD guidelines, also
supporting the fulfilment of the UN
SDGs through our focus on our salient
human rights issues. By incorporating
the most recent information into our
risk assessments and responding to
new focus areas identified by interna-
tional organisations, we improve our
practices. This ensures a thorough and
up-to-date approach to respecting
human rights.
Human rights risk assessments
In 2024, we continued to identify and
address potential and actual human
rights risks and impacts within our
value chain, particularly focusing on our
operations in West Africa. Our Global
HUMAN RIGHTS
DUE DILIGENCE
PROCESS
HUMAN RIGHTS
COUNTRY BRIEF
MONITORING
AND TRACKING
COMMUNICATION
ON FINDINGS
ASSESSMENTS:
· Strategic business
partners
· Arla-controlled
sites
· Allegations/
high-risk issues
PREVENTION
AND MITIGATION
PLAN
HIGH-LEVEL
RISK ASSESSMENT
Human Rights team, in collaboration
with local teams, conducted on-site hu-
man rights risk assessments at our dairy
site in Nigeria. The goal was to identify
and address human rights risks for all
personnel at our locations, including
Arla employees and third-party workers.
Our assessments also concentrated
on risks related to key suppliers of
packaging, logistics and services, which
are often vulnerable due to the nature
of their work.
97
Number of physical and virtual supplier
audits conducted in 2024.
RESPECTING
HUMAN RIGHTS
PAGE 73
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
SALIENT HUMAN RIGHTS ISSUES ARE IDENTIFIED
THROUGH DUE DILIGENCE PROCESSES, RISK ASSESSMENTS
AND ONGOING STAKEHOLDER DIALOGUES.
The most critical salient human rights
identified in our value chain, including
our suppliers and business partners, are
working conditions, living standards,
modern slavery, health and access to
grievance mechanisms.
Right to fair and good working
conditions
Safe and healthy working conditions
We remain focused on enhancing
the maturity level of health and
safety practices in our production
facilities worldwide. We observe strong
performance in both our European and
non-European markets. More details
on our health and safety initiatives are
available on page 71.
During 2024, we continued working
with suppliers to resolve risks in relation
to unfavourable working conditions,
including long working
hours in our supply chain.
Living wage
Aligned with international frameworks,
we understand and appreciate that
paying living wages is one of the most
important ways of helping people to get
out of poverty, realising human rights
and achieving our sustainable develop-
ment goals. We participate in the AIM
Living Wage and Income Working Group
to gain insights and share knowledge.
Throughout 2024, we continued
our collaboration with the Fair Wage
Network to map wages for our own
employees. The mapping created an
overview of Arla's living wage status,
and work is ongoing to evaluate and
decide next steps.
Right to an adequate standard
of living
Employer-provided housing
We continuously work to ensure that
Arla-provided accommodation meets
Access to whis-
tleblower service
Ethics Line
The Ethics Line
is available in 30
different languages
for all employees and
other stakeholders to
raise concerns.
SALIENT
HUMAN RIGHTS
Our assessments were guided by
our salient human rights issues, with
particular attention to regional risks
such as working conditions, health and
safety and wages. Our own operations
demonstrated solid performance,
revealing no critical risks concerning
Arla's salient human rights issues. The
findings highlighted efforts to respect
human rights. Additionally, we initiated
discussions with relevant external
parties to address potential risks, in-
cluding working conditions and access
to health insurance, and we continue
to follow up on action plans to resolve
identified issues.
Throughout 2024, we also maintained
regular follow-ups on action plans from
assessments conducted in 2022 and
2023, focusing on the Middle East and
Nigeria.
Each year, we conduct supplier audits
based on risk evaluations. In 2024,
we performed 97 physical and virtual
audits, compared to 73 in the previous
year.
The human rights due diligence and
supplier audits are coordinated by
resources in our Supplier Assurance
function.
PAGE 74
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
or exceeds International Labour
Organisation standards and local
requirements.
Right to health
Health insurance in our
non-European markets
Our employees should have fair access
to health services. The employee
interviews in West Africa confirmed that
Arla as well as third-party workers have
health insurance coverage, although
there are differences for third-party
workers. We will address these varia-
tions with the suppliers.
Right not to be subjected to
slavery, servitude or forced labour
The risk of modern slavery continues
to pose a challenge within our global
value chain. As we source commodities
from various regions worldwide, we
acknowledge the heightened risk of
child and forced labour among workers
in certain countries in Asia and Africa.
We did not identify any risks related
to child labour or forced labour in our
own operations during 2024. We have
previously identified the risk of forced
labour in some of the Middle Eastern
countries, where we have production
facilities. This risk mainly pertains to
local contractors and migrant workers.
We continue our efforts to mitigate
those risks. We continue to ensure that
migrant workers keep their passports
and identity documents, unless they
require otherwise and sign a letter
of consent, and we work with the
implementation of our Code of Conduct
for Suppliers and Business Partners.
During 2024, we also continued our
collaboration with manpower agencies
on these matters.
Access to a grievance mechanism
In 2024, we continued promoting our
whistleblower service Ethics Line. It is
available on our public website in 30
different languages for all employees,
consumers and other stakeholders
to raise concerns. A compliance
self-assessment of 38 entities in Arla's
international business revealed a 9
percentage points increase in Ethics
Line awareness compared to 2023,
bringing the awareness level to 87%.
Awareness questions included in our
on-ground risk assessments indicated
general awareness among staff.
In 2024, we did not receive any reports
or found any severe human rights
incidents within our own operations or
throughout our value chain. In accord-
ance with the guidance for our Ethics
Line grievance mechanism, we make
sure to provide remediation appropriate
to the grievance.
In relation to Arla's Ethics Line,
third-party grievance mechanisms for
reporting to external parties can be
found and used by Arla's employees and
external stakeholders.
In 2024, the total amount of fines,
penalties and compensation for dam-
ages as a result of severe human rights
incidents was EUR 0 and as a result of
discrimination and harassment EUR 0.
Our staff is aware of
the Ethics Line
On-ground risk
assessments
indicated general
awareness among
our employees of the
Ethics Line service.
PAGE 75
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
Progress towards targets
ACCIDENTS
Accident frequency rate development
Accidents that result in injuries can be classified as
either lost-time accidents (LTAs) or non-lost-time
accidents (minor incidents). LTAs per 1 million
working hours dropped to 4.6 in 2024 compared to
5.5 last year. The total number of LTAs decreased
to 154 (2023: 181). Most markets experienced
reductions, particularly in Danish logistics, which
was a focus area in 2024 due to historically high
accident rates.
We are closely monitoring the trend of accidents
and have implemented mandatory mitigation plans
in specific areas to ensure a quick improvement.
ACCOUNTING POLICIES
A lost-time accident (LTA) refers to a workplace
injury suffered by an employee during work
activities that leads to the loss of one or more
scheduled working days or shifts. An accident is
categorised as an LTA when the employee is unable
to perform regular job duties, requires time off for
recovery, or is assigned modified duties during the
recovery period.
All employees, including both Arla employees and
external agency workers engaged in Arla-related
work, are required to promptly report any
workplace-related injuries or illnesses to their
team leader or manager, regardless of the severity.
It is important to note that accidents involving
contractors, such as construction workers, are not
included in this reporting.
Most on-site employees have access to a mobile
application that enables them to easily and swiftly
report any accidents. It is essential to report the
incident before the injured party leaves the
workplace. The working hours used to calculate
the accident frequency rate are derived partly from
payroll information and partly from estimates using
full-time equivalent (FTE) figures.
Accidents1
Per 1 million working hours
2024
2023
2022
2021
2020
Accident frequency
4.6
5.5
4.4
4.3
5.2
1 Figures exclude accident frequency from the M&A of a whey business, UK.
Number of employees (headcount) by country and gender2
2024
2023
2022
2021
2020
Women
Men and other
Total
Denmark
2,894
6,002
8,896
8,722
8,427
8,262
8,027
United Kingdom
774
3,263
4,037
3,810
3,705
3,689
3,762
Sweden
1,048
2,568
3,616
3,554
3,563
3,559
3,582
Germany
430
1,205
1,635
1,592
1,606
1,662
1,684
Saudi Arabia
65
869
934
941
979
978
968
Poland
570
362
932
805
646
622
561
North America
222
337
559
562
546
528
492
United Arab Emirates
72
381
453
441
441
429
388
Netherlands
123
299
422
422
395
374
370
Finland
191
235
426
374
374
386
343
Bahrain
38
292
330
330
335
294
164
Other countries3
357
1,035
1,392
1,376
1,321
1,272
1,075
Total headcount
6,784
16,848
23,632
22,929
22,338
22,055
21,416
Full-time equivalents
21,895
21,307
20,907
20,617
20,020
2 The number of employees by country and gender is reported as the headcount as at 31 December for 2024 and all historical years.
3 Other countries include, among others, Bangladesh, Argentina, Kuwait, Iraq, Oman, China and Nigeria.
Number of employees (headcount) by contract type
2024
2023
Number
Women
Men and other
Total
Women
Men
Total
Number of employees
6,784
16,848
23,632
6,549
16,380
22,929
Number of permanent employees
6,065
15,768
21,833
5,889
15,354
21,243
Number of temporary employees
719
1,080
1,799
660
1,026
1,686
Number of full-time employees
5,607
15,025
20,632
5,397
14,691
20,088
Number of part-time employees
1,177
1,823
3,000
1,152
1,689
2,841
Distribution of employees by age group
2024
2023
Age group
<30
30-50
>50
<30
30-50
>50
Share of employees
21%
49%
30%
20%
51%
29%
Number of employees
4,945
11,619
7,068
4,473
11,753
6,703
EMPLOYEES
Employee development
The total number of employees, measured as
headcount, increased by 3 percentage points
compared to the previous year. This growth can be
attributed to the acquisition of the whey nutrition
business and production site in the UK and ongoing
insourcing of IT activities.
Full-time equivalents (FTEs) also increased by 3
percentage points compared to the previous year.
The share of blue-collar workers amounted to 59%
of the total headcount as at 31 December 2024.
Workers outside of our own workforce are not
reflected in the numbers of this report.
ACCOUNTING POLICIES
The number of employees by country, gender,
contract type and age distribution is based on the
headcount as at 31 December for 2024 and all his-
torical years. Arla changed its methodology in 2023,
previously figures were reported as average FTEs.
The total number of employees is still expressed in
FTEs for comparison reasons.
FTEs are a measure of an employee's contractual
working hours in relation to a full-time contract for
the same position and country. This figure is used to
quantify the active workforce in terms of full-time
positions. An FTE of 1.0 represents a full-time
employee, while an FTE of 0.5 indicates a workload
equivalent to a part-time employee working 50%
of a full-time position. The headcount refers to the
total number of employees, regardless of whether
they are on a full-time or a part-time contract. Each
individual employed by Arla is counted as 1.0 in the
headcount numbers.
The average FTE figure is calculated as the average
value for each legal entity throughout the year.
These averages are derived from quarterly meas-
urements taken at the end of each quarter. The
headcount and FTE figure include all employees,
regardless of whether they are on permanent or
temporary contracts. However, employees on long-
term leave, such as maternity leave or long-term
sick leave, are excluded from the calculation. This
ensures that the figure accurately represents the
active workforce.
The majority of employees in production and logis-
tics are classified as blue-collar employees, while
employees in sales and administrative functions are
classified as white-collar employees. The ratio of
white-collar to blue-collar employees is calculated
based on the headcount as at 31 December 2024.
Employee data is managed centrally in compliance
with the General Data Protection Regulation (GDPR)
guidelines. In Arla, employees have the option to
choose a gender category that aligns with their
identity. The available choices include man, woman
or other. To comply with GDPR regulations, the
'other' category is merged with the 'men' category in
disclosed gender diversity figures. The FTE figure is
reported internally on a monthly basis. To enhance
the accuracy and reliability of the data, each legal
entity validates the information on a quarterly basis.
Find additional information in Table 1.2.c of our
financial statements on page 115.
PAGE 76
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
Gender pay ratio
2024
2023
2022
2021
2020
Gender pay ratio (hierarchy variances)
1.00
1.01
1.03
1.03
1.05
Employee turnover2
%
2024
2023
2022
2021
2020
Voluntary turnover
8%
9%
10%
10%
6%
Involuntary turnover
4%
4%
4%
3%
4%
Total
12%
13%
14%
13%
10%
Number of voluntary leavers
1,797
1,868
2,159
2,052
1,275
Number of involuntary leavers
846
901
719
693
783
Total
2,643
2,769
2,878
2,745
2,058
2 Figures exclude employee turnover from the M&A of a whey business, UK
GENDER
DIVERSITY
ACCOUNTING POLICIES
Gender diversity for all employees
Gender diversity refers to the proportion of women
in relation to the total number of headcounts.
The measurement of gender diversity, both for all
employees and in management, is based on the
headcount as at 31 December for 2024 and all
historical years, and encompasses both white-collar
and blue-collar employees.
Gender diversity in management
This measurement provides insight into the
representation of women in management positions
within the organisation. Arla's gender diversity in
management is determined by measuring the
proportion of women in director positions or above.
Gender diversity in the EMT
Gender diversity in top management is quantified
by the proportion of women in the EMT. This meas-
urement provides insight into the representation of
women in executive management positions within
the organisation.
Gender diversity in management1
2024
2023
2022
2021
2020
Number of men
253
260
256
257
258
Number of women
113
108
104
96
89
Share of women at level director and above
31%
29%
29%
27%
26%
1 The share of women among employees and in management is calculated based on the headcount as at 31 December for 2024 and all historical years.
Gender diversity in the Executive Management Team
2024
2023
2022
2021
2020
Number of men
7
7
7
6
6
Number of women
1
1
1
1
1
Share of women in the Executive Management Team (EMT)
13%
13%
13%
14%
14%
Gender diversity for all employees1
2024
2023
2022
2021
2020
Total share of women
29%
29%
28%
27%
27%
EMPLOYEE
TURNOVER
Employee turnover development
Employee turnover reflects the fluctuation within
our workforce. Arla strives for a stable turnover
rate, recognising that a certain level of turnover
is necessary for maintaining competitiveness and
fostering innovation.
In terms of employee turnover, there was a decrease
compared to the previous year, with a total turnover
rate of 12%. This was the result of a lower voluntary
turnover rate, while the involuntary turnover rate
was unchanged.
ACCOUNTING POLICIES
Differentiating between voluntary turnover (when
an employee chooses to leave the company)
and involuntary turnover (when an employee is
dismissed), turnover serves as a measure of talent
retention in Arla and also reflects the efficiency of
our operations.
To calculate employee turnover, we divide the
total number of employees who leave during a
specific period by the total number of employees
in that same period. It is important to note that this
calculation is based on the headcount of employees
and not on full-time equivalents (FTEs).
Turnover is calculated for all employees on
permanent contracts and encompasses various
reasons for their departure, including retirement,
dismissal and resignation. Departures are included
in the calculation starting from the month when
remuneration is no longer provided. For instance,
some tenured employees may receive remunera-
tion for a few months after their dismissal, and their
departure would be considered in the turnover
calculation after this period.
GENDER
PAY RATIO
Gender pay ratio development
Ensuring equal pay for the same job, regardless of
gender, is a fundamental expectation for an ethical
and responsible company. In Arla, both men and
women in equivalent positions receive equal pay.
This is achieved through well-defined and fixed sal-
ary bands across all job categories. To maintain pay
equality, regular monitoring occurs on a quarterly
basis, comparing salary levels between men and
women within comparable job bands.
The gender pay ratio is based on the base
salary and provides insights into the placement of
women within the company hierarchy. Arla aims
for completely equal treatment between genders,
which would be represented by a gender pay
ratio of 1.00. This was achieved in 2024, with the
median salary for men to women reaching parity at
1.00, demonstrating the effectiveness of efforts to
equalise payment between genders.
ACCOUNTING POLICIES
The gender pay ratio is calculated by dividing the
median salary for men by the median salary for
women. This calculation includes contractual base
salaries, while pensions and other benefits are not
taken into account. By focusing solely on base
salaries, the gender pay ratio provides a specific
measure of the disparity in remuneration between
men and women within the organisation.
UNCERTAINTIES AND ESTIMATES
According to CSRD and the ESG reporting guidelines
provided by CFA Society Denmark and Nasdaq, it is
recommended to include the total workforce, along
with bonus and pension, in the calculation of the
gender pay ratio. However, due to data limitations,
only the gender pay ratio for the white-collar
workforce is included in this report. Arla will report
in accordance with CSRD requirements in 2025.
The pay data used for the calculation pertains to
contractual base salary amounts at the end of
March 2024, following the salary adjustment for
that year.
PAGE 77
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
Share of employees covered by collective agreements per country in the European Economic Area (EEA)
%
2024
Denmark
73%
United Kingdom
56%
Sweden
100%
Germany
73%
Poland
0%
Netherlands
91%
Finland
81%
Number of grievance reports received through the Ethics Line
Year
2024
2023
2022
2021
2020
Related to unacceptable behaviour (including harassment and discrimination)
44
36
9
-
-
Related to fraud and bribery allegations
23
29
19
-
-
Related to other topics
33
31
16
-
-
Total number of reports received
100
96
44
-
-
ETHICS LINE
GRIEVANCES
Our grievance and whistleblower service Ethics
Line allows employees and stakeholders to report
concerns such as legal violations, code of conduct
breaches, fraud, bribery, harassment, food safety,
environmental issues and intellectual property
disclosure. We report externally the total amount
of reports received during the year separately for
unacceptable behaviour, including harassment and
discrimination, fraud and bribery allegations and
other grievances. In 2024, 100 reports were sub-
mitted to the Ethics Line. Please see the Grievance
Policy for more information about the Ethics Line
and the process of handling grievances.
UNCERTAINTIES AND ESTIMATES
It is possible that some work-related discrimination
and harassment incidents are reported directly
to HR and not captured by the Ethics Line. The
significant increase in reports between 2022 and
2023 is attributed to enhanced communication
and a general rise in awareness about grievance
reporting.
COLLECTIVE
AGREEMENTS
We support employees' rights to unionise and
freely form and join organisations of their choice
and to engage in collective bargaining, aligned
with international human rights standards. Our
commitment to these principles is embedded in our
Code of Conduct and Human Rights Policy. In 2024,
Arla reported on collective bargaining coverage
for the first time. At the end of 2024, 61% of our
workforce was covered by collective agreements.
Outside of the European Economic Area this share is
0%. However, regardless of where we operate in the
world, and whether our employees are represented,
Arla is invested in offering fair wages and benefits
for all employees.
In the table displaying the share of employees
covered by collective agreements per country
within the EEA, we have included each country with
significant employment, defined as representing
at least 10% of the total number of employees.
Additionally, four other countries are included, as
they are also featured in the employee headcount
breakdown.
HUMAN RIGHTS
GOVERNANCE
Arla is committed to respecting human rights
across our entire value chain. We adhere to the
United Nations Guiding Principles on Business and
Human Rights (UNGP) and the OECD Guidelines for
Multinational Enterprises. Our work is guided by
our Code of Conduct 'Our Responsibility' and our
Human Rights Policy, in which we elaborate on our
commitment and expectations of stakeholders.
Arla's human rights work is governed by our EMT
and managed in various business functions. We
engage with stakeholders, including experts, unions,
right-holders and NGOs, on our human rights
management.
Policies and other
In Arla, we have a comprehensive set of policies,
standards, processes and codes of practice covering
our complete value chain, governing how issues
related to our workforce are handled in a structured
manner. The policies presented below cover all our
own employees and thus impact over 20,000 peo-
ple. Even more people employed in our upstream
value chains are covered by our human rights due
diligence process, risk and impact assessments and
human rights and modern slavery policies. If publicly
available, policies can be found on our website and
all policies are available to our employees on the
intranet.
No significant changes to the policies took place
in 2024.
Code of Conduct – Our Responsibility
Policy objectives and scope
Arla's Code of Conduct 'Our Responsibility' covers
all aspects of our business and lies within every
decision made every day, at all levels and every-
where in our company. It is based on the 10 princi-
ples of the UN Global Compact, the UN initiative to
promote ethical business practices. Further, we are
committed to following the UN Guiding Principles
on Business and Human Rights as well as the OECD
Guidelines for Multinational Enterprises. All of our
policies are founded on our Code of Conduct that
covers the four themes Responsible company,
Confidence in products, Care for the environment
and animal welfare, and Responsible relations.
Policy governance
Our Code of Conduct is approved by the BoD. The
EMT approves strategies, prioritises areas, ensures
progress and annual follow-up and sets the direction
for necessary improvements and further updates.
All managers are responsible for embedding our
Code of Conduct in the culture and business, and
each and every employee plays an important role in
its implementation.
Our Code of Conduct is available in 12 languages on
our website.
Human Rights Policy
Policy objective and scope
The Arla Foods Human Rights Policy is based on
internationally recognised human rights principles,
and applies to all Arla operations and all companies
owned and/or controlled by Arla Foods, regardless
of size or location. As a global dairy cooperative, we
seek to strategically improve the fulfilment of the
right to adequate food and its fair distribution, the
right to health and the right to enjoy favourable con-
ditions of work. Wherever we operate, we establish
processes that enable us to identify, prevent and
mitigate potential adverse human rights impacts
that we may cause, contribute to or be directly
linked to through our business activities. If we find
that we are causing or contributing to adverse
impacts, we seek to provide remediation. We do
not accept any form of human trafficking and child
labour or forced labour anywhere in our value chain.
Policy governance
The effectiveness of the policy is reviewed bi-annu-
ally by the EMT to ensure the business' continuous
compliance with the UN Guiding Principles.
Code of Conduct for Suppliers and Business
Partners
Policy objective and scope
It is essential for Arla to operate in a responsible
manner, and we expect our suppliers and business
partners to live up to the same standards on
environmental, social and human rights aspects.
In addition to meeting our expectations on quality
and food safety, our suppliers must sign the Code of
Conduct for Suppliers and Business Partners if they
want to become our strategic, preferred or locally
accepted suppliers. Employees are strongly advised
to only use suppliers of these categories.
The most important objective of our Code of
Conduct for Suppliers and Business Partners is
to minimise risks to people and safeguard our
business. It requires suppliers to provide a safe
and healthy working environment, respect the
rights of children and not engage in or tolerate the
use of child labour, not use forced labour and as a
minimum comply with applicable laws and industry
standards related to working hours and minimum
wages and respect international agreements on
human rights. In case a supplier breaches these
obligations, Arla is entitled to terminate the
contract and reject any supplied material without
remediation for the supplier in question. In such
a case, Arla will consider if any mitigating actions
can be taken to avoid causing or contributing to
negative impacts.
In accordance with our Code of Conduct for
Suppliers and Business Partners, we require our
suppliers to provide means for confidential griev-
ance reporting to all workers, and they must ensure
that processes are in place to ensure that workers
who raise concerns and speak up in good faith are
protected from retaliation. Additionally, we promote
the possibility for suppliers to report any concerns
about misconduct to the Arla Ethics Line.
We regularly update our Code of Conduct for
Suppliers and Business Partners to ensure
adherence to the latest international standards.
This ongoing refinement guarantees that our
practices meet the highest ethical requirements.
Arla is a member of AIM-Progress, which is a forum
assembled to enable and promote responsible
sourcing practices. The update is inspired by AIM-
Progress's work.
Policy governance
When a supplier signs the Code of Conduct for
Suppliers and Business Partners, it allows Arla to
audit them on sustainability matters as part of
our human rights due diligence assessments. Our
PAGE 78
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
Procurement function monitors compliance with
our Code of Conduct for Suppliers and Business
Partners as part of the supplier contracting process
and reports on it internally each month.
The Code of Conduct for Suppliers and Business
Partners is owned by the Head of Procurement,
and is prepared and implemented through a
collaboration between Procurement, Legal, QEHS
Supplier Assurance and Global Sustainability.
Diversity Policy
Policy objective and scope
Arla runs a global business, and we believe that
diverse teams combining inherent diversity such as
gender, age or nationality are key to understanding
and meeting the needs of our consumers and
customers. Our overall ambition is to achieve a
more diverse workforce and create an inclusive
environment, where employees are included
and treated with openness and mutual respect,
recognising and harvesting the benefits of diversity.
See our related targets and our progress towards
them on pages 72 and 79.
The policy applies to all people processes to ensure
equal and inclusive selection, assessment and
reward of people.
Policy governance
Our Global HR team, headed by the Chief Human
Resources Officer, is responsible for monitoring
compliance with the policy, updating it when
necessary and reporting on progress.
Anti-harassment Policy
Policy objective and scope
Arla is committed to ensuring a workplace that
is characterised by mutual respect, free from any
kind of harassment, bullying or discrimination.
Harassment and discrimination are seen as any
offensive, unacceptable verbal or physical conduct
because of for example (but not limited to) race,
religious beliefs, colour, place of origin, gender,
physical or mental disability, age, ancestry, marital
status, source of income, family status, pregnancy or
sexual orientation, aimed at humiliating, demeaning,
offending or intimidating an individual or a group
of individuals. Our focus lies on preventive actions,
early detection and actions to stop it. We encourage
reporting of complaints (see grievance mechanism
on page 75). All complaints are taken seriously,
and if proven, harassment and discrimination are
sanctioned, as are deliberately false or malicious
allegations. The policy covers all locations, including
the workplace and any other settings in which
employees may find themselves in connection with
their Arla employment.
Policy governance
Our HR function's management and the HR busi-
ness partners across Arla have prime responsibility
for rolling out this policy, initiating dialogue about it
and assisting managers in handling cases. Updating
the policy is the responsibility of our Global HR func-
tion. We measure the effectiveness of our policy by
closely tracking non-acceptable behaviour cases
through our yearly employee satisfaction survey and
our confidential grievance reporting system.
Further policies that regulate our impacts on our
own workforce are the Recruitment Policy and the
Working Hour Policy.
Working Hour Policy
Policy objective and scope
Arla Foods is committed to providing safe and
healthy working conditions for all employees work-
ing at our sites, while at the same time providing
maximum flexibility for managers and employees
and complying with legislation and relevant
guidelines. We seek to ensure that employees do
not exceed reasonable working hours, respect their
right to rest and leisure and thus ensure a satisfacto-
ry balance between work and personal life. Working
hours must comply with national laws and collective
agreements and follow the standards of the Ethical
Trading Initiative (ETI) Base Code, whichever affords
the greater protection for employees.
Policy governance
All people leaders must ensure that the planning
of working hours for all internal as well as external
employees working at an Arla location is aligned
with this policy. Vice Presidents in production and
managers at similar levels in other functions are
responsible for handling escalations of non-con-
formances within the respective areas.
Grievance Policy
Policy objective and scope
Arla is committed to acting with integrity, respect
and in a transparent way, according to principles set
out in our Code of Conduct. We recognise that our
reputation and success depend on the behaviour
of our employees, and we take violations of the
Code of Conduct and legislation seriously. Our whis-
tleblower service, Ethics Line, is available on Arla's
website for all employees and other stakeholders
to raise any concerns they may have. It is separately
communicated to our suppliers through the Code
of Conduct for Supliers and Business Partners that
they sign. We do not tolerate retaliatory action taken
against anyone raising concerns in good faith. Our
actions align with the EU Directive on the protection
of whistleblowers. All reports are confidential and
can be submitted anonymously. Each grievance is
addressed seriously and respectfully, and we provide
remediation appropriate to the grievance.
Policy governance
The Ethics Line Committee is an internal team
acting with integrity and balancing the interests of
the reporter, the reported person(s)/organisation/
activities and the interests of Arla when handling
grievances. The Ethics Line Committee includes
representatives from Finance (Risk, Controls &
Compliance), Legal, HR, Global Sustainability and
commercial segments. The Ethics Line Committee
is independent of organisational structures and
reports to the CEO. Arla reports externally on an
annual basis the number and type of grievances
received.
QEHS Manual
Policy objective and scope
Arla's accident management system is documented
in our Quality, Environment, Health & Safety (QEHS)
Manual that determines how the topic of health
and safety is to be managed, and how workplace
accidents, near misses and observations are to be
reported. The QEHS Manual covers all Arla-owned
and/or -operated manufacturing sites, warehouses,
logistic functions and other functions managing
products, services and processes.
Policy governance
Our Global QEHS function is responsible for
maintaining and reviewing the Arla QEHS Manual
which happens at least once a year and more often
if needed. The manual is approved by the Chief
Supply Chain Officer.
Arlagården®.
Policy objective and scope
All Arla farmer owners are obliged to adhere to
our cooperative's farm management programme
Arlagården®. People is one of the four focus areas of
the programme. The dairy farm is a place to live and
work. Respectful relations are part of the heritage
of our cooperative and are just as important for the
generations to come. The Arlagården® people re-
quirements define a framework for how we ensure a
fair and safe workplace for the farmer owner and the
employees, forming the foundation for respectful
relations between people on the farm, within the
local community and in the value chain.
Our farmer owners are an essential part of our co-
operative's supply chain and our joint commitment
to eliminating forced labour. As per our general
membership terms, our farmer owners are obliged
to ensure that no forced labour is used in their pro-
duction, and that as a minimum they comply with
all applicable laws and industry standards relating to
working hours and minimum wage. Farmer owners
in the UK are specifically obliged to comply with the
provisions of the Modern Slavery Act.
Policy governance
Arlagården®'s mandatory components include
Arlagården® and a farm information survey. The
Arlagården® farm management programme and
its verification process consist of two steps, each
designed to further strengthen transparency and
trust: A self-assessment survey and a third-party
audit. At the current stage, the people agenda is not
part of the third-party audit.
Our Agriculture team, headed by the Chief
Agriculture and Sustainability Officer, is responsible
for monitoring compliance with the programme,
updating it when necessary and reporting on
progress.
POLICIES AND OTHER
CONTINUED
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Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
/ Employees and workers in the value chain
Consumer – health and safe nutrition /
Impacts
PNI
API
API
Policies
ANI
Actual Negative Impact
PNI
Potential Negative Impact
API
Actual Positive Impact
PPI
Potential Positive Impact
CONSUMERS – HEALTHY
AND SAFE NUTRITION
Quality and Product Safety Policy
Labelling Policy
QEHS Manual, food safety and recalls
Responsible Marketing Policy
ARLA'S IMPACTS
FOOD SAFETY
HEALTHY
NUTRITION
NUTRITION TO
VULNERABLE
CONSUMERS
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SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Consumer – health and safe nutrition /
/ Employees and workers in the value chain
Targets and ambitions
ARLA'S AMBITION
ENSURING SAFE
PRODUCTS IS
OUR PRIORITY
Impact, risk and opportunities
Prioritising food safety and
nutritional impact
In our double materiality assessment
(see pages 34-37), we identified both
actual positive and potential negative
impacts related to the consumption of
our products.
Our top priority as a food producer is
ensuring product safety. Compliance
with food safety regulations is crucial
for maintaining our production licence.
We maintain high food safety standards
through global certifications, a recall
process and policy and an external
benchmark survey.
Additionally, having consumer trust
in the food safety and health of our
products is crucial. We believe that con-
suming our nutrient-dense products
can have an actual positive impact on
our consumers' health.
We constantly work on further
improving our products' health profile
and following up on developments in
international standards.
Furthermore, we consider that we
have a positive impact on vulnerable
consumers such as elderly people,
infants or malnourished children and
low-income consumers to maintain
and support their health and well-being
by improving their access to valuable
nutrition.
Strategy
Our health and nutrition ambition
Ensuring the safety of our products is
our highest priority. By following the
principles outlined in our Global Quality
and Product Safety Policy, we continual-
ly enhance our quality culture and food
safety standards. Accurate labelling is
crucial, enabling consumers to make
informed choices. We understand
the importance of providing quality
information, particularly to vulnerable
groups such as children and low-in-
come consumers.
As part of our health strategy, we aim to
develop new, sustainable and healthier
products. Guided by the publicly avail-
able Arla Nutrition Criteria, which align
with current scientific evidence and
recommendations from health author-
ities, we strive to provide nutritious
and tasty dairy products to consumers.
Balancing environmental protection
with the need to provide nutritious
food for a growing global population
is a significant challenge for the food
industry. Turning this challenge into
an opportunity is vital for our ongoing
relevance in a changing market.
We are committed to combating global
malnutrition for low-income consum-
ers. Our strategic goal is to reach 100
million low-income consumers, and
we continuously develop products and
strengthen our efforts to achieve this.
Inspiring healthy eating habits and
promoting cooking with minimal waste
are also key components of our health
strategy, particularly for future genera-
tions. Through various educational and
inspirational programmes, we aim to
instil positive habits and behaviours.
LOW-INCOME CONSUMERS REACHED
Access to adequate and healthy food is a basic human right, and we
want to meet consumers' nutritional needs around the world. Our
ambition is to reach 100 million low-income consumers.
Read more on page 82.
2023
2022
2024
2030
97 m
84 m
87 m
Target: 100 m
PRODUCT RECALLS
A core responsibility is to ensure that our
products are safe for consumers to eat and
drink. The target for recalls is by default zero.
Read more on page 82.
2023
2022
2024
1 recall
1 recall
2 recalls
Target: 0 recalls
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SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Consumer – health and safe nutrition /
/ Employees and workers in the value chain
Actions and resources
PROVIDING GOOD
FOOD TO THE WORLD
Dairy products targeted for low-income consumers are
available in Bangladesh with Dano® Daily Pushti, and in
Nigeria, Senegal and Ghana with Dano® Cool Cow.
DANO®
COOL COW
Pushti Ambassadors
It supports female
entrepreneurs in
rural Bangladesh by
promoting business
development and the
sale of dairy products for
low-income consumers.
Food safety first
Ensuring the safety of our products for
everyone is crucial for Arla. We do not
release products to the market if there
are any food safety concerns, and we
have strict procedures and policies in
place to ensure this. Alongside policies
and procedures, our quality and food
safety culture is crucial for maintaining
control over food safety. Products are
recalled if there is any sign of a food
safety risk. In 2024, we had two recalls,
one due to mislabelling and one due to
visible mould (read more on page 85).
IN ARLA, WE FOCUS ON PRODUCT SAFETY TO PROTECT OUR CONSUM-
ERS. WE LEAD IN DAIRY NUTRITION THROUGH RESEARCH TO BENEFIT
PUBLIC HEALTH AND WORK TO TACKLE GLOBAL MALNUTRITION
BY IMPROVING ACCESS TO DAIRY AND MAKING
A POSITIVE IMPACT.
All our production sites are certified
under the International Featured
Standards (IFS) on food safety, audited
by third-party auditors, and they have
passed their audits.
This year, we conducted our second
external benchmark survey on quality
and food safety culture, serving as
inspiration in the continued effort to
strengthen our business.
Additionally, we conducted labelling
checks on our branded products in
European and international markets to
ensure regulatory compliance.
Advancing nutrition through
research partnerships
To pioneer dairy nutrition and explore
its health benefits, Arla actively runs a
research collaboration called Arla Food
for Health (AFH) with Denmark's two
largest universities.
In 2024, three new research projects
were chosen to receive total funding of
EUR 1.6 million.
The research outcomes can be used
to strengthen the foundation of the
health effects of consuming dairy and
dairy ingredients. AFH and its partners
are equally dedicated to sharing their
scientific insights with the broader
community.
Improving access to healthy
nutrition
Malnutrition remains a significant
health challenge. We are committed to
addressing the needs of groups at high
risk of malnutrition by providing access
to affordably priced dairy products, in
Bangladesh with Dano® Daily Pushti,
and in Nigeria, Senegal and Ghana with
Dano® Cool Cow. We constantly pursue
opportunities for creating products for
low-income consumers that provide
sufficient nutrients.
Dano® Cool Cow and Dano® Daily Pushti
reached 84 million consumers in 2024,
marking a decline from 2023. This
reduction is attributed to high inflation
in West Africa and Bangladesh, which
reduced purchasing power among
low-income consumers, along with
increased competition in Bangladesh
and shifting consumer habits in Nigeria.
To improve consumer awareness,
campaigns on dairy nutrition were
introduced in Nigeria. Additionally,
Arla® Eazy was launched in Bangladesh
to offer even more dairy options for
low-income consumers.
We continued training farmers to de-
velop a more sustainable dairy sector in
Bangladesh, Indonesia and Nigeria. By
sharing our expertise, we help develop
a green dairy industry to nourish a
growing population.
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SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Consumer – health and safe nutrition /
/ Employees and workers in the value chain
WHAT WE BRING
TO THE TABLE
WE BELIEVE DAIRY CONTRIBUTES
POSITIVELY TO A SUSTAINABLE DIET.
WE TAKE DIFFERENT MEASURES TO
PROVIDE OUR CONSUMERS WITH
NUTRITIOUS DAIRY PRODUCTS AS
WELL AS PROTECT VULNERABLE
CONSUMERS.
Increasing transparency on our
products' nutritional value
As a global dairy company, we ac-
knowledge our impact on public health
and the importance of transparency
about our products' nutritional value.
Therefore, we collaborate with the
Access to Nutrition initiative (ATNi). In
their benchmarking of global food and
beverage manufacturers and retailers,
ATNi uses a nutrient profiling model
called the Health Star Rating (HSR),
which assigns ratings from 0.5 to 5 stars
to packaged foods and beverages. The
star rating is based on factors like total
energy, saturated fat, salt and sugar
content, which lower the score, while
fibre, protein, fruit, vegetables, nuts and
legumes increase it. The points needed
for a certain star rating depend on the
product category. To be considered
healthy, a product must achieve at least
3.5 stars, regardless of its category.
In 2024, Arla achieved third place
among the 30 largest food and bever-
age companies and continues to rise
in the ranking. ATNi makes a specific
mention of our responsible marketing
and labelling policies, recognising Arla's
commitment to protecting children
and enabling all consumers to make
informed dietary choices. The report
further refers to our work with providing
nutrition, highlighting our strategy to
provide nutritious food to lower-income
families in Bangladesh and Nigeria.
Strengthening our Responsible
Marketing Policy
In 2024, we updated our Responsible
Marketing Policy, which regulates Arla's
communication activities aimed at
all consumers, with added provisions
for children as sensitive consumers. It
now aligns with the UN Convention on
the Rights of the Child, which defines
children as those under 18 years of age.
Furthermore, the share of the place-
ment of advertising to children through
media has declined from 30% to 25%.
Lastly, due to the increasing importance
of the HSR, it is now used as a standard
instead of the Arla Nutrition Criteria to
assess if a product is deemed healthy
(HSR ≥ 3.5) or not. The HSR now sets the
standard by which brands may or may
not be advertised to children under 18.
Micronutrient Fortification Policy
Based on the WHO international
recommendations, Arla released a policy
on when and how to add minerals and
vitamins to our products in 2024. This
policy defines three principles, which are:
1. The products chosen for fortification
must be of good nutritional quality
defined by complying with the Arla
Nutrition Criteria and an HSR equal to
or above 3.5.
2. The nutritional need for fortification
must be justified by data on the local
context, the nutritional intakes of
the population group and the risk of
deficiencies identified.
3. The fortification levels must be
adjusted to contribute significantly
to cover the needs, while not
posing a risk of toxicity.
With the purpose of creating more
healthy options for consumers
within this indulgence category,
we constantly work on finding
solutions or innovations to increase
our products' nutritional value
without compromising on taste or
texture. One product group in focus
is our milk-based beverages (MBB).
This health strategy focuses on four
ambitions:
1 Maximum 6 g of added sugars
per 100 g product in 100% of
our global branded volume.
2 By 2024, for each MBB variant
a 'no-added sugar' or reduced
sugar variant is available.
3 Continuously aligning the
serving size recommendations
with nutrition criteria and
clearly communicating the
sharing size on multi-serve
packages by the end of 2024.
4 Providing new and healthier
solutions for sweet taste.
HEALTH STRATEGY FOR
MILK-BASED BEVERAGES
By 2024, for each MBB variant a
'no-added sugar' or reduced sugar
variant is available.
COCIO®
DELIGHT
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SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Consumer – health and safe nutrition /
/ Employees and workers in the value chain
INSPIRING
CONSUMERS
OUR MISSION IS TO INSPIRE CONSUMERS BY OFFERING
PRODUCTS THAT MEET THEIR DIVERSE NEEDS AND
INVITING THEM TO ENGAGE IN ACTIVITIES THAT
PROVIDE INSIGHTS INTO OUR PRODUCTS' ORIGINS
WHILE PROMOTING HEALTHY HABITS.
Supporting sustainable and
healthy eating habits of children
The food skills you acquire as a child
and young person are important
prerequisites for being able to take
responsibility for sustainability and your
own health in adulthood.
Building on our previous efforts in
supporting school breakfast in 2023,
Arla Sweden launched Frukosteffekten,
a personalised tool aimed at easing the
process of starting breakfast in schools,
Inspiring a healthy diet through
our national websites
We believe that inspiration and
knowledge about cooking are key to
developing good food habits. We offer
cooking inspiration globally through our
national websites and brochures. Our
Danish and Swedish recipe platforms
reached over 120 million visitors in the
last 12 months.
Additionally, we increasingly use social
media platforms to actively engage
consumers and promote sustainable
and healthy eating.
in collaboration with Rädda Barnen
(Save the Children) and Generation
Pep. This initiative is linked to our 360
Campaign towards consumers focusing
on the benefits of breakfast.
Through the Arla Foundation, we want
to contribute to long-term positive
development by working on a broad
solution that is based on initiating
practical food activities for children and
young people, and engaging structural
actors. Together, we want to ensure
that the next generation has the best
conditions for developing strong food
skills and mastering important choices
in relation to cooking, meals, sustaina-
bility and health. In 2024, over 114,000
Danish children participated in activities
around cooking, avoiding food waste
and food education.
Engaging with consumers
We closely monitor consumer opinions
and preferences to maintain our
position as one of the leading global
dairy companies. We conduct repre-
sentative surveys of both European and
global consumers through third-party
organisations, which include weekly
assessments of corporate reputation
and brand image. Additionally, our team
occasionally purchases syndicated
studies focused on sustainability issues.
The survey results are shared with the
Chief Marketing Officer.
Reducing food
waste starts early
Hosted by the
Arla Foundation,
Madspildskole
teaches children how
to use food scraps
to build a strong
knowledge base on
avoiding food waste.
We also gather consumer feedback
on our products through various focus
groups, organised as needed. The
effectiveness of these efforts is evident
in positive consumer responses and
increasing sales volumes.
Capturing concerns
We place a high value on consumer
satisfaction and recognise the impact
that negative feedback can have on our
brand value.
Therefore, we prioritise providing
multiple channels for consumers to
voice concerns and complaints about
our products. Our branded packaging
prominently displays the physical
address, phone number and email
address of relevant Arla offices, ensur-
ing consumers know how to reach us.
Consumer complaints are managed by
individual markets and tracked through
a centralised database.
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General information
Environment
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
Social
Consumer – health and safe nutrition /
/ Employees and workers in the value chain
Progress towards targets
FOOD SAFETY –
PRODUCT RECALLS
In 2024, Arla initiated two recalls. One recall related
to mislabelling of a Cultura product in the Swedish
market. The product was incorrectly labelled as
lactose-free, despite containing lactose. This error
originated in the design phase of the packaging and
was unfortunately overlooked. Additionally, a recall
was initiated for Protino desserts in the Danish mar-
ket due to sporadic occurrences of visible mould.
ACCOUNTING POLICIES
All product incidents are handled promptly to
safeguard consumer safety as well as to ensure
compliance with legal requirements and product
quality. The management of public recall incidents
follows a detailed and standardised process.
Additionally, the handling of product incidents is
subject to annual testing to maintain preparedness
and effectiveness.
A public recall is initiated when products pose a
material food safety, legal or brand integrity risk.
It is relevant only when the affected products are
accessible to consumers in the marketplace. Public
recalls are promptly reported as they occur, and
an incident report must be completed within two
weekdays from the initial notification of the issue.
The total number of public recalls is disclosed
externally on an annual basis in accordance with
reporting requirements.
LOW-INCOME CONSUMERS
REACHED
Arla is committed to improving access to
nutrition targeted for low-income consumers in
developing countries. In 2024, we reached 84
million consumers (2030 target: 100 million; 2020
baseline: 76 million) with affordable nutrition
Recalls
2024
2023
2022
2021
2020
Number of recalls
2
1
1
0
1
Low-income consumers reached in Bangladesh and Nigeria
million
2024
2023
2022
2021
2020
People reached in Bangladesh
52
58
48
36
28
People reached in Nigeria
32
39
39
49
48
Total number of people reached
84
97
87
85
76
products, indicating a notable decrease compared
to 97 million in 2023. Macroeconomic factors, such
as currency depreciation leading to high inflation in
Bangladesh and intensified inflation in Nigeria, have
further diminished the purchasing power of low-in-
come consumers. Moreover, in Nigeria, there is a
noticeable shift in consumption habits towards less
nutritious dairy substitutes, whereas, in Bangladesh,
increased market competition and political unrest
have also contributed to lower sales volumes.
ACCOUNTING POLICIES
The disclosed number on access to nutrition is
defined as the number of low-income consumers
reached with Arla's products in key markets
during the last 12 months. These products are
Dano Daily Pushti (DDP) in Bangladesh and Dano
Cool Cow (DCC) in Nigeria. These products are
in line with having a Health Star Rating equal to
or higher than 3.5 to be considered healthy. By
'consumers reached' Arla refers to consumers that
are in a household which has either purchased or
consumed the product in the specific period. The
KPI is calculated using market penetration data
related to the number of low-income consumers
reached with Arla's affordable nutrition products
and average household size relative to the number
of low-income consumers based in the market
according to the National Social Economic Class
segmentation. Market penetration data is provided
by an external agency every month. The agency
collects sample data from around 9,500 households
every month using various data collection methods,
such as mobile apps or diaries, depending on the
available technologies in the area. The final result
is estimated by extrapolating the sample data to
illustrate the market penetration of the whole
population within that specific market. Data is
available with one month's delay, and as a result
data related to December is based on the November
data collection. Every year, the data is based on the
last available period. 2024 numbers are based on
market penetration data from November, and from
December for previous years.
As it is not feasible to collect data directly from the
entire population, the current methodology used
for reporting on the metric is considered sufficiently
robust.
Policies and other
Our policies related to consumers regulate those
actions where our key impacts and potential risks
lie, and support us in reaching our social sustain-
ability targets and ambitions. They ensure that
we correctly and appropriately inform consumers
about our products, that our products are safe to
consume, that we can act swiftly in case they are
not and that we market our products responsibly,
especially to the most vulnerable consumers
groups, such as children. If publicly available,
policies can be found on our website.
Quality and Product Safety Policy
Policy objective and scope
Arla's top priority is to supply safe products of
high and consistent quality. We are committed to
never compromising on the quality or safety of our
products. Our Quality and Product Safety Policy
applies to Arla, and any entity directly or indirectly
controlled by Arla and their respective employees.
The scope of this policy includes all handling and
services related to our products which can affect
product quality and safety. Key elements of our
policy are as follows:
1. All of our products are risk-assessed for their full
declared shelf life and for the relevant target
groups of consumers.
2. HACCP principles (Hazard Analysis and Critical
Control Points) are applied, documented and
validated for all productions.
3. All manufacturing sites must be certified
according to internationally recognised food
safety standards within GFSI (Global Food Safety
Initiative).
4. All products must be 100% traceable in all steps
of supply, production, storage and distribution.
5. All production must comply with relevant legisla-
tion and regulatory requirements in the country
of manufacture and with relevant regulatory
requirements in markets exported to.
The effectiveness of this policy is constantly moni-
tored internally based on three KPIs: the number of
food safety incidents, complaints from customers
and consumers and cost of quality deficiencies.
Policy governance
Our Quality and Food Safety Policy is reviewed yearly
by the management of the Quality, Environment,
Health and Safety (QEHS) function and approved by
the Chief Supply Chain Officer.
Labelling Policy
Policy objective and scope
Our Labelling Policy aims to create a uniform ap-
proach to labelling across all Arla-branded products
to avoid misleading the consumers with regard to
nutrition and health information. We seek to provide
simple and accurate information about our products
to enable our consumers to make informed choices
in their quest for healthier food choices. The policy
regulates the responsibility for both mandatory and
voluntary information on the front and the back of
all branded food packaging. Mandatory labelling
information on our products always follows local
or EU laws and regulations. Voluntary information
on packaging includes health and nutrition claims
and any other type of claims governed by EU or
local food regulations (such as the use of words like
'Natural', 'Pure', 'Original'). In markets where there
is no such legislation or guideline, Arla follows the
principles for mandatory and voluntary information
on labels laid out in FAO's Codex Alimentarius.
The efficiency of the policy is evidenced by the
consistently low number of legal cases we have in
relation to our labels.
Policy governance
Our Labelling Policy is owned jointly by the global
management of the Marketing and the QEHS
function, who are responsible for updating and
implementing it. The policy is approved by the Chief
Marketing Officer and the Chief Supply Chain Officer.
QEHS Manual, food safety and recalls
Process objective and scope
Product incidents related to the safety, legality or
quality of our products are dealt with through a
highly standardised process detailed in our QEHS
Manual. Timely and controlled handling of such
incidents is of utmost importance to secure the best
possible control and the safety of our consumers.
All incidents must be managed without any undue
delays, and in accordance with the escalation
process, local procedures and Arla Mandatory
Standards. Product incident management is tested
at least annually. The number of product-related
incidents is tracked through a global system and
reported to relevant management bodies at least
monthly. Read more about food safety and the
QEHS Manual on page 79.
Process governance
Read about process governance on page 79.
Responsible Marketing Policy
Policy objective and scope
Our Responsible Marketing Policy covers all market-
ing communications directed at consumers, with
special provisions for marketing to children under
18 years and additional provisions for marketing
to children under 13 years. First and foremost, all
of our marketing communications have to comply
with local laws and regulations. However, our
commitment goes above and beyond these laws
and regulations. The backbone of the policy is based
on a collaboration with the EU Pledge. All marketing
communications must abide by the International
Chamber of Commerce (ICC) Advertising and
Marketing Communications Code, and the ICC
Framework for Responsible Food and Beverage
Marketing Communications in alignment with the
EU Pledge enhanced commitment 2021.
Our key objective is to factually present our prod-
ucts and recipes in all advertisements in a way which
does not attempt to mislead consumers. When it
comes to children, we do not insert marketing com-
munication into inappropriate editorial content, and
we make sure not to mislead about the potential
benefits of a product (such as status and popularity
with peers). For the most vulnerable group (under
13 years), we only market products that fulfil the
Arla Nutrition Criteria. The efficiency of the policy is
evidenced by the consistently low number of legal
cases related to our marketing communications.
Policy governance
The Responsible Marketing Policy is owned by our
Global Marketing function, and is approved by the
Chief Marketing Officer.
PAGE 85
ARLA FOODS ANNUAL REPORT 2024
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Environment
SUSTAINABILITY STATEMENTS
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Governance
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Consumer – health and safe nutrition /
/ Employees and workers in the value chain
Impacts
GOVERNANCE
ARLA'S FOCUS AREAS
ACTIONS AND RESOURCES
Policies
Responsible Political
Engagement Policy
Payment Policy
Global Purchasing Policy
Anti-bribery Policy
Code of Conduct – Our
Responsibility
Code of Conduct for Suppliers
and Business Partners
Grievance Policy
Responsible Marketing Policy
Environmental Policy & Green
Ambition 2050
POLITICAL ENGAGEMENT
RESPONSIBLE SUPPLY
CHAIN MANAGEMENT
FAIR PAYMENT TERMS
RESPONSIBLE
MARKETING
CORPORATE CULTURE
PAGE 86
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
Social
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
/ Responsible business conduct /
RESPONSIBLE
BUSINESS CONDUCT
Impact, risk and opportunities
Safeguarding reputation and ethical
engagement
Arla's reputation and operational
licence rely on transparent business
practices and a commitment to
sustainability. Our double material-
ity assessment (see pages 34-37)
highlighted two business conduct risks:
Perceptions of greenwashing, espe-
cially in European markets sensitive to
overstated sustainability claims, and the
risk of unethical conduct accusations if
political engagement is not managed
transparently.
Actions and resources
Commitment to ethical practices
and transparency
Our dedication to ethical business
practices involves more than being
compliant. It is about embodying our
core values and fostering a culture of
transparency and integrity.
Our Code of Conduct reflects this
commitment. It guides every action
and decision within Arla, ensuring that
our operations exemplify integrity and
responsibility. It outlines our stance on
a range of topics, including anti-cor-
ruption, anti-bribery, taxation and
managing environmental and social
impacts throughout the value chain.
Arla's BoD is responsible for approving
our Code of Conduct and overseeing
management to ensure alignment
with legal and ethical standards. The
BoD holds executive management
accountable, promoting transparency
and ethical operations.
The EMT approves strategies, prioritises
initiatives and monitors progress on
business conduct. They identify and
manage risks related to ethical issues
proactively. Additionally, all managers
are tasked with embedding our prin-
ciples of business conduct into Arla's
culture, with every employee playing a
vital role in its implementation.
Anti-corruption, bribery and fraud
We take a strong stand against any
breaches of our Code of Conduct
or regulations. We urge employees
and stakeholders to voice concerns
or report any potential misconduct
through our whistleblower system, the
Ethics Line.
This platform ensures confidentiality
and security and is available on the
Arla website in 30 languages, open to
all employees and stakeholders. Any
breaches can also be reported directly
to the local Human Resources, Risk and
Compliance or Legal function.
We ensure that our policies are
accessible and clearly communicated
to all relevant parties. Our Code of
Committed to
growing responsibly
In early June 2024,
38 distributors from
the Rest of the World
cluster gathered in
Copenhagen for an
inspirational week
focused on our
brands to kick off
2025. We conduct
business with these
distributors to
further promoting
our products in their
respective markets.
WE ARE COMMITTED TO SUSTAINABLE GROWTH,
GROUNDED IN THE PRINCIPLES OF HONESTY,
ACCOUNTABILITY AND TRANSPARENCY.
PAGE 87
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
Social
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
/ Responsible business conduct /
Conduct is available in 12 different
languages on the Arla website as well
as an English version of our Anti-bribery
Directive. Internally, all Arla policies are
stored and managed through a portal
on our intranet. By integrating our Code
of Conduct into the onboarding training
for new employees, we instill our
corporate values.
To avoid fraud, we maintain a coherent
system of internal controls, which are
regularly assessed for effectiveness
and adequacy. In 2024, we updated
the Anti-fraud Policy and conducted
relevant communication to remind
our employees that fraud can also be
reported via the Ethics Line. The Ethics
Line Committee, which oversees the
grievance channel, reports to the
CEO. The reporting structure for other
non-conformities varies by region. For
instance, these can be reported to the
local BoD or through other channels to
the EMT.
We pay particular attention to high-
er-risk areas for fraud, corruption
and bribery, such as operations in
the Middle East, Nigeria, Central and
Southern Africa, Bangladesh, Indonesia
and South America. We have also
identified higher-risk business areas
that require more focus, which are
sales, marketing and procurement.
Addressing bribery, fraud and corrup-
tion is essential for upholding human
rights and labour rights. Breaches of
business conduct such as human rights
and labour rights are identified and
assessed through our human rights due
diligence process. More on pages 73
and 78.
In the UK, we increased our focus
on reinforcing anti-corruption and
anti-bribery initiatives to align with
stricter local regulatory demands. In
November 2024, Arla UK conducted
anti-corruption and bribery training to
enhance employees' understanding
and adherence to the Bribery Act 2010.
This initiative ensures we have ade-
quate procedures in place based on the
UK's statutory guidance, which sets out
a risk-based approach to compliance.
In 2024, we did not receive any
convictions or fines for violation of
anti-corruption and anti-bribery laws.
See page 78 for the number of reports
submitted to the Ethics Line.
The responsibility of anti-corruption and
bribery investigations lies with our Legal
function, which has local coverage of all
markets.
Political engagement and lobbying
As a leading dairy cooperative, Arla's
involvement in political engagement is
essential to make a significant impact
and drive meaningful change. This
engagement not only ensures our
representation in issues that directly
impact us and our farmer owners, but
also enables us to help shape emerging
legislation, reduce risks and enhance
collaboration. Our active participation
helps address industry challenges,
supports growth and leverages our
expertise to shape a deeper compre-
hension of the dairy sector and how
legislation can support the industry in
the sustainable transition.
In accordance with our policies, we do
not make political contributions to pol-
iticians, their representatives, political
parties, election campaigns or political
fundraising events. This could be direct
to the party or individual or indirect via
third-party organisations, and it covers
monetary or in-kind contributions.
In 2024, our political engagement
practices focused on climate-related
regulatory changes, including carbon
taxation, and supporting political frame-
works for farmers to adopt regenerative
practices and carbon farming. We also
focused on product labelling to ensure
consumers can make informed choices,
and we worked with authorities and
NGOs to promote sustainable, healthy
diets globally and highlight dairy's role
in this. We believe that nutritional label-
ling should align with countries' official
dietary guidelines. Our engagement
activities are aligned with key business
risks and are rooted in our Future 26
strategy as well as our commitment to
meeting the 1.5°C goal set by the Paris
Agreement.
Responsible supply chain
management
We aim to collaborate with suppliers
who share similar values. Our global
network of suppliers significantly
influences our sustainability perfor-
mance. Many of our biggest sustaina-
bility impacts, such as scope 3 climate
emissions, animal welfare, impact on
biodiversity and human rights, occur
in our value chain. In addition, our
business risks, including potential
impacts on brand value, are linked to
these challenges.
With that in mind, we require com-
pliance with our Code of Conduct
for Suppliers and Business Partners
(CoCS), which addresses a broad range
of environmental, social, ethical and
human rights standards. Currently,
signing our CoCS is an essential
criterion in our supplier selection
process. Our Global Purchasing Policy
sets forth the purchasing standards
that are crucial for engaging with our
suppliers. When suppliers sign our
purchasing agreements, they commit
to our sustainability goals and the
necessary measures to lessen their
environmental impact as well as our IT
security measures. In addition to that,
we updated our Code of Conduct for
Suppliers and Business Partners (CoCS)
in 2023 to reinforce our commitment
to human rights, particularly the right
not to be subjected to slavery, servitude
or forced labour. We are engaging with
suppliers and business partners who
previously signed older versions of our
CoCS, encouraging them to adopt the
updated version.
By fostering strong relationships with
suppliers and implementing strategic
sourcing initiatives, we maintain a
robust supply chain and production.
We also engage in ongoing collab-
oration with our suppliers to tackle
environmental and social issues along
our entire supply chain. For a detailed
account of our strategies to decrease
the climate impact in our supply chain,
please see pages 48-49. Information
on how we manage risks linked to risk
commodities is available on page 59,
and our methods for safeguarding
human rights in our supply chain are
detailed on pages 73, 78 and 79.
Due to our cooperative structure, we
continuously work alongside our farmer
owners, who also serve as our suppliers,
on sustainability-related matters
on farms through the Arlagården
programme and the FarmAhead™
Check. More on pages 44 and 50.
Fair payment practices
Fair payment terms, such as reasonable
payment periods and transparent
agreements, foster trust, strengthen
business relationships and encourage
collaboration between Arla and our
suppliers. Paying suppliers on time
is crucial as timely payments ensure
sustainability and growth. We have set
our payment terms in line with industry
practice outlined in our Payment Policy.
In 2024, the average time required for
us to process an invoice payment was
53 days, compared to 52 days in 2023.
Our primary suppliers, the farmers
providing raw milk, are crucial to our
operations and affected by the timing
of our payments. In 2024, the average
payment period for farmers was 15
days, whereas payments to other
suppliers took 59 days.
PAGE 88
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
Social
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
/ Responsible business conduct /
Targets and progress
PAYMENT
PRACTICES
ACCOUNTING POLICIES
Average payment time
Fair payment terms foster trust and ensure sustain-
ability while aligning with industry practices. Arla
reports the average time it takes to pay an invoice
for its suppliers. The KPI measures the duration from
the start of the contractual or statutory payment
term to the clearing date, reported annually in
days. It is noted that Arla's reporting spans from
the time an invoice is received in our system to the
date it is paid, which may not match the exact date
the supplier receives the payment due to varying
bank processes. The reporting includes all Arla SAP
entities.
Payments by standard payment terms
Conducted in line with our Payment Policy, see
more under Payment Policy.
Legal proceedings currently outstanding related to
late payments
Arla has specific procedures in place to avoid late
payments, including the use of automated notifi-
cations and robotics to alert users about invoices
awaiting approval. Monthly reports are generated
to facilitate smooth payment processes, and we
track overdue open items on supplier accounts and
monitor ageing for invoices.
Legal proceedings currently outstanding related to
late payments is defined as open legal proceedings
with bailiff's courts or public authorities due to
alleged late payment of undisputed invoices by
year-end. These cases primarily involve bailiff ac-
tions and specific collection procedures, excluding
disputes under regular civil court or arbitration
processes. Such bailiff cases should be rare and
indicate a problem; upon awareness, Arla would
either promptly settle the unpaid invoice or inform
the judge that the claim is disputed. In the latter
scenario, the bailiff case would conclude, and the
supplier would need to pursue a regular civil court
case to determine the validity of the claim.
The number covers 99% of Arla's entity. Persons
responsible for invoices will input the number of
ongoing cases, if any, through our internal system,
ensuring accurate and complete information.
Policies and other
Our Code of Conduct serves as an umbrella for our
policies on business conduct. We outline some of
our governance-related policies in the following.
Our Code of Conduct and other governance-related
policies such as our Code of Conduct for Suppliers
and Business Partners, Responsible Marketing
Policy, Environmental Policy & Green Ambition 2050
and our Grievance Policy are outlined in more detail
in the chapters on environment and social data.
Responsible Political Engagement Policy
Policy objective and scope
The objective of our Responsible Political
Engagement Policy is to ensure open and transpar-
ent engagement with political stakeholders, garner
political support for the dairy sector and promote
the development of innovative, sustainable dairy
products, while adhering to ethical business
practices and relevant regulatory frameworks.
Arla's political engagement activities are governed
by Arla's Code of Conduct, which is in synergy with
the 10 guiding principles of the UN Global Compact
as well as the EU Transparency Register's Code of
Conduct.
In order to be able to take part in political
engagement in the EU, Arla registered in the EU
Transparency Register in August 2014, with the
registration number 479299526321-12 and signed
up to the Code of Conduct governing relations with
the EU institutions and their members, officials and
other staff.
Policy governance
The Chief Agriculture and Sustainability Officer
(CASO) has ownership of the policy. The monitoring
of this policy is the responsibility of the Global Public
Affairs team. Twice a year, compliance with this
policy is reviewed by the Director for Global Public
Affairs. An annual update will be sent to the political
and legislative Steering Committee, Senior Vice
Average payment time
Days
2024
2023
Average time to pay an invoice
53
52
Average time to pay farmers
15
15
Average time to pay other suppliers
59
60
Payments by standard payment terms
%
2024
Share of payments with up to 60 day standard payment term
33%
Share of payments with up to 30 day standard payment term
32%
Share of payments with 2 weeks standard payment term
15%
Share of payments part of supply chain finance programme
11%
% of payments with other payment term
10%
Legal proceedings currently outstanding related to late payments
2024
Number of legal proceedings currently outstanding related to late payments
0
President of Corporate Communications and the
responsible Executive Vice President. Any breaches
of the policy will be dealt with as necessary at the
time of notification to the Director for Global Public
Affairs.
Payment Policy
Policy objective and scope
The objective of our Payment Policy is to create the
basic principles by which payment to suppliers is
performed. In other words, to guide the payment
behaviour of all supplier payments in a common
direction and ensure that they are performed in a
consistent manner.
Our Payment Policy applies to all supplier payments
and defines our standard payment terms, invoicing
requirements and procedures. It is also designed
to adhere to local legislation, ensuring compliance
with applicable legal requirements . Our preferred
suppliers have a standard payment term of 60 days.
Suppliers classified as non-preferred have a term of
30 days. Our Payment Policy separately defines the
payment terms for our farmer owners who are paid
twice a month. In addition, certain strategic sup-
pliers participating in financing programmes could
have longer payment terms. More in table 2.1e
Supply chain finance programmes on page 120. We
always pay public authorities, utility companies and
financial institutions on the due date stated on the
invoice. Payments below 60 days for preferred or
pending suppliers can take place with the approval
of the Head of Procurement and below 30 days with
the approval of the Vice President of Finance or
Chief Financial Officer.
Policy governance
Our Finance function's leadership and the local
Finance Managers across Arla have prime respon-
sibility for rolling out this policy, initiating dialogue
about it and handling cases. Updating the policy is
the responsibility of our Global Finance function.
Global Purchasing Policy
Policy objective and scope
Clear and consistent purchasing practices are
fundamental to minimising risks to food safety, the
environment and human rights in our supply chain.
Our policy sets out 11 principles for purchasing in
Arla to ensure a clear and uniform process when
buying goods and services to reduce costs, risks and
environmental and human rights impacts.
Among other procedural requirements, the policy
also requires compliance with Arla Foods' Code of
Conduct for Suppliers and Business Partners.
Policy governance
This policy applies to all purchases from external
suppliers of goods and/or services with one excep-
tion: the purchase of raw milk registered on the
milk balance. The policy applies to all employees
in Arla. However, the Global Procurement function
has overall responsibility for the implementation of
this policy.
Anti-bribery Policy
Policy objective and scope
Our Anti-bribery Policy sets out the responsibilities
in observing and upholding our position on bribery
and corruption, and provides information and guid-
ance on how to recognise and deal with bribery and
corruption issues. Arla is committed to conducting
all business in an honest and ethical manner. We
take a zero-tolerance approach to bribery and cor-
ruption and are committed to acting professionally,
fairly and with integrity in all our business dealings
and relationships wherever we operate. Further,
we are committed to implementing and enforcing
effective systems to counter bribery and corruption.
This policy applies to all persons working for Arla or
on Arla's behalf in any capacity.
Policy governance
Arla's Executive Management Team (EMT) has
overall responsibility for ensuring this directive
complies with our ethical obligations, and that all
those under our control comply with it. Arla's Legal
function has overall responsibility for ensuring this
directive complies with our legal obligations. Arla's
management at all levels is responsible for ensuring
those reporting to them understand and comply
with this directive and are given adequate and
regular training in it.
PAGE 89
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
General information
Environment
Social
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance
/ Responsible business conduct /
91
Governance framework
93
Management
97
Management remuneration
98
Business ethics
The EUR 210 million investment in Taw Valley
Dairy, UK, includes new technology that will
reduce the mozzarella maturing process
from 14 days to just one and provide greater
flexibility and innovation opportunities to
meet customer demands.
ARLA®
MOZERELLA
OUR
GOVERNANCE
GOVERNANCE
FRAMEWORK
COOPERATIVE GOVERNANCE
Arla is a cooperative dairy company
owned by 7,624 milk-producing farmers
in seven countries. It is organised into
four geographic areas: Denmark,
Sweden, Central Europe and the UK.
These areas are further subdivided into
regions and member districts. This struc-
ture ensures that all our farmers have the
opportunity to voice their opinions and
actively engage in decision-making. See
the next page for further details.
We have two essential bodies to
represent our farmer owners: the BoR
and BoD.
Board of Representatives (BoR)
The BoR holds the highest authority for
decision-making within our cooperative.
The BoR meets regularly, at least twice
a year, to make key decisions such as
distributing annual profits and electing
the BoD.
It comprises 187 members, with 175 being
farmer owners and 12 representing our
employees. Every two years, the farmer
owners elect their representatives. The
number of seats each area receives is de-
termined by its accumulated contribution
to the cooperative in the year leading up
to the elections. Following the equity as-
sessment on 31 December 2023, the seat
distribution for the BoR was determined
and formally confirmed in May 2024.
AS A DAIRY COOPERATIVE OWNED BY
FARMERS FROM SEVEN COUNTRIES,
WE HAVE A ROBUST SYSTEM OF
GOVERNANCE THAT EMPOWERS
EVERY MEMBER TO VOICE THEIR
OPINIONS AND ENSURES EFFECTIVE
REPRESENTATION.
Our company is owned by dairy farmers
from Denmark, Sweden, Germany,
the UK, Belgium, the Netherlands and
Luxembourg. As a cooperative, we
prioritise a strong and reliable system
that allows every member to voice
their opinions and be represented. The
responsibility for decision-making rests
with the Board of Representatives (BoR)
and the Board of Directors (BoD).
The BoR elects the BoD, which collab-
orates closely with the Executive Board
to determine the overarching strategic
direction. For more information on our
governance system, please refer to our
Articles of Association.
EXECUTIVE
BOARD
CEO and CFO
EXECUTIVE
MANAGEMENT TEAM
Executive Board
Managers for European and
International commercial
segments
Functional Heads
EMPLOYEES
21,895
CORPORATE
GOVERNANCE
FUNCTIONAL HEADS
· Agriculture, Sustainability,
Communnication
· Supply Chain
· Human Resources
· Marketing and Innovation
More about our sustainability
governance on page 33
BOARD OF DIRECTORS
14 elected owners
3 employee representatives
2 external members
BOARD OF
REPRESENTATIVES
175 owners
12 employee representatives
OWNER NATIONALITIES
7,624 dairy farmers
DISTRICTS
111 districts
REGIONS
14 regions
COOPERATIVE
GOVERNANCE
DK
1,828
SE
1,938
CE
1,939
UK
1,919
4 AREA
FORUMS
DK, SE, CE, UK
MEMBERS
DK 72
SE 47
CE 26
UK 30
PAGE 91
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Management
Management remuneration
Business ethics
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance framwork
Denmark
6
Sweden
4
Central Europe
2
The UK
2
Owners
As of 31 December 2024, we had 7,624
joint owners in the cooperative (2023:
7,999). The reduction in the number of
owners, mainly in Central Europe, was
partly due to farmers stopping milk pro-
duction or selling their farms to other
Arla members, with a few also leaving
to supply another dairy company. This
trend aligned with the broader patterns
observed in the dairy sector in recent
years.
District meetings
Every owner of Arla is affiliated with the
member district where their farm is
situated. In March or April of each year,
they gather for the annual ordinary
district meeting in their respective
districts for a presentation of the annual
report and to uphold their democratic
influence. During these assemblies in
even years, district members elect the
district council and representatives to
stand for their district on the BoR.
Regional boards
In Denmark and Sweden, regional
boards consist of BoR members elected
from those regions. In Central Europe
and the UK, regional boards include the
Chairs and Vice Chairs from the district
councils. These boards meet soon after
the district assemblies to discuss issues
relevant to their regions' owners.
Board of Directors (BoD)
Selected by the BoR, the BoD is
responsible for managing Arla in the
best interests of the farmer owners. In
accordance with the Rules of Procedure
for the Board of Directors of Arla, the
BoD is responsible for formulating and
defining the strategic direction of Arla.
This includes ensuring they are well-in-
formed about all significant matters,
including any major risks.
Their role includes setting strategic
objectives, overseeing operations and
assets, maintaining proper accounting
practices and appointing the Executive
Board. Additionally, the BoD looks out
for the interests of all company stake-
holders, such as lenders, bond investors
and employees. Comprising 14 farmer
owners, three employee representa-
tives chosen by Arla's employees and
two external members elected by the
BoR, the BoD represents a diverse group
of interests. The allocation of 14 seats
for farmer owners on the BoD is based
on the equity contribution of each area,
with the current distribution as follows:
Area forums and Joint Area Council
Arla has four area forums, each linked to
a specific member area. These forums
serve as an important connection be-
tween all the district council members
and Arla's BoD and management team.
The members in these forums act like
spokespeople, looking out for Arla's
interests among all members and they
meet twice a year.
There is also a Joint Area Council, which
is made up of four BoR members from
each area. They get onto the council
through a ballot process. The BoD
chooses who will be the Chair and
additional members for the council.
This council mainly deals with issues
that affect all owners.
CORPORATE GOVERNANCE
Arla's governance structure is a
synergistic collaboration between the
Executive Board and the BoD. Among
other responsibilities, they maintain
Arla's strategic course, supervise the
organisational operations and ensure
adherence to all pertinent regulations
and standards.
Executive Board
Appointed by the Board of Directors
(BoD), the Executive Board is pivotal
in directing Arla towards sustained
long-term growth. Their remit includes
establishing strategic plans, evaluating
progress against objectives and formu-
lating essential group-wide policies,
with the overarching aim of driving
sustainable expansion and increasing
the overall value of Arla.
The Executive Board is also responsible
for implementing comprehensive
risk management and ensuring strict
adherence to legal regulations and
company policies. The Executive Board
comprises the CEO and the CFO.
Executive Management Team
(EMT)
The EMT is appointed by the Executive
Board and is responsible for overseeing
Arla's day-to-day business operations.
They are actively involved in formu-
lating strategies and planning future
operating structures.
It consists of the Executive Board, a
manager for each of the European and
International commercial segments
and four functional heads: Supply Chain
(CSO), Agriculture, Sustainability and
Communications (CASO), Marketing and
Innovation (CMO), Human Resources
(CHRO).
To promote collaboration and commu-
nication, the EMT regularly connects to
share updates and coordinate various
initiatives. Each team member also
addresses all material impacts, risks and
opportunities within their responsibili-
ties. These efforts aim to advance and
make progress towards targets that
align with our strategy. More about
sustainability governance on page 33.
Employees
Arla employs 21,895 full-time equiv-
alents (FTEs) globally (2023: 21,307),
represented by three elected employ-
ees on the BoD and 12 on the BoR.
Beyond these roles, employee interests
are further represented through work
councils, which include both employee
and employer representatives. The
European Works Council acts as a plat-
form for high-level discussions between
the management and employees on
company-wide issues. In 2024, the
focus of the annual European Works
Council meetings centred on digital
transformation, milk balance outlook
and inclusion of employees.
PAGE 92
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Management
Management remuneration
Business ethics
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Governance framwork
4
8
10
14
17
19
2
18
5
9
1
15
16
12
11
13
3
25%
75%
0%
0%
16%
8
0
5
3
1
1
1
42%
42%
Female
Male
8+ years
DK
SE
UK DE BE FR
4-7 years
0-3 years
7
6
BOARD OF DIRECTORS
ARLA'S BOD IS A GROUP OF SKILLED
PROFESSIONALS WHO COMBINE
THEIR EXPERTISE TO DRIVE THE
COMPANY'S SUSTAINABLE GROWTH.
BoD election
The BoD is elected by the BoR every two
years through a multi-stage process.
During the identification phase, candi-
dates register, self-assess and have an
initial interview with the local Evaluation
Committee (EC). In the evaluation phase,
they undergo a second interview with
the joint EC for aligned assessment.
The evaluation and nomination phase
involves feedback and sharing results at
the Regional Board or area forum. Finally,
nominees are presented for election at
the BoR meeting.
For the 2024 election, the BoR evaluat-
ed 20 candidates and 14 were elected
to the Board. Four new members
joined the BoD, and Jan Toft Nørgaard
was re-elected as Chair and Inger-Lise
Sjöström was elected as Vice Chair. Find
their biographies on the next page.
BoD competencies
Together with the EMT, the BoD is
responsible for the long-term strategic
vision of the company's growth, from
analysing global business trends and
identifying potential risks and opportu-
nities, to making sound decisions that
prioritise the cooperative's best interests.
In the election process, each candidate
is evaluated on various competencies
crucial for Arla's success and ethical
business conduct, including passion
for the cooperative, risk awareness
and sustainability. On average, the BoD
members possess strong competencies
in areas critical to the company's
success. There are opportunities for
improvement in digitalisation and brand
awareness. Therefore, the BoR appoint-
ed external members to address these
topics. The two external members are
considered independent, non-executive
members, thus the share of independ-
ent non-executive board members
comprises 11% of the Board.
They also engage in training to refine
their skill sets, which helps them stay
prepared to address the changing
requirements of Arla. More on sustaina-
bility competencies on page 33.
Diversity of the BoD
To ensure both genders are represent-
ed to bring a variety of perspectives
to the business, in 2023, we set a new
target: to reach 30% women by 2026.
More on the BoD and diversity on page
33.
Meetings and key topics in 2024
The BoD conducted a total of 11
ordinary meetings and one extraor-
dinary meeting. Among these, five
meetings were held in person, while the
remaining meetings took place online.
In 2024, the BoD engaged in discus-
sions on several topics, including digi-
talisation, AI and driving sustainability.
See pages 33 and 38 for key sustain-
ability-related topics discussed and
information on meeting attendance.
Gender composition of the BoD1
Tenure of the BoD
Nationalities of the BoD
1 According to section 99b of the Danish Companies Act, only members elected at the company's general meeting are included.
PAGE 93
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Governance framwork
Management remuneration
Business ethics
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Management
Owner
Employee
External
1-19
Link to the group photo
All roles in public administration
or similar held currently or in the
previous two years are listed in the
biographies.
MEMBER
BIOGRAPHIES
member of the cattle section of the Danish
Agriculture & Food Council (2009) and the Board
of Directors of the Danish Milk Levy Fund (2019)
Born: 1963
5. DANIEL HALMSJÖ (SE)
Member since: 2022
Occupation: Dairy farmer
Internal positions: Chair of the Organic
Committee Sweden and member of the Global
Organic Committee. Member of the Global
Appeals Committee
Born: 1982
6. GEORGE HOLMES (UK)
Member since: 2024
Occupation: Dairy farmer
Internal positions: Chair of the Organic
Committee UK and member of the Global
Organic Committee
Born: 1965
7. GUSTAV KÄMPE (SE)
Member since: 2021
Occupation: Dairy farmer
Internal positions: Member of the Farmer
Sustainability Working Group
External positions: Member of the Board of
the Swedish Dairy Association and Copa Cogeca
Working Group for Dairy Products (2021). Dairy
Ambassador for the UN High-Level Political
Forum (2024)
Born: 1977
8. JØRN KJÆR MADSEN (DK)
Member since: 2019
Occupation: Dairy farmer
Internal positions: Member of the Nomination
Committee
External positions: Vice Chair of the Board of
Directors of GLS-A (2018)
Born: 1967
9. MARCEL GOFFINET (BE)
Member since: 2019
Occupation: Dairy farmer
Internal positions: Area Chair for Central
Europe, member of the Joint Area Council and
the Member Relations Group. Member of the
Global Appeals Committee, Chair of the Organic
Committee Central Europe and member of the
Global Organic Committee
External positions: Chair of the Board of Directors
of Agra Ost Agriculture Research (2016), member
of the municipal government of St. Vith (2018) and
the Bauernbund Farmer Association (2012)
Born: 1988
10. MARITA WOLF (SE)
Member since: 2021
Occupation: Dairy farmer
Internal positions: Chair of the Global Training
Committee. Member of the Nomination Committee
External positions: Member of the Board
of Directors of the Swedish Dairy Association
(2003), the Board of Directors of the Swedish
Farmers Foundation for Agriculture (2022) and
Board member of Cooperatives Sweden (2024)
Born: 1959
11. MARKUS HÜBERS (DE)
Member since: 2017-19. Re-elected in 2024
Occupation: Dairy farmer
Internal positions: Member of the Nomination
Committee and the Remuneration Committee
Born: 1975
12. RENÉ LUND HANSEN (DK)
Member since: 2019
Occupation: Dairy farmer
Internal positions: Member of the Arlagården
Preparatory Working Group
External positions: Member of the Governing
Board and the Executive Committee of the
Danish Agriculture & Food Council (2019)
Born: 1967
13. SIMON SIMONSEN (DK)
Member since: 2017
Occupation: Dairy farmer, Valuation Consultant
DLR Kredit A/S
Internal positions: Member of the
Remuneration Committee
External positions: Dairy Ambassador for
the UN High-Level Political Forum (2017)
Born: 1970
14. STEEN NØRGAARD MADSEN (DK)
Member since: 2005
Occupation: Dairy farmer
Internal positions: Area Chair for Denmark,
member of the Joint Area Council and
the Member Relations Group. Chair of the
Sustainability Working Group and the Global
Appeals Committee
External positions: Chair of the Danish Dairy
Board (2012), Vice Chair of the Governing Board
and the Executive Committee of the Danish
Agriculture & Food Council (2014), Chair of the
Agro Food Park Steering Committee (2016) and
the Danish Milk Levy Fund (2012)
Born: 1956
15. ANDERS OLSSON (SE)
Member since: 2022
Occupation: Technical Coordinator at Götene
Dairy, Sweden
External positions: Member of the Swedish
workers' union
Born: 1966
16. HOLGER STEEN LUND (DK)
Member since: 2024
Occupation: Production Operator at Esbjerg
Dairy, Denmark
External positions: Shop steward of the Danish
Trade Union NNF
Born: 1964
17. PAUL CULLEN (UK)
Member since: 2024
Occupation: Bulk farm driver at Aylesbury Dairy,
UK
External positions: Shop steward of Usdaw
Born: 1962
18. FLORENCE ROLLET (FR)
Member since: 2019 as an advisor and full
membership since 2022
Occupation: Head of the MSc in Luxury
Marketing and Management, EMLyon, France
Born: 1966
19. NANA BULE (DK)
Member since: 2019 as an advisor and full
membership since 2022
Occupation: Operating Advisor, Goldman Sachs
Asset Management
External positions: Chair of the Board of
Directors of the Danish Centre for AI Innovation
(2024), Chair of the Board of Directors of Carbfix
(2023), member of the Board of Directors of
the Novo Nordisk Foundation (2023) and Chair
of the Danish Agency for Digital Government
(2022)
Born: 1978
1. JAN TOFT NØRGAARD (DK)
Member since: 1998
Occupation: Dairy farmer
Internal positions: Chair of the Board of
Directors and the Nomination Committee.
Member of the Remuneration Committee
External positions: Member of the Governing
Board of the Danish Agriculture & Food Council
(2009)
Born: 1960
2. INGER-LISE SJÖSTRÖM (SE)
Member since: 2017
Occupation: Dairy farmer
Internal positions: Vice Chair of the Board
of Directors. Area Chair for Sweden, Chair
of the Joint Area Council and the Member
Relations Group. Member of the Remuneration
Committee and the Nomination Committee
External positions: Chair of the Board of
Directors of the Swedish Dairy Association
(2022) and Board member of Tillväxtbolaget
(2022)
Born: 1973
3. ARTHUR FEARNALL (UK)
Member since: 2018
Occupation: Dairy farmer
Internal positions: Area Chair for the UK, mem-
ber of the Joint Area Council and the Member
Relations Group. Chair of the Remuneration
Committee. Member of the Nomination
Committee and the Global Appeals Committee
Born: 1963
4. BJØRN JEPSEN (DK)
Member since: 2011
Occupation: Dairy farmer
Internal positions: Chair of the Organic
Committee Denmark and the Global Organic
Committee
External positions: Vice Chair of Skjern Bank
(2012) and the Danish Dairy Board (2019),
PAGE 94
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Governance framwork
Management remuneration
Business ethics
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Management
1
3
7
2
5
6
4
8
13%
87%
0%
0%
0
50%
4
2
1
1
25%
25%
Female
Male
8+ years
DK
SE
UK
FR
4-7 years
0-3 years
EXECUTIVE
MANAGEMENT
TEAM
THE EXECUTIVE MANAGEMENT TEAM (EMT) OF ARLA
COMPRISES THE CHIEF EXECUTIVE OFFICER, ONE
COMMERCIAL MANAGER OVERSEEING EUROPEAN
MARKETS, ONE FOR INTERNATIONAL MARKETS AND FOUR
SPECIALISTS WITH FUNCTIONAL EXPERTISE. THIS TEAM
IS RESPONSIBLE FOR ESTABLISHING AND DELIVERING
GROUP STRATEGIES AS WELL AS MANAGING ARLA'S DAILY
OPERATIONAL ACTIVITIES.
Gender composition of the EMT
Tenure of the EMT
Nationalities of the EMT
Peter Giørtz-Carlsen left Arla in January 2025.
PAGE 95
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Governance framwork
Management remuneration
Business ethics
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Management
All roles in public administration
or similar held currently or in the
previous two years are listed in
the biographies.
Peter Giørtz-Carlsen left Arla
in January 2025. Torben Dahl
Nyholm takes on a role as part of
Arla's Executive Board starting 1
December 2024, and Mark Boot
became EVP of the European
Business in January 2025.
1. PEDER TUBORGH (DK)
Position: CEO, member of the Executive Board,
representing Global Industry Sales and Arla
Foods Ingredients in the Executive Management
Team
Experience: Peder took on the role of Arla's
CEO in 2005, but his journey with Arla began in
1987, starting with MD Foods. Since then, he has
made his mark in various senior management
and executive positions, including Marketing
Director, Divisional Director and Executive Group
Director. Over the course of his distinguished
career in Arla, Peder has made significant
contributions to the company in Germany, Saudi
Arabia and Denmark.
Education: Master's degree in Economics and
Business Administration from the University of
Southern Denmark, Odense
External positions: Member of the Global Dairy
Platform (2006), Chair of AgriFoodTure (2022)
Born: 1963
2. TORBEN DAHL NYHOLM (DK)
Position: Executive Vice President and CFO,
Finance, Legal, IT and Strategy and member of
the Executive Board
Experience: Torben joined Arla in 2012
following several years in the M&A consultancy
sector. He began his Arla career as a Business
Controller in Corporate Finance and has since
taken on various key project and leadership
roles within the finance organisation, primarily
concentrating on the intersection of finance
and strategy. Most recently, Torben headed
our Group Performance Management team,
before assuming his current position as CFO and
Executive Vice President, Finance, Legal, IT and
Strategy in 2020 and joining the Executive Board
in December 2024.
Education: MSc in Finance and International
Business from Aarhus University
Born: 1981
3. PETER GIØRTZ-CARLSEN (DK)
Position: COO, member of the Executive Board,
Executive Vice President of Europe
(until January 2025)
Experience: Peter began his journey at Arla
in 2003 as the Vice President of Corporate
Strategy. Over the years, he has held several
senior roles, such as Executive Vice President
of Consumer DK and UK, before assuming the
position of Executive Vice President of Europe
in 2016.
Education: Master's degree in Business
Administration, Organisation and Management
from the Aarhus University School of Business
and Social Sciences
External positions: Board member of AIM, the
European Brands Association (2018), member
of the Policy and Issues Council (PIC) of the UK's
Institute of Grocery Distribution (IGD) (2016),
Vice Chair of the Board of the European Dairy
Association (EDA) (2020), Vice Chair of the Board
of Directors of the Toms Group (2022)
Born: 1973
4. OLA ARVIDSSON (SE)
Position: CHRO, Executive Vice President, HR
Experience: Ola started at Arla in 2006 as
Corporate HR Director and advanced to Chief
HR Officer in 2007. Before his time in Arla, he
held various directorial roles at Unilever across
Europe and the Nordics, culminating in his posi-
tion as Vice President of HR. Earlier in his career,
Ola served as an Officer in the Royal Combat
Engineering Corps of the Swedish Army.
Education: Master's degree in HR Management
from Lund University
External positions: Member of the Board of
Directors of AP Pension (2014), Central Board
member of the Confederation of Danish Industry
(2018)
Born: 1968
5. HANNE SØNDERGAARD (DK)
Position: CASO, Executive Vice President,
Agriculture, Sustainability and Communication
Experience: Since 1989, Hanne has been an
integral part of Arla, initially joining under MD
Foods and later taking on a significant position
in the UK, where she played a pivotal role
in the growth and development of Arla UK.
Progressing her career, she became Vice CEO
of Arla UK, and in 2010, she transitioned into a
global marketing role as Senior Vice President
of Brands and Categories. In 2016, Hanne
assumed the position of CMO and Executive
Vice President, becoming a valued member of
Arla's Executive Management Team. In January
2021, she took on the role of Executive Vice
President, overseeing Agriculture, Sustainability
and Communication in Arla.
Education: Business degrees from the Aarhus
University School of Business and Social
Sciences and Harvard Business School
External positions: Member of the Board of
Directors of Arla Fonden (2012), member of
the Technical University of Denmark (2016),
member of the Danish Climate Forest Fund
(Klimaskovfonden) established by the Danish
Ministry of Environment and Gender Equality
(2021), Board member of the Danish Agriculture
& Food Council (2022)
Born: 1965
6. DAVID BOULANGER (FR)
Position: CSO, Executive Vice President,
Supply Chain
Experience: David joined Arla in October 2020,
bringing 26 years of experience in supply chain
and operations. He has held various senior lead-
ership roles in the food industry with companies
like Mars, Mondelēz and Danone across multiple
regions. Immediately before joining Arla as Chief
Supply Chain Officer, he served as Senior Vice
President of Operations of Danone's Specialised
Nutrition Division, managing global operations
in the Early Life & Medical Nutrition sectors.
Education: Engineering degree from the École
Civil des Mines de Paris in France and Master's
degree in Mathematics
External positions: Member of the Board of
Directors of Global Baby SAS (2021)
Born: 1970
7. SIMON STEVENS (UK)
Position: Executive Vice President, International
Experience: Joining Arla in 2002 as UK Sales
Director, Simon later took on the role of SVP
Sales and Marketing, where he played a crucial
part in transforming the UK business. After his
stint as Head of the MENA region in Dubai, he
became a member of the EMT in 2021. Before
his career in Arla, Simon worked for 14 years at
Unilever, holding various sales and marketing
positions in the UK, Netherlands and Italy.
Education: 1st class BSc Hons degree in
Management Sciences from Loughborough
University
External positions: Member of the Board of
Directors of Mengniu (2021)
Born: 1965
8. PATRIK HANSSON (SE)
Position: CMO, Executive Vice President
Marketing and Innovation
Experience: Patrik brings a wealth of experience
from his extensive career in international con-
sumer goods companies, encompassing finance,
marketing, sales and general management. Prior
to joining Arla in October 2011 as Vice President
of Marketing and Sales in Sweden, he spent 13
years at Procter and Gamble, primarily focusing
on marketing. In 2015, Patrik relocated to
Malaysia to establish Arla's regional headquar-
ters in South-East Asia. After returning to Europe
in 2016, he held key positions such as Group
Vice President in Sweden and later in Germany.
In 2022, he assumed his current role as CMO.
Education: Master's degree in Engineering
MEMBER
BIOGRAPHIES
Physics from Chalmers and a Master's degree in
Business from Gothenburg University
Born: 1967
MARK BOOT (NL)
Position: Executive Vice President of Europe
(as of January 2025)
Experience: Mark joined Arla Foods in 2016 as
head of South-East Asia, based out of Malaysia.
After years of accelerated growth in Asia, Mark
moved to the Netherlands as SVP Benelux and
France in 2021. There, he sustained the growth
journey with impact across all markets. As of
January 2025, he joined the EMT as Executive
Vice President Europe. Before joining Arla, Mark
worked at Unilever and Royal FrieslandCampina.
He has held local, regional and global roles in
general management, marketing and sales
across Europe, the USA and Asia, spending 19
years abroad.
Education: Master's degree in Business
Economics from Erasmus University Rotterdam
External positions: Board member of the
FoodService Institute Netherlands (2021),
Board member of AIM, the European Brands
Association (2025)
Born: 1969
PAGE 96
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Governance framwork
Management remuneration
Business ethics
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Management
MANAGEMENT
REMUNERATION
OUR EXECUTIVE COMPENSATION IS ESTABLISHED
TO PROMOTE PERFORMANCE AND VALUE CREATION.
THIS APPROACH ENSURES THAT OUR LEADERSHIP
IS INCENTIVISED TO DRIVE SUCCESS, ALIGNING
WITH THE STRATEGIC DIRECTION AND THE BEST
INTERESTS OF OUR FARMERS.
Remuneration governance
Arla's remuneration practice follows
the remuneration guidance provided
by the BoD, who regularly reviews it.
It considers the recommendations
from Arla's Remuneration Committee
(RemCo), including the Chair and Vice
Chair that meet quarterly. The RemCo's
role includes acting as a preparatory
committee for the BoD and BoR,
focusing on recommendations for the
BoD, BoR and the Executive Board. The
aim is to ensure that our remuneration
guidance, practices and incentive
programmes are in harmony with our
overarching goals, enhancing value for
our owners.
Executive practices
The remuneration packages are
designed to attract, engage and retain
highly skilled senior managers while
also promoting strong performance
in both short- and long-term business
outcomes.
Board of Directors (BoD)
The remuneration provided to the BoD
consists of a fixed fee and does not
include any incentives. Apart from a
minimal travel per diem, no additional
compensation is provided for attending
meetings and committees. However,
BoD members receive a fixed yearly fee
if they are members of a cross-area BoR
working group or committee. This
approach aims to ensure that the BoD's
main focus is on the long-term interests
of the cooperative. The remuneration
of the BoD is evaluated and adjusted
every two years and is approved by the
BoR. The most recent adjustment was
made in 2024. For detailed information
regarding the specific amounts, please
see page 155.
Executive Board
To ensure that the total remuneration
of the Executive Board is align with the
market, we benchmark our remuner-
ation packages against the standards
of European and global FMCG (Fast-
Moving Consumer Goods) companies,
conducted biannually by an external
vendor. Any changes in the total remu-
neration are agreed upon in the RemCo.
The total remuneration consists of both
fixed and variable elements.
Fixed remuneration
The level of fixed remuneration for
the Executive Board is based on their
impact and contribution within the
organisation. Annual changes are
agreed with the Chair of the Board and
approved by the BoD RemCo.
Short- and long-term incentive plans
In addition to the fixed remuneration,
we also offer two variable pay plans: A
Short-Term Incentive (STI) plan that is
linked to Arla's performance against
annual business targets and a Long-
Term Incentive (LTI) plan that supports
the long-term strategic value creation.
Both plans are cash-based.
For the STI, the target payout of this
plan is 40% of the annual base pay. The
highest payout is 80% (capped). The
payout is adjusted +/- 1.25 depending
on the peer group performance).
Therefore, the total potential maximum
payout is 100% of the annual base pay
(capped). It combines Arla's business
performance, including its sustainability
component (more on page 33), with
individual performance. The KPIs
are set at Arla group level, whereas
individual performance is measured as
the individual leadership. The KPIs, the
weight of each KPI and target level for
each KPI are revised and set annually
for the next performance year. The final
programme, KPIs and financial targets
are approved by the BoD RemCo, as well
as the annual payout.
Short-term
incentive
(STI)
Long-term
incentive
(LTI)
Profit
Efficiencies
Sustainability
Branded volume-
driven revenue growth
Leadership
Performance
versus peer group
Executive Board and EMT
Variable pay components
For the LTI, the target payout of this
plan is 60% of the annual base pay.
The potential maximum payout is
120% (capped). It covers a three-year
performance period and consists of two
KPIs: Strategic Branded Volume Growth
and Peer Group Index. Target levels for
each KPI are set at the start of the new
three-year period for each individual
year, and the payout is determined
as the average performance over the
three-year period. The programme,
KPIs, financial targets and payout are
approved by the BoD RemCo.
Executive Management Team (EMT)
The total remuneration of the EMT is in
line with market practice. It consists of
both fixed and variable elements.
Fixed remuneration
The level of fixed remuneration for
the EMT is based on their impact and
contribution within the organisation.
Any changes in the fixed remuneration
for the EMT are determined by the CEO.
Short- and long-term incentive plans
In addition to the fixed remuneration,
all members of the EMT are included in
Arla Foods' STI and LTI plans, similar to
the Executive Board's.
PAGE 97
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Governance framwork
Management
Business ethics
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Management remuneration
BUSINESS ETHICS
RESPONSIBLE AND
TRANSPARENT TAX PRACTICES
WE ARE COMMITTED TO RESPON-
SIBLE AND TRANSPARENT TAX
PRACTICES, WHILE CONTRIBUTING
OUR FAIR SHARE OF TAXES AND
ADVOCATING FOR CLEAR AND OPEN
DISCLOSURES OF OUR TAX AFFAIRS.
OUR KEY TAX PRINCIPLES
Our tax practices align with Arla's glob-
al Code of Conduct, supported by a set
of essential tax principles approved by
the Board of Directors:
· We aim to report the right and
proper amount of tax according to
where value is created
· We are committed to paying taxes
legally due and to ensuring compli-
ance with legislative requirements in
all jurisdictions in which we operate
· We will not use tax havens to reduce
Arla's tax liabilities
· We will not set up tax structures
intended for tax avoidance which
have no commercial substance and
do not meet the spirit of the law
· We are transparent about our
approach to tax and our tax position
· Our disclosures are made in accord-
ance with relevant regulations and
applicable reporting standards such
as (IFRS)
· We build on good relations with
tax authorities and trust that
transparency, collaboration and
proactiveness minimise the extent
of disputes
Presence in non-cooperative
jurisdictions
Arla has no presence in the jurisdictions
determined as non-cooperative jurisdic-
tions for tax purposes by the Council of
the European Union (as per the latest
update, 8 October 2024).
Cooperative and corporate tax
As a dairy cooperative, our farmer
owners are also our suppliers. This
means that earnings are distributed to
our owners in the form of the highest
possible price for the milk supplied. As
a Danish-based cooperative, Arla Foods
amba is subject to the tax regulations
for Danish cooperatives, which are
taxable based on the tax value of their
equity.
We operate multiple subsidiaries world-
wide. They are mainly limited liability
and private limited companies that are
subject to regular corporate taxation.
Dialogue-driven approach
We strive for an open dialogue with
tax authorities and tax communities
to foster transparency regarding our
business operations and tax matters. To
support this agenda, we have voluntar-
ily entered into enhanced relationships
with the tax authorities in some of our
core markets, where we fully disclose
our local tax affairs.
We proactively seek to provide public
consultation responses and input to
relevant upcoming tax legislation in
cooperation with industry-relevant
business groups and corporate peers.
We welcome tax legislative initiatives
that aim to drive fair and uniform
global tax standards. As an example, we
actively supported the national Danish
implementation of the rules on Global
Minimum Taxation (Pillar Two). Working
with the Danish Agriculture & Food
Council, we offered our perspective,
along with input from corporate peers,
on the potential impact of the Pillar
Two rules on companies operating as
cooperatives.
Tax governance
Our global tax function is structured
to ensure robust tax governance. We
implement appropriate tax policies and
employ knowledgeable personnel in
our core markets to establish effective
tax controls and tax procedures. The
roles and responsibilities around our
tax governance and tax management
Value and taxes generated
In 2024, Arla generated a total value of
EUR 7.0 billion from the milk supplied.
Milk sourced from our farmer owners
accounted for EUR 6.5 billion in
milk payments, while other farmers
received milk payments totalling EUR
370 million. Consequently, 98% of
the value generated directly from the
milk supplied is subject to tax at the
farm level, in accordance with local tax
regulations.
In addition to the value and taxes gener-
ated directly from the milk supplied, our
operations extend and generate value
into societies through different types of
tax payments, either borne or collected
by Arla.
Global Minimum Tax (Pillar Two)
Arla falls within the scope of the Pillar
Two rules, according to which Arla
Foods amba is the Ultimate Parent
are stipulated in our internal Global Tax
Policy, which is reviewed and approved
by Arla's CFO.
Fair tax practices
To ensure that transactions between
Arla entities are conducted on market
terms and in accordance with the value
generated by and between Arla entities,
we carefully determine and document
these transactions in line with the
OECD's Transfer Pricing Guidelines.
As part of our fair tax practices, we
continuously evaluate available tax
incentives and reliefs to ensure that
their use is always anchored in business
substance. For example, our UK group
will benefit from full tax expensing of
qualifying capital expenditure in 2024,
in line with the UK Capital Allowances
Act.
PAGE 98
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Governance framwork
Management
Management remuneration
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Business ethics
Entity (UPE) of the group. As a result,
we are liable to top up taxes for the
difference between the effective tax
rate per jurisdiction and the global 15%
minimum tax rate. Additional tax pay-
ments under the Pillar Two rules will be
made to the country of Denmark (the
tax jurisdiction of the group's parent
company, Arla Foods amba).
Based on our analyses, it has been
determined that our effective tax rate
is well above 15% in most of the juris-
dictions where we operate. We have,
however, identified a few jurisdictions,
mainly in the Middle East, where the
effective tax rate is below 15%. This
is primarily due to the national laws
in these jurisdictions that either do
not impose a corporate income tax or
impose a corporate tax rate below the
minimum of 15%. Given the substantial
size of our operations in the Middle
East, the related Pillar Two top-up taxes
have been materially reduced by the
substance-based income exclusion rule.
In net terms, our 2024 Pillar Two tax
cost for the Middle East region amounts
to approximately EUR 2 million relating
to our operations in the United Arab
Emirates, Qatar, Lebanon and Kuwait.
DATA ETHICS
In our ongoing commitment to ethical
and compliant data management, we
recognise the growing importance
and possible implications associated
with data usage. The Data Ethics Policy
articulates the standards of data ethics
we strive to meet, highlighting our ded-
ication to the responsible handling of
data in all our operations. This is guided
by principles centred on human dignity,
responsibility, equality and fairness,
progressiveness and diversity.
The policy is overseen by the EMT, and
a data ethics committee evaluates and
offers recommendations on data ethics
issues.
During 2024, we continued imple-
menting our Data Ethics Policy. Our
data ethics committee discussed
relevant dilemmas and provided
recommendations regarding the use
of data. These recommendations are
based on the policy principles. We will
evaluate our practices to determine
how best to continue embedding data
ethics awareness in the business. No
information has been reported based
on local legislation.
Data ethics
In 2024, we
advanced our
Data Ethics Policy,
addressing dilemmas
and offering data-use
recommendations.
Furthermore, due to the high infla-
tion in Argentina, the Argentinian
income tax law has allowed for certain
mechanisms aimed at eliminating the
distortive effect of inflation in assessing
the taxable income for companies
operating in Argentina. Consequently,
the effective tax rate of our operations
in Argentina has been impacted,
resulting in a Pillar Two top-up tax of
approximately EUR 8 million.
To assess the potential future financial
effects of the Pillar Two rules and other
related local tax rules, we continuously
follow the development and enactment
of these rules in the countries where we
operate.
For further details about tax, including
Pillar Two, please refer to Note 5.1 on
page 152.
PAGE 99
ARLA FOODS ANNUAL REPORT 2024
I.
II.
III.
Governance framwork
Management
Management remuneration
SUSTAINABILITY STATEMENTS
INTRODUCTION
PERFORMANCE REVIEW
ABOUT ARLA
OUR GOVERNANCE
Business ethics
FINANCIAL
STATEMENTS
CONSOLIDATED
Primary statements
101 Income statement
101 Comprehensive income
102 Profit appropriation
103 Balance sheet
104 Equity
107 Cash flow
Notes
109 Introduction to notes
112 Note 1: Revenue and cost
118 Note 2: Net working capital
122 Note 3: Capital employed
131 Note 4: Funding
152 Note 5: Other areas
Making its debut in the UK, the
Starbucks™ Protein Drink with Coffee
combines Arabica coffee with 20
g of protein. This year, Starbucks™
achieved 0.8% volume growth.
STARBUCKSTM
PROTEIN WITH
COFFEE
Primary statements
/ Income statement
Comprehensive income
Profit appropriation
Balance sheet
Equity
Cash flow /
Notes
Financial comments
Comprehensive income consists of real-
ised profit for the year and other value
adjustments recognised directly in
equity. Profit for the year amounted to
EUR 417 million (2023: EUR 399 mil-
lion), and other comprehensive income
amounted to EUR -11 million (2023:
EUR -199 million). Other comprehensive
income was primarily foreign currency
translation of EUR 60 million (2023: EUR
-47 million), remeasurement of defined
benefit schemes of EUR -33 million
(2023: EUR -19 million) and unrealised
value adjustments on hedging instru-
ments of EUR -27 million (2023: EUR -
141 million). Effects from associates and
joint ventures amounted to net EUR -16
million (2023: EUR -3 million).
(EUR million)
Note
2024
2023
Development
Revenue
1.1
13,770
13,674
1%
Production costs
1.2
-10,803
-10,894
-1%
Gross profit
2,967
2,780
7%
Sales and distribution costs
1.2
-1,824
-1,764
3%
Administration costs
1.2
-508
-459
11%
Other operating income
1.3
48
113
-58%
Other operating costs
1.3
-118
-121
-2%
Share of results after tax in joint ventures and associates
3.3
33
51
-35%
Earnings before interest and tax (EBIT)
598
600
0%
Specification:
EBITDA
1,109
1,079
3%
Depreciation, amortisation and impairment losses
1.2
-511
-479
7%
Earnings before interest and tax (EBIT)
598
600
0%
Financial income
4.2
183
135
36%
Financial costs
4.2
-318
-280
14%
Profit before tax
463
455
2%
Tax
5.1
-46
-56
-18%
Profit for the year
417
399
5%
Attributable to:
Arla Foods amba
401
380
6%
Non-controlling interests
16
19
-16%
Total
417
399
5%
(EUR million)
Note
2024
2023
Profit for the year
417
399
Other comprehensive income
Items that will not be reclassified to the income statement:
Remeasurements of defined benefit schemes
-33
-19
Tax on remeasurements of defined benefit schemes
8
4
Share of other comprehensive income of associates and joint ventures
measured by the equity method
3.3
-16
-3
Items that may be reclassified subsequently
to the income statement:
Value adjustments of hedging instruments
-27
-141
Fair value adjustments
-2
-2
Foreign currency translation
60
-47
Tax on items that may be reclassified to the income statement
-1
9
Other comprehensive income, net of tax
-11
-199
Total comprehensive income
406
200
Attributable to:
Arla Foods amba
390
181
Non-controlling interests
16
19
Total
406
200
Primary statements
/ Income statement
Comprehensive income
Profit appropriation
Balance sheet
Equity
Cash flow /
Notes
EUR-cent/kg
mEUR
EUR-cent/kg
EUR-cent/kg
mEUR
Individual capital
0.31
40
Common capital
0.53
69
EUR-cent/kg
mEUR
Supplementary
payment
2.11
274
Interest
0.13
18
EUR-cent/kg
Financial comments
The supplementary payment for 2024
was EUR 292 million, including interest
(2023: EUR 270 million). This corre-
sponded to 2.24 EUR-cent/kg of owner
milk (2023: 2.07 EUR-cent/kg). Contrib-
uted individual capital carried interest
of 5.0% in 2024 (2023: 5.6%), corre-
sponding to EUR 18 million. The Board
of Directors approved an interim supple-
mentary payment of EUR 64 million
based on the first six months of owner
milk deliveries. The remaining amount,
corresponding to EUR 228 million, will
be paid out in March 2025, subject to
approval of the annual report by the
Board of Representatives.
Arla's Retainment Policy prescribes a
maximum of 1.00 EUR-cent/kg of owner
milk minus interest on contributed indi-
vidual capital to be retained. In 2024,
this equalled a retainment of 0.84 EUR-
cent/kg of owner milk (2023: 0.84 EUR-
cent/kg), corresponding to EUR 109
million (2023: EUR 110 million). Accord-
ing to the Retainment Policy, the
retained earnings must be split 1/3 on
individual capital (contributed individual
capital) and 2/3 on common capital (re-
serve for special purposes). The amount
allocated to common capital is reduced
by EUR 18 million corresponding to the
interest paid out in connection with the
supplementary payment. In addition, the
contributed individual capital was ad-
justed for amounts paid out to members
who reached a limit of 7.8 EUR-cent of
individual capital per kg of owner milk.
* Please refer to Note 1.4.1 for
further information about the
performance price.
Supplementary payment for 2024
(EUR-cent/kg)
Supplementary
payment
Half-year supplemen-
tary payment in 2024
Interest
March 2025
Final settlement,
March 2025
2.24
-0.50
-0.13
1.61
(EUR million)
2024
2023
Profit for the year
417
399
Non-controlling interests
-16
-19
Arla Foods amba's share of profit for the year
401
380
Profit appropriation:
Supplementary payment for milk
274
252
Interest on contributed individual capital
18
18
Total supplementary payment
292
270
Transferred to equity:
Common capital (reserve for special purposes)
69
69
Individual capital (contributed individual capital)
40
41
Total transferred to equity
109
110
Appropriated profit
401
380
Primary statements
/ Income statement
Comprehensive income
Profit appropriation
Balance sheet
Equity
Cash flow /
Notes
(EUR million)
Note
2024
2023
Development
Assets
Non-current assets
Goodwill
3.1
938
752
25%
Intangible assets
3.1
269
258
4%
Property, plant and equipment and right-of-use assets
3.2
3,521
3,149
12%
Investments in associates and joint ventures
3.3
560
560
0%
Deferred tax
5.1
31
23
35%
Pension assets
4.7
11
21
-48%
Other non-current assets
24
25
-4%
Total non-current assets
5,354
4,788
12%
Current assets
Inventory
2.1
1,635
1,384
18%
Trade receivables
2.1
1,317
1,145
15%
Derivatives
4.5
90
132
-32%
Other receivables
2.2
266
309
-14%
Securities
4.5
577
403
43%
Cash and cash equivalents
4.1
91
138
-34%
Total current assets
3,976
3,511
13%
Total assets
9,330
8,299
12%
(EUR million)
Note
2024
2023
Development
Equity and liabilities
Equity
Common capital
2,230
2,211
1%
Individual capital
570
557
2%
Other equity accounts
44
13
238%
Supplementary payment to owners
228
207
10%
Equity, attributable to Arla Foods amba
3,072
2,988
3%
Non-controlling interests
66
64
3%
Total equity
3,138
3,052
3%
Liabilities
Non-current liabilities
Pension liabilities
4.7
166
167
-1%
Provisions
5.2
30
31
-3%
Deferred tax
5.1
101
83
22%
Loans
4.3
2,808
2,369
19%
Total non-current liabilities
3,105
2,650
17%
Current liabilities
Loans
4.3
1,194
803
49%
Trade payables and other payables
2.1
1,433
1,425
1%
Provisions
5.2
31
20
55%
Derivatives
4.5
64
43
49%
Other current liabilities
2.2
365
306
19%
Total current liabilities
3,087
2,597
19%
Total liabilities
6,192
5,247
18%
Total equity and liabilities
9,330
8,299
12%
Primary statements
/ Income statement
Comprehensive income
Profit appropriation
Balance sheet
Equity
Cash flow /
Notes
Common capital
Individual capital
Other equity accounts
Suppl.
payment
Total equity
(EUR million)
Capital
account
Reserve for
special
purposes
Total
Contributed
individual
capital
Delivery-
based
owner
certificates
Injected
individual
capital
Total
Reserve
for value
adjustment of
hedging
instruments
Reserve for
fair
value
through OCI
Reserve for
foreign
exchange
adjustments
Total
Total
Equity
attributable to the
owners of Arla
Foods amba
Non-
controlling
interests
Total
equity
Equity at 1 January 2024
895
1,316
2,211
372
51
134
557
70
3
-60
13
207
2,988
64
3,052
Profit for the year
-
69
69
40
-
-
40
-
-
-
-
292
401
16
417
Other comprehensive income
-42
-
-42
-
-
-
-
-27
-2
60
31
-
-11
-
-11
Total comprehensive income
-42
69
27
40
-
-
40
-27
-2
60
31
292
390
16
406
Transactions with owners
1
-
1
-20
-4
-5
-29
-
-
-
-
-
-28
-
-28
Transactions with non-controlling interests
-5
-
-5
-
-
-
-
-
-
-
-
-
-5
-18
-23
Half-year supplementary payment
-
-
-
-
-
-
-
-
-
-
-
-64
-64
-
-64
Supplementary payment regarding 2023
-
-
-
-
-
-
-
-
-
-
-
-209
-209
-
-209
Foreign currency translation adjustments
-4
-
-4
-2
-1
5
2
-
-
-
-
2
-
4
4
Total transactions with owners
-8
-
-8
-22
-5
-
-27
-
-
-
-
-271
-306
-14
-320
Equity at 31 December 2024
845
1,385
2,230
390
46
134
570
43
1
-
44
228
3,072
66
3,138
Equity at 1 January 2023
903
1,247
2,150
348
55
137
540
211
5
-13
203
208
3,101
67
3,168
Profit for the year
-
69
69
41
-
-
41
-
-
-
-
270
380
19
399
Other comprehensive income
-9
-
-9
-
-
-
-
-141
-2
-47
-190
-
-199
-
-199
Total comprehensive income
-9
69
60
41
-
-
41
-141
-2
-47
-190
270
181
19
200
Transactions with owners
1
-
1
-17
-4
-5
-26
-
-
-
-
-
-25
-
-25
Transactions with non-controlling interests
-5
-
-5
-
-
-
-
-
-
-
-
-
-5
-17
-22
Half-year supplementary payment
-
-
-
-
-
-
-
-
-
-
-
-63
-63
-
-63
Supplementary payment regarding 2022
-
-
-
-
-
-
-
-
-
-
-
-201
-201
-
-201
Foreign currency translation adjustments
5
-
5
-
-
2
2
-
-
-
-
-7
-
-5
-5
Total transactions with owners
1
-
1
-17
-4
-3
-24
-
-
-
-
-271
-294
-22
-316
Equity at 31 December 2023
895
1,316
2,211
372
51
134
557
70
3
-60
13
207
2,988
64
3,052
Primary statements
/ Income statement
Comprehensive income
Profit appropriation
Balance sheet
Equity
Cash flow /
Notes
Understanding equity
Equity accounts regulated by the Arti-
cles of Association are divided into three
main categories: common capital, indi-
vidual capital and other equity accounts.
The characteristics of each category are
explained below.
Common capital
Common capital is not allocated to indi-
vidual members and consists of the cap-
ital account and the reserve for special
purposes. The capital account provides a
strong foundation for the cooperative's
equity, as the non-impairment clause
(described in the accounting policies be-
low) ensures it cannot be used for pay-
ments to owners. The reserve for special
purposes can be used in extraordinary
situations to compensate owners for
losses or impairment affecting the profit
for appropriation. Amounts transferred
from the annual profit appropriation to
common capital are recognised in this
account.
Individual capital
Individual capital is equity allocated to
each owner based on their delivered
milk volumes. It comprises contributed
individual capital, delivery-based owner
certificates and injected individual capi-
tal. Subject to approval by the Board of
Representatives, amounts in these
accounts will be paid out if owners leave
the cooperative. Interest is credited to
contributed individual capital and dis-
bursed with the supplementary pay-
ment.
Other equity accounts
Other equity accounts include those re-
quired by IFRS. These consist of reserves
for value adjustments of hedging instru-
ments, reserves for fair value adjust-
ments of certain financial assets and re-
serves for foreign currency translation
adjustments.
Supplementary payment
The account for proposed supplemen-
tary payment reflects the transactions of
supplementary payments during the
year, and a carrying amount represent-
ing the supplementary payment includ-
ing interest on contributed capital for
the year. The amount will be paid to
owners after the approval of the annual
report by the BoR.
Non-controlling interests
Non-controlling interests represent the
portion of group equity attributable to
holders of non-controlling interests in
group companies.
Financial comments
Equity increased by EUR 86 million in
2024 and totalled EUR 3,138 million at
31 December 2024 (2023: EUR 3,052
million). The equity share was 33%, cal-
culated as equity excluding non-
controlling interests of EUR 3,072 mil-
lion divided by total assets of EUR 9,330
million.
Comprehensive income
Profit for the year amounted to EUR 417
million (2023: EUR 399 million), and
other comprehensive income
amounted to EUR -11 million (2023:
EUR -199 million). Other comprehensive
income included income and expenses
as well as gains and losses that are ex-
cluded from the income statement and
not realised at the balance sheet date.
Other comprehensive income of EUR -
11 million included positive value ad-
justments on net assets measured in
foreign currencies, remeasurement of
pension assets and liabilities, negative
value adjustments on hedging instru-
ments as well as fair value adjustments
of assets and other comprehensive in-
come adjustments from associates and
joint ventures.
Transactions with farmer owners
The Board of Directors decided to pay
out an interim supplementary payment
of EUR 64 million for milk deliveries in
the first six months of the year. An addi-
tional supplementary payment of EUR
228 million was proposed to be paid
subject to the Board of Representatives'
approval of the annual report. In total
this is a supplementary payment of EUR
292 million for the year, which includes
interest on contributed individual capi-
tal.
A supplementary payment related to
2023 totalling EUR 209 million was paid
out in March 2024. Other transactions
with farmer owners amounted to net
EUR 28 million. This consisted of EUR 29
million paid out to owners resigning or
retiring from the cooperative and EUR 1
million relating to payments from new
members.
In 2025, it is expected that EUR 32 mil-
lion will be paid to owners resigning or
retiring, subject to approval by the Board
of Representatives.
Other equity adjustments
Other equity adjustments amounted to
EUR -19 million (2023: EUR -27 million),
specified as transactions with non-con-
trolling interests of EUR -23 million and
foreign exchange rate adjustments of
EUR 4 million.
Accounting policies
In this section, it is described how the
group's Articles of Association and IFRS
regulations are reflected in the account-
ing policies.
Common capital
The capital account includes technical
items like the remeasurement of de-
fined benefit pension schemes, effects
from the disposals and acquisitions of
non-controlling interests in subsidiaries
and exchange rate differences in equity
Development in equity
(EUR million)
Total equity
1 January
2024
Profit for the
year
Other
comprehensive
income
Supplementary
payment
related to 2023
Other
transactions
with owners
Half-year
supplementary
payment
Other
equity
adjustments
Total equity
31 December
2024
3,052
417
-11
-209
-28
-64
-19
3,138
Primary statements
/ Income statement
Comprehensive income
Profit appropriation
Balance sheet
Equity
Cash flow /
Notes
instruments issued to owners. Addition-
ally, the capital account is affected by
contributions from new cooperative
owners.
The reserve for special purposes in-
cludes the annual profit appropriation to
common capital. According to article
20.1(iii) of the Articles of Association,
this reserve can be used, upon the Board
of Directors' proposal, by the Board of
Representatives to fully or partially off-
set substantial extraordinary losses or
impairment.
Individual capital
Individual capital instruments are gov-
erned by article 20 of the Articles of
Association and the general member-
ship terms.
Equity instruments issued as contrib-
uted individual capital relate to amounts
transferred during the annual profit
appropriation. These balances earn
interest at CIBOR 12 months + 1.5%,
which is approved and paid with the
supplementary payment as part of the
annual profit appropriation.
Delivery-based owner certificates are
equity instruments issued to Danish and
Swedish owners until 2010 when these
instruments were discontinued.
Injected individual capital refers to eq-
uity instruments issued during coopera-
tive mergers and when new owners join
the cooperative.
Balances on delivery-based owner certif-
icates and injected individual capital in-
struments do not carry interest.
Balances on contributed individual capi-
tal, delivery-based owner certificates
and injected individual capital can be
paid out over three years upon termina-
tion of the Arla Foods amba member-
ship, in line with the Articles of Associa-
tion and subject to the Board of Repre-
sentatives' approval. Balances are
denominated in the relevant currency of
the owner's country. Foreign currency
translation adjustments occur annually,
with effects transferred to the capital ac-
count.
Proposed supplementary payment to
owners is recognised separately in
equity until approved by the Board of
Representatives.
Other equity accounts
The reserve for value adjustments of
hedging instruments includes the fair
value adjustment of derivatives classi-
fied as hedging of future cash flows,
where the hedged transaction is not yet
realised.
The reserve for fair value adjustments
through OCI includes fair value
adjustments of mortgage credit bonds
classified as financial assets measured at
fair value through other comprehensive
income.
The reserve for foreign currency transla-
tion adjustments includes differences
arising during the translation of financial
statements of foreign companies. This
includes value adjustments related to
assets and liabilities that are part of the
group's net investment and adjustments
related to hedging transactions securing
the group's net investment.
Non-impairment clause
According to the Articles of Association,
Arla Foods amba cannot make payments
to owners that would impair the sum of
the capital account and legally required
equity accounts under IFRS. The non-im-
pairment clause is evaluated based on
the most recent annual IFRS report. Indi-
vidual capital and the reserve for special
purposes are not covered by this clause.
No payout of individual capital can occur
without retaining a corresponding
amount in the cooperative's unallocated
equity, the individual capital accounts or
the reserve for special purposes, as
specified in article 20.1(i), (ii) and (iii) of
the Articles of Association.
Non-controlling interests
Subsidiaries' income and expenses and
assets and liabilities are fully recognised
in the consolidated financial statements.
Non-controlling interests' share of the
profit for the year and of the equity in
subsidiaries is recognised as part of the
consolidated profit and equity, respec-
tively, but is presented separately.
On initial recognition, non-controlling
interests are measured at either the fair
value of the equity interest or the pro-
portional share of the fair value of the
acquired companies' identified assets, li-
abilities and contingent liabilities. The
measurement of non-controlling inter-
ests is selected on a transaction by
transaction basis.
Milk payment to owners
The on-account settlement of owner
milk is recognised as a production cost
in the income statement.
The supplementary payment is based on
the profit for the year as part of the
profit appropriation. The supplementary
payment is recognised as a reserve in
the equity statement until approved by
the Board of Representatives, based on a
recommendation by the Board of Direc-
tors.
The supplementary payment is settled
as an interim supplementary payment
based on the first six months of milk
deliveries, and a final supplementary
payment at year-end. The interim sup-
plementary payment in the year was
recognised in equity.
Primary statements
/ Income statement
Comprehensive income
Profit appropriation
Balance sheet
Equity
Cash flow /
Notes
(EUR million)
Note
2024
2023
Half-year supplementary payment
-64
-63
Supplementary payment regarding the previous financial year
-209
-201
Transactions with owners
-28
-25
Transactions with non-controlling interests
-23
-13
New loans obtained
4.3.c
54
777
Other changes in loans
4.3.c
557
-967
Payment of lease debt
4.3.c
-78
-78
Payment to pension plans
4.3.c
-23
-22
Cash flow from financing activities
186
-592
Net cash flow
-49
40
Cash and cash equivalents at 1 January
138
106
Net cash flow for the year
-49
40
Exchange rate adjustment of cash funds
2
-8
Cash and cash equivalents at 31 December
91
138
Free operating cash flow
Cash flow from operating activities
652
1,151
Cash flow from operating investing activities
-629
-507
Free operating cash flow
23
644
Free cash flow
Cash flow from operating activities
652
1,151
Cash flow from investing activities
-887
-519
Free cash flow
-235
632
(EUR million)
Note
2024
2023
EBITDA
1,109
1,079
Reversal of share of profit in joint ventures and associates
3.3
-33
-51
Reversal of other operating items without cash impact
-36
-54
Change in net working capital
2.1
-379
320
Change in other receivables and other current liabilities
145
-23
Dividends received, joint ventures and associates
24
18
Interest paid
-173
-145
Interest received
34
55
Taxes paid
-39
-48
Cash flow from operating activities
652
1,151
Investments in intangible assets
3.1
-74
-68
Investments in property, plant and equipment
3.2
-557
-445
Sale of property, plant and equipment
3.2
2
6
Operating investing activities
-629
-507
Acquisition of financial assets
-24
-18
Sale of financial assets
56
29
Acquisition of enterprises
3.4
-290
-26
Sale of enterprises
-
3
Financial investing activities
-258
-12
Cash flow from investing activities
-887
-519
Primary statements
/ Income statement
Comprehensive income
Profit appropriation
Balance sheet
Equity
Cash flow /
Notes
Financial comments
Cash flow from operating activities
decreased to EUR 652 million (2023:
EUR 1,151 million), primarily driven by
increased working capital positions.
Higher milk price levels increased cash
tied up in working capital positions by
EUR 379 million, compared to a release
of EUR 320 million last year. The de-
crease was partly offset by slightly
higher EBITDA and settlement of other
working capital positions including VAT
receivables and receivables from associ-
ates and joint ventures.
The net cash flow from investing activi-
ties amounted to EUR 887 million
(2023: EUR 519 million). CapEx
investments amounted to EUR 557 mil-
lion (2023: EUR 445 million), where con-
tinued investments in butter capacity in
Denmark, investments in mozzarella ca-
pacity in UK and the continued growth
of Arla Foods Ingredients were the main
drivers.
Cash flow from investments in intangi-
ble assets amounted to EUR 74 million
(2023: EUR 68 million), consisting of
continued investments in the SAP plat-
form across the group.
The effect of financial investing activi-
ties of net EUR 258 million (2023: EUR
12 million) is mainly explained by the
acquisition of the Volac Whey Nutrition
business and the Lockerbie Biogas facil-
ity, both in the UK.
The cash flow from financing activities
was EUR 186 million (2023: EUR -592
million), comprising transactions with
owners and the effect of funding activi-
ties and cash management.
Transactions with owners constituted a
negative cash flow of EUR 301 million,
specified as an interim supplementary
payment of EUR 64 million, a supple-
mentary payment regarding 2023 of
EUR 209 million and net payment of
individual capital of EUR 28 million.
Transactions with non-controlling inter-
ests amounted to EUR -23 million
(2023: EUR -13 million) and consisted of
dividend payments and acquisition of
non-controlling interests' shares.
The net cash flow from funding activities
was EUR 510 million and consisted of
net cash from utilisation of loan facilities
of EUR 611 million, payment of lease
debt of EUR 78 million and settlement
of pension liabilities of EUR 23 million.
See Note 4.3 for more details.
Cash and cash equivalents at 31 Decem-
ber 2024 amounted to EUR 91 million
(2023: EUR 138 million).
Illustration of cash flow
(EUR million)
EBITDA
Net working capital
Other payments and
adjustments with an impact
on operating cash flow
Cash flow from
operating activities
Investing activities
Free cash flow
Supplementary payments
and payments to
leaving members
Transactions with
non-controlling interests
Other financing
activities
Decrease in cash
1,109
-379
-78
652
-887
-235
-301
-23
510
-49
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Basis for preparation
The consolidated financial statements
are based on the group's monthly
reporting procedures. Group entities
are required to report using standard
accounting principles in accordance
with the IFRS Accounting Standards as
adopted by the EU (IFRS).
The consolidated financial statements
are prepared on a going concern basis.
General accounting principles are
disclosed in Note 5.7, while accounting
policies for the respective areas are
explained in the relevant note sections.
In response to the Guidelines on Alter-
native Performance Measures (APMs)
issued by the European Securities and
Markets Authority (ESMA), we have pro-
vided additional information on the
APMs used by the group. These APMs,
and in particular the performance price,
are deemed critical to understanding
the financial performance and financial
position of the group. As they are not
defined by IFRS, they may not be directly
comparable with other companies that
use similar measures. Definitions are
provided in the glossary and supported
by calculations in Note 1.4.
Considering the potential future
impact of strategic risks
When preparing the consolidated finan-
cial statements the going concern as-
sumption was applied. Identified strate-
gic risks and market and regulatory risks
including sustainability-related risks
were considered.
On top of a potential direct impact on
Arla's performance, these risks could po-
tentially also negatively impact future
milk volumes delivered by the owners of
Arla Foods amba and thereby indirectly
impact the future value in use of certain
parts of the asset base. These risks are
monitored closely, and no material
impairment losses were identified.
The assessment of risk and the potential
impact on future performance is inher-
ently judgemental, and different conclu-
sions could materialise in the future.
Read more in the Risk management sec-
tion on pages 25-27 and the section on
climate-related risks and opportunities
on pages 51-52.
Currency exposure
The group's financial position is signifi-
cantly exposed to currencies, both due
to transactions conducted in currencies
other than EUR and due to the transla-
tion of financial reporting from entities
not part of the euro zone. The most sig-
nificant exposure relates to financial
reporting from entities operating in GBP
and SEK, and to transactions relating to
sales in USD or USD-pegged currencies.
See page 15 for more details on curren-
cies as part of strategic risk and Note
4.1.2 on currency risks.
Special focus areas for 2024
Comparability
The group's activity level is normally
determined by the volume of milk deliv-
ered by the owners and by the success
of moving milk volumes into branded
positions and to international markets.
This was also the trend in 2024, despite
another year of general macroeconomic
uncertainty. Revenue was EUR 13,770
million in 2024, which was an increase
of 1% compared to last year. This was
driven by increasing commodity prices
of milk throughout 2024.
The following sections
provide additional disclosures
supplementing the primary
financial statements.
Details on the group's
performance and profitability.
Development and composition
of the group's inventory and
trade balances.
Details on production capacity,
intangible assets and financial
investments.
Details on funding
of the group's activities.
The group's general accounting princi-
ples and accounting policies.
Read more on page 112.
Read more on page 118.
Read more on page 122.
Read more on page 131.
Read more on page 152.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Despite increased commodity prices
and production-related costs in general,
total production costs decreased by 1%
to EUR 10,803 million in 2024, primarily
driven by continued efficiencies in the
supply chain and logistics.
The performance price for 2024 totalled
50.9 EUR-cent/kg of owner milk, repre-
senting an increase of 8.3% compared
to last year.
The continuous increase in milk prices
compared to the last half of 2023 signif-
icantly increased the level of funds tied
up in net working capital positions at
year-end. This had a negative impact on
cash flow from operating activities,
which decreased to EUR 652 million
(2023: EUR 1,151 million). Combined
with business combinations during
2024, interest-bearing debt increased
and leverage landed at 3.2, which is
within our target range of 2.8 to 3.4.
The volatility and uncertainty experi-
enced in 2024 is a continuity of the last
couple of years, which makes compari-
son with previous years difficult. As un-
certainty continues into 2025, predicta-
bility will continue to be difficult, and
stakeholders should be careful about us-
ing reported results as projections for
the future.
Valuation of inventory
An imbalance between demand and
supply drove up commodity prices
during the year. To ensure correct
inventory valuation, we frequently
updated our standard cost model for
individual cost components such as
milk-based components, additives,
packaging, energy etc. throughout
2024, and thoroughly reviewed the val-
uation at 31 December 2024.
The conversion from standard cost to
actual cost at the time of production for
the individual inventory categories was
correspondingly carefully assessed.
Furthermore, net realisable value was
assessed based on the price develop-
ment for especially milk commodity
products at the end of the year.
Read more in Note 2.1 Inventory.
Valuation of certain assets and
liabilities based on a projection of
expected future cash flows
Interest rates remained at a high level,
although on most markets at a lower
level compared to last year. The valua-
tion of goodwill, gross pension liabilities
and interest hedge instruments was
therefore also carefully assessed
in 2024.
Overall headroom related to impairment
test of goodwill positions remained at a
comfortable level supported by solid
expected future cash flows and lower
discount rates.
The fair value of interest hedge instru-
ments decreased by EUR 25 million as a
result of lower long-term interest levels
and utilisation of interest hedges during
the year, while net pension liabilities
remained at the same level as last year.
Read more in Note 3.1 Goodwill, Note
4.4 Hedge instruments and Note 4.7
Pension liabilities.
FarmAhead™ Customer Partnership
recognised as part of revenue
In 2024, we launched a sustainability
customer programme across most of
Arla's core European markets, enabling
customers to participate in sustainability
projects on farms, access customer data
and receive customised reports, and
achieve claimable reductions for ESG
reporting. Customers participating in the
programme pay a premium on the prod-
ucts, recognised as part of revenue.
FarmAhead™ Incentive recognised as
part of milk costs
The year 2024 marked the first full year
after the implementation of the Incen-
tive model in 2023, which facilitates the
redistribution of up to EUR 500 million
among farmers based on their engage-
ment in sustainability initiatives on
farms. Read more about the model on
page 44 in the sustainability statements.
In 2024, a total of EUR 337 million was
disbursed in relation to the FarmAhead™
Check and FarmAhead™ Incentive, and
this amount was accounted for in the
cost of owner milk. Read more in Note
1.2 Operational costs.
Classification of power purchase
agreements
To support the reduction of scope 1+2
CO2e emissions, Arla has entered into
five new power purchase agreements
(PPAs) with a contractual annual energy
volume of 126 GWh. Solar energy
accounts for 26 GWh, and wind energy
accounts for 100 GWh. This adds to
11 already signed PPAs from 2022
and 2023.
Through a structured process, the ac-
counting classification of the individual
contracts was rigorously assessed based
on the latest available guidance and
involvement of external expertise. All
contracts are for the purpose of own
use and classified as executory supplier
contracts.
Read more in Note 4.1.4 Commodity
price risk and Note 5.5 Contractual com-
mitments, contingent assets and liabili-
ties.
Climate-related risks in the
consolidated financial statements
Climate-related risks are of great im-
portance to Arla. The management has
assessed the impact on the
consolidated financial statements from
such risks and initiatives taken or to be
taken towards addressing them. There
was no material impact on the consoli-
dated
financial statements 2024 from climate
changes or the actions taken against
climate-related risks. Potential future
impacts were also evaluated. Read more
on page 35.
Points of considerations are described
below.
Risk of decline in milk volumes
Climate-related risks that can potentially
reduce milk volumes in the future are:
· The Danish Tripartite agreement on a
new carbon tax on methane and ni-
trous oxide emissions from agriculture
has been finalised. The impact from
this could be increased production
costs for our farmer owners in Den-
mark.
· Extreme weather events like heat
waves, draughts or floods which can
have a negative impact on crop yields
and cows' productivity.
· Land use regulations both following
from the Danish Tripartite agreement
and EU level proposals to reach EU cli-
mate targets of converting agriculture
to forest land which would potentially
reduce the production of feed for
cows.
Risk of increased production costs
Climate-related risks that could poten-
tially affect the future of dairy opera-
tions are:
· Regulations to reduce emissions in
production. The EU decided to expand
ETS to cover fuel combustion from
buildings and road transport. The EU
has discussed the development of
an agricultural ETS targeted at pro-
cessing. Arla's operations will be
impacted by this in countries with
CO2e regulations. Dairy production
would be more expensive compared to
countries where such initiatives are
not implemented, which would harm
Arla's competitiveness. We are con-
stantly lowering CO2 emissions from
operations. This is enforced by the
Future 26 strategy's science-based tar-
gets of lowering scope 1 and 2 CO2
emissions by 63% by 2030. Read more
on page 45.
· Changes in consumer behaviour
driven by costumers pushing for more
sustainable products increase the
need for sustainable dairy production
to stay competitive.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Risk of impairment of production
capacity
As a consequence of the above climate-
related risks, Arla could face impairment
of its production capacity due to:
· Equipment becoming outdated in the
sustainability transformation.
· Excess production capacity if milk vol-
umes and operations decline.
The potential consequences of the
above were considered as part of our
impairment test conducted during 2024
and our assessment of value in use for
property, plant and equipment. Non-
current assets in the balance sheet were
not affected by such impairment in
2024. Sustainability is now an integral
part of all investments in property, plant
and equipment which ensure future in-
vestments to address the risks identi-
fied.
Significant accounting estimates
and judgements
Preparing the group's consolidated
financial statements requires manage-
ment to apply accounting estimates and
judgements that affect the recognition
and measurement of the group's assets,
liabilities, income and expenses. The es-
timates and judgements are based on
historical experience and other factors.
These are inherently associated with
uncertainty and unpredictability which
can have a significant effect on the
amounts recognised in the consolidated
financial statements. Areas of significant
accounting estimates and judgements
are listed below with reference to fur-
ther comments in the notes.
Significant accounting estimates
and judgements
Note
Estimate/
Judgement
Measurement of revenue and rebates
1.1
Estimate
Measurement of inventory
2.1
Estimate
Measurement of trade receivables
2.1
Estimate
Impairment test and measurement of goodwill
3.1
Estimate
Classification of investments
3.3
Judgement
Identification and valuation of assets and liabilities in business combinations
3.4
Judgement
Classification of power purchase agreements
4.1.4.a
Judgement
Measurement of pension plans
4.7
Estimate
Recognition and measurement of deferred tax positions
5.1
Estimate
Measurement of insurance provisions
5.2
Estimate
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Revenue increased by 0.7% to EUR
13,770 million (2023: EUR 13,674 mil-
lion). Prices contributed positively to
revenue by EUR 50 million, driven by a
positive impact on Global Industry Sales
(GIS) from higher commodity prices,
partly offset by commercial prices being
at a lower average level compared to
last year.
Branded volume growth increased reve-
nue with EUR 238 million. This was off-
set by lower volumes in private label and
Global Industry Sales, resulting in a net
effect of EUR -10 milliion from vol-
ume/mix.
Business combinations added EUR 24
million to revenue and related to the ac-
quisition of the Volac whey nutrition
business.
Arla’s revenue was positively impacted
by currency effects of EUR 32 million,
primarily driven by higher GBP related
exchange rates and offset by a lower
NGN related exchange rate.
Development in revenue
(EUR million)
2023
Sales prices
Volume/mix
Business
combinations
Currency
2024
13,674
50
-10
24
32
13,770
Table 1.1.a Revenue split by country*
(EUR million)
2024
2023
Share of revenue
in 2024
United Kingdom
3,492
3,441
25%
Sweden
1,698
1,645
12%
Germany
1,683
1,661
12%
Denmark
1,345
1,319
10%
Netherlands
885
873
6%
Saudi Arabia
449
499
3%
Finland
397
388
3%
USA
296
302
2%
UAE
268
277
2%
China
258
270
2%
Other**
2,999
2,999
22%
Total
13,770
13,674
100%
*The figures in this table represent total revenue by country and includes all sales in the countries, irrespective of
organisational structure. Therefore, the figures cannot be compared to the commercial segment review in the
management review.
**Other countries include, among others, Oman, Spain, Canada, Belgium, France and Australia.
Table 1.1.b - Revenue split by brand
(EUR million)
2024
2023
Arla
3,737
3,618
Lurpak
837
772
Puck
514
529
Castello
245
246
Milk-based beverages
393
376
Other supported brands
863
834
Strategic branded revenue
6,589
6,375
Arla Foods Ingredients
1,015
963
Global Industry Sales, private label and other
6,166
6,336
Total
13,770
13,674
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
In 2024, we succeeded in growing our
brands with volume-driven revenue
growth of 3.7% (-0.7% in 2023) and a
branded revenue increase of 3.1% to
EUR 6,589 million (2023: EUR 6,375 mil-
lion), which exceeded our expectations
at the start of the year. This growth was
driven by increased consumer purchas-
ing power, strong sales execution and
the strength of our brands.
Europe is Arla's largest commercial seg-
ment, comprising 58.6% of total reve-
nue (2023: 58.4%). Revenue in Europe
increased to 8,066 EUR million (2023:
EUR 7,984 million).
The increase was driven by higher vol-
umes and lower prices. In Europe, strate-
gic branded volume-driven revenue in-
creased by 4.1% (2023: -1.3%) due to
strong branded positions and growth ef-
forts as well as increased European con-
sumer purchasing power, thanks to eas-
ing inflation and rising wages. Branded
volume growth was partly offset by
changes in commercial prices, which
followed commodity prices and a reduc-
tion in private label volumes.
The International segment accounted
for 17.7% of total revenue (2023:
18.1%). The revenue in International de-
creased to EUR 2,435 million (2023:
EUR 2,471 million), driven by an unfa-
vourable impact from currency develop-
ments, mainly due to devaluations in Ni-
geria and Bangladesh. The underlying
revenue development, excluding cur-
rency effects, was positive as commer-
cial prices followed the upwards moving
commodity prices in the year. Despite
challenges faced due to currency deval-
uations and geopolitical turbulence in
the Middle East, strategic branded vol-
ume-driven growth was 2.9% in Interna-
tional (2023: 1.9%).
Arla Foods Ingredients accounted for
7.4% of total revenue (2023: 7.0%),
amounting to EUR 1,015 million (2023:
EUR 963 million). AFI maintained a high
value-add share of 80.1% (2023: 79.7%).
In late 2024, AFI acquired full ownership
of Volac Whey Nutrition Limited.
Global Industry Sales and other seg-
ments represented 16.4% of total reve-
nue (2023: 16.5%) and decreased by
0.1% to EUR 2,254 million (2023: EUR
2,256 million). The development was
primarily driven by commodity prices.
The overall share of milk solids sold
through GIS decreased to 21.9% (2023:
27.4%).
Arla's revenue was positively impacted
by currency effects of EUR 32 million,
primarily driven by higher GBP-related
exchange rates and offset by a lower
NGN-related exchange rate.
Accounting policies
Revenue is recognised when there is a
contract with a customer for producing
and transferring dairy products across
various product categories and regions.
Revenue by commercial segment or
market is based on the group's internal
financial reporting practices.
Revenue is recognised in the income
statement at the point in time a perfor-
mance obligation is fulfilled, at the price
allocated to that performance obliga-
tion. This occurs when control of the
products is transferred to the buyer, the
revenue amount can be measured relia-
bly and collection is probable. The trans-
fer of control to customers is deter-
mined by trade agreement terms, such
as Incoterms, which can vary depending
on the customer or specific trade.
Revenue related to our FarmAheadTM
Customer Partnership programme is an
integral part of the sales price for the in-
dividual products covered by the con-
tracts with the customers and therefore
follows the regular revenue recognition
criteria mentioned above.
Revenue includes invoiced sales for the
year, minus customer-specific deduc-
tions like sales rebates, cash discounts,
listing fees, promotions, VAT and duties.
Customer contracts may include various
discounts. Historical experience is used
to estimate these discounts for accurate
revenue recognition.
Moreover, revenue is only recognised
when it is highly probable that there will
not be a significant reversal in the
amount of revenue. This typically occurs
when control of the product is
transferred to the customer, considering
any applicable sales rebates.
Most contracts have short payment
terms, so adjusting the transaction price
for a financing component in customer
contracts is not necessary.
Uncertainties and estimates
Revenue, net of rebates, is recognised
when goods are transferred to custom-
ers. Estimates are used when measuring
accruals for rebates and other sales in-
centives. Most rebates are calculated
based on terms agreed upon with the
customer. In some customer relation-
ships, the final settlement of the rebate
depends on future sales volumes, prices
and other incentives. Therefore, esti-
mating whether performance obliga-
tions are met involves some judgement.
These estimates are based on historical
experience and forecasted future sales.
Revenue split by commercial segment
(EUR million)
2024
2023
Europe
International
Arla Foods Ingredients
Global Industry Sales
and other sales
8,066
2,435
1,015
2,254
7,984
2,471
963
2,256
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Operational costs were on a par with last
year at 13,135 million (2023: EUR
13,117 million). Higher milk costs paid
to farmers were offset by positive ef-
fects from cost of goods sold.
Production costs decreased by 0.8% to
EUR 10,803 million (2023: EUR 10,894
million). Excluding costs of raw milk, pro-
duction costs decreased to EUR 4,238
million (2023: EUR 4,739 million), repre-
senting a decrease of 10.6%. The de-
crease was driven by cost of goods sold
which was somewhat lower than last
year due to inventory carry-overs (dairy
products sold in 2024, but already pro-
duced during 2023 with a lower pre-paid
milk price compared to the opposite sit-
uation last year). During 2024, produc-
tion-related costs increased due to infla-
tion effects on production materials
such as packaging, additives and con-
sumables and higher costs related to
salaries, partly offset by lower energy
prices.
Sales and distribution costs increased by
3.4% to EUR 1,824 million (2023: EUR
1,764 million).
Administration costs increased by 10.7%
to EUR 508 million (2023: EUR 459 mil-
lion), mainly driven by an increase in
staff costs, inflation and depreciation.
In 2024, we achieved net savings of
EUR 131 million, of which EUR 96 mil-
lion related to operational costs, reduc-
ing our future cost base.
Cost of raw milk
The cost of raw milk increased by 6.7%
to EUR 6,565 million (2023: EUR 6,155
million), driven by increases in the pre-
paid milk price.
Development in operational costs
(EUR million)
2023
Milk costs
COGS from
inventory
and others
Efficiency cost
impact
Inflation
Business
combinations
Currency
2024
13,117
410
-364
-96
23
23
22
13,135
Table 1.2.a Operational costs split by function and type
(EUR million)
2024
2023
Production costs
10,803
10,894
Sales and distribution costs
1,824
1,764
Administration costs
508
459
Total
13,135
13,117
Specification:
Weighed-in raw milk
6,565
6,155
Other production materials*
2,255
2,882
Staff costs
1,654
1,511
Transport costs
814
795
Marketing costs
271
262
Depreciation, amortisation and impairment
511
479
Other costs**
1,065
1,033
Total
13,135
13,117
*Other production materials include packaging, additives, consumables, variable energy and effects of cost of
goods sold related to changes in inventory
**Other costs mainly include maintenance, utilities and IT
Table 1.2.b Weighed-in raw milk
2024
2023
mkg
EUR million
mkg
EUR million
Owner milk
12,973
6,195
13,058
5,753
Other milk
762
370
816
402
Total
13,735
6,565
13,874
6,155
Milk volumes disclosed using standardised milk with a composition of 3.4% protein and 4.2% fat for weighed-in
milk in Arla.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Owner milk
Costs related to owner milk increased by
EUR 441 million due to a higher average
pre-paid milk price. Arla's average pre-
paid milk price increased to 47.8 EUR-
cent/kg in 2024 (2023: 44.1 EUR-
cent/kg), which constitutes a 8.4%
increase.
In 2024, a total of EUR 337 million was
paid out related to FarmAheadTM Check
and the new FarmAheadTM Incentive
model introduced in July 2023. The
amount was included in the cost of
owner milk.
Other milk
The cost of other milk decreased by
EUR 32 million due to lower prices, and
lower volume intake in the UK. Other
milk consists of speciality milk and other
contract milk acquired to meet local
market demands.
Staff costs and number of FTEs
Staff costs increased by 9.5% to EUR
1,654 million (2023: EUR 1,511 million).
Staff costs increased due to regular sal-
ary increases and additional FTEs. The
total number of FTEs increased to
21,895 (2023: 21,307). See ESG section,
Note 1.2 for further details.
Depreciation, amortisation
and impairment
Depreciation, amortisation and impair-
ment increased by 6.7% to EUR 511 mil-
lion (2023: EUR 479 million) due to an
increase in investments.
Accounting policies
Production costs
Production costs cover direct and indi-
rect costs related to production, includ-
ing volume movements in inventory and
related inventory revaluation. Direct
costs comprise the purchase of milk
from owners, including incentives re-
lated to FarmAheadTM Check and the
new FarmAheadTM Incentive model, in-
bound transport costs, packaging, addi-
tives, consumables, energy and variable
salaries directly related to production.
Indirect costs comprise other costs
related to the production of goods,
including depreciation and impairment
losses on production equipment and
other supply chain-related costs. The
purchase of milk from cooperative own-
ers is recognised at pre-paid prices for
the accounting period and therefore
does not include the supplementary
payment, which is classified as distribu-
tions to owners and recognised directly
in equity.
Sales and distribution costs
Costs relating to sales staff, write-down
of receivables, sponsorships, research
and development, depreciation and im-
pairment losses are recognised as sales
and distribution costs. Sales and distri-
bution costs also include marketing
expenses relating to investment in the
group's brands such as the development
of marketing campaigns, advertise-
ments, exhibits and others.
Administration costs
Administration costs relate to manage-
ment and administration, including
administrative staff, office premises and
office costs as well as depreciation and
impairment.
Table 1.2.c Staff costs
(EUR million)
2024
2023
Wages, salaries and remuneration
1,430
1,324
Pensions – defined contribution plans
109
85
Pensions – defined benefit plans
-
1
Other social security costs
115
101
Total
1,654
1,511
Staff costs relate to:
Production costs
895
842
Sales and distribution costs
477
434
Administration costs
282
235
Total
1,654
1,511
Average number of full-time employees
21,895
21,307
Table 1.2.d Depreciation, amortisation and impairment
(EUR million)
2024
2023
Intangible assets, amortisation
66
62
Property, plant and equipment and RoU, depreciation
445
417
Total
511
479
Depreciation, amortisation and impairment relate to:
Production costs
356
346
Sales and distribution costs
70
60
Administration costs
85
73
Total
511
479
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Other operating income decreased by
57.5% to EUR 48 million (2023: EUR
113 million).
Income from the sale of excess electric-
ity volumes from power production
plants was EUR 28 million (2023: EUR
30 million). The reduction was due to
lower market prices for electricity com-
pared to last year.
Income from currency hedging instru-
ments reclassified from OCI was EUR 4
million (2023: EUR 18 million). Please
refer to Note 4.4 for further details.
Income from commodity hedging in-
struments reclassified from OCI was EUR
3 million (2023: EUR 0 million). Please
refer to Note 4.4 for further details.
Gains on the disposal of intangible
assets and property, plant and equip-
ment were EUR 2 million (2023: EUR 6
million) following disposals in the UK.
Other items amounted to EUR 11 mil-
lion (2023: EUR 37 million), mainly
driven by EUR 5 million insurance
income.
Other operating costs decreased by
2.5% to EUR 118 million (2023: 121
EUR million).
Costs of commodity hedging instru-
ments related to diesel, natural gas
and electricity reclassified from OCI
amounted to EUR 32 million (2023: EUR
61 million), exclusively driven by energy
hedging instruments due to commodity
market prices increasing to levels above
the hedged prices. See Note 4.4 for fur-
ther details.
Costs related to the sale of electricity
remained stable at EUR 27 million
(2023: EUR 27 million) in line with the
previous year.
Costs of currency hedging instruments
reclassified from OCI were EUR 29 mil-
lion (2023: EUR 15 million). Please refer
to Note 4.4 for further details.
Other items amounted to EUR 30 mil-
lion (2023: EUR 18 million) and were
mainly driven by expenses following fire
accidents and expenses relating to the
Volac acquisition.
Accounting policies
Other operating income and costs in-
clude items outside the usual dairy busi-
ness activities. These items consist of
gains and losses from the settlement of
disputes, remeasurement gains from
step acquisitions of entities, net results
from financial hedging activities and net
results from producing and selling en-
ergy from own biogas plants. Addition-
ally, this category includes gains and
losses from the disposal of non-current
assets and the divestment of entities.
Table 1.3 Other operating income and costs
(EUR million)
2024
2023
Sale of electricity
28
30
Income from commodity hedging instruments reclassified from OCI
3
-
Income from currency hedging instruments reclassified from OCI
4
18
Gains on the disposal of intangible assets and property, plant and equipment
2
6
Remeasurement gain on existing shares of MV Ingredients Ltd.
-
22
Other income items
11
37
Other operating income
48
113
Costs of commodity hedging instruments reclassified from OCI
32
61
Costs of currency hedging instruments reclassified from OCI
29
15
Costs related to the sale of electricity
27
27
Other cost items
30
18
Other operating costs
118
121
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
The alternative performance measures
disclosed in Note 1.4 are key perfor-
mance indicators for the group. They
are not defined by IFRS.
Financial comments
Arla's performance price is a key meas-
ure of overall performance, reflecting
the value added to each kilogramme of
milk supplied by our farmer owners.
The performance price was 50.9 EUR-
cent/kg of owner milk, (2023: 47.0 EUR-
cent/kg).
Accounting policies
The performance price is calculated by
taking the standardised pre-paid milk
price included in production costs, add-
ing Arla Foods amba's share of profit
attributable to farmer owners and then
dividing by the total milk volume
weighed in.
Financial comments
Volume-driven revenue growth (VDRG)
is defined as revenue growth resulting
from increased volumes while keeping
prices constant. VDRG of strategic
brands is a performance measure used
to support and understand the non-
price revenue growth and performance
of our branded business.
Strategic branded VDRG increased by
3.7% (2023: decrease of 0.7%). Branded
retail sales increased, driven by strong
demand, despite continued high dairy
prices.
Accounting policies
Strategic branded volume-driven reve-
nue growth (strategic branded VDRG) is
a measure of the share of revenue
growth relative to volumes.
Volume-driven revenue is calculated by
keeping prices fixed year on year.
Strategic branded VDRG is calculated as
the volume growth of EUR 238 million
divided by total strategic branded reve-
nue of EUR 6,589 million and equalled
3.7% in 2024.
Financial comments
The profit share of Arla is targeted at
2.8-3.2% of revenue, calculated on the
basis of the profit attributable to our
farmer owners.
For 2024, the profit attributable to our
farmer owners amounted to EUR 401
million (2023: EUR 380 million). This
corresponded to 2.9% of revenue, or 3.1
EUR-cent/kg of milk delivered, and was
distributed to the supplementary pay-
ment and retainment as disclosed in the
statement of profit appropriation.
Accounting policies
Profit share is a measure of profit rela-
tive to revenue calculated as Arla Foods
amba's share of profit for the year
divided by total revenue.
Profit share is calculated as EUR 401
million divided by EUR 13,770 million
and equalled 2.9% in 2024.
Table 1.4.1 Performance price
2024
2023
EUR
million
mkg
EUR-
cent/kg
EUR
million
mkg
EUR-
cent/kg
Owner milk (standard milk (4.2% fat,
3.4% protein))
6,195 12,973
47.8
5,753 13,058
44.1
Arla Foods amba's share of profit for
the year
401 12,973
3.1
380 13,058
2.9
Total
6,596 12,973
50.9
6,133 13,058
47.0
Table 1.4.2 Strategic branded volume driven revenue growth
(EUR million)
2024
2023
Strategic branded revenue last year
6,375
6,294
Strategic branded VDRG
238
-46
Price and exchange rate adjustments
-24
127
Strategic branded revenue
6,589
6,375
Strategic branded volume driven revenue growth, %
3.7%
-0.7%
Table 1.4.3 Profit share
(EUR million)
2024
2023
Revenue
13,770
13,674
Profit for the year
417
399
Profit relating to non-controlling interests
-16
-19
Profit attributable to farmer owners
401
380
Profit share
2.9%
2.8%
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Net working capital increased by EUR
415 million to EUR 1,519 million, (2023:
EUR 1,104 million), representing an
increase of 37.6% % compared to last
year.
This was due to higher inventory and
trade receivables positions, driven by
higher prepaid milk prices and higher
sales prices.
Development in net working capital
(EUR million)
1 January
2023
Inventory
Trade
receivables
Trade payables
and other payables
excluding owner
milk
Owner
milk
Currency
Business
combinations
31 December
2024
1,104
216
117
96
-71
39
18
1,519
Table 2.1.a Net working capital
Cash flow
Non-cash flow
(EUR million)
1 January
Included in
operating
cash flow
Business
combinations
Write-
downs
Currency
31 De-
cember
2024
Inventory
1,384
233
16
-17
19
1,635
Trade receivables
1,145
121
28
-4
27
1,317
Trade payables and other payables
-1,425
25
-26
-
-7 -1,433
Total net working capital
1,104
379
18
-21
39
1,519
2023
Inventory
1,772
-375
2
10
-25
1,384
Trade receivables
1,267
-117
4
2
-11
1,145
Trade payables and other payables
-1,597
172
-3
-
3 -1,425
Total net working capital
1,442
-320
3
12
-33
1,104
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Inventory
Inventory increased by 18.1% to EUR
1,635 million (2023: EUR 1,384 million).
The increase was driven by higher milk
prices paid to our farmer owners and
higher production-related salary costs,
partly offset by a decrease in the energy
and ingredient costs. Excluding currency
and effects from business combinations,
the carrying amount of inventory in-
creased by EUR 216 million.
Trade receivables
Trade receivables increased by 15.0% to
EUR 1,317 million (2023: EUR 1,145 mil-
lion), driven by higher sales prices.
The utilisation of trade receivables
finance programmes increased to
EUR 353 million (2023: EUR 267 mil-
lion). The group utilises these pro-
grammes to manage liquidity and
reduce credit risk on trade receivables.
Managing credit risk exposure on trade
receivables is guided by group-wide poli-
cies. Credit limits are set based on the
customer's financial position and current
market conditions. The customer portfo-
lio is diversified in terms of geography, in-
dustry sector and customer size. In 2024,
the group was not extraordinarily exposed
to credit risk related to significant individ-
ual customers, but to the general credit
risk in the retail sector. Read more about
credit risk in Note 4.1.5.
Overdue above 30 days amounted to
7.1% of the trade receivables position
(2023: 6.6%). Provision for expected
losses was EUR 21 million (2023:
EUR 17 million).
Excluding currency and effects from
business combinations, the carrying
amount of trade receivables increased
by EUR 117 million.
Trade payables and other payables
Trade payables and other payables in-
creased by 0.6% to EUR 1,433 million
(2023: EUR 1,425 million).
A number of Arla's strategic suppliers
participate in supply chain finance
programmes, where the supply chain
finance provider and related financial
institutions act as a funding partner.
When suppliers participate in these pro-
grammes, the supplier has the option, at
their own discretion and flexibility, to
receive early payment from the funding
partner based on invoices sent to Arla.
This is conditioned by Arla's recognition
and approval of received goods or ser-
vices and an irrevocable acceptance to
pay the invoice at the due date via the
funding partner. The arrangement of
early payment is an exclusive transac-
tion between the supplier and the sup-
ply chain finance provider.
Extended payment terms are not
embedded in the programmes them-
selves, but agreed with vendors directly.
The liquidity risk for Arla on termination
of the programmes is limited. No securi-
ties or guarantees are provided. The pay-
ment terms for suppliers participating in
the programmes are no more than 180
days. Utilisation of supply chain finance
programmes at year-end decreased to
EUR 165 million (2023: EUR 176 mil-
lion). Read more on page 88-89.
Excluding currency and effects from
business combinations, the carrying
amount of trade payables and other pay-
ables, including owner milk, decreased
by EUR 25 million.
Table 2.1.b Inventory
(EUR million)
2024
2023
Inventory before write-downs
1,671
1,403
Write-downs
-36
-19
Total inventory
1,635
1,384
Raw materials and consumables
347
307
Work in progress
457
380
Finished goods and goods for resale
831
697
Total inventory
1,635
1,384
Table 2.1.c Trade receivables
(EUR million)
2024
2023
Trade receivables before provision for expected losses
1,338
1,162
Provision for expected losses
-21
-17
Total trade receivables
1,317
1,145
Table 2.1.d Trade receivables
age profile
2024
2023
(EUR million)
Gross carrying
amount
Expected loss
rate
Gross carrying
amount
Expected loss
rate
Not overdue
1,026
0%
912
0%
Overdue by less than 30 days
217
0%
173
1%
Overdue by between 30 and 89 days
53
0%
32
0%
Overdue by more than 90 days
42
36%
45
33%
Total trade receivables
1,338
1,162
Historically, experienced loss rates on balances not due or overdue by less than 30 days are below 1%.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Accounting policies
Inventory
Inventories are measured at the lower of
cost or net realisable value, calculated
on a first-in, first-out basis. The net real-
isable value is determined by consider-
ing inventory marketability and estimat-
ing the sales price, minus completion
costs and costs incurred to execute the
sale.
The cost of raw materials, consumables
and commercial goods includes the pur-
chase price plus delivery costs. The pre-
paid milk price to Arla's owners is used
as the purchase price for owner milk.
The cost of work in progress and manu-
factured goods also includes an appro-
priate share of production overheads,
including depreciation, based on the
normal operating capacity of the pro-
duction facilities.
Trade receivables
Trade receivables are recognised at the
invoiced amount less expected losses,
according to the simplified approach for
amounts considered irrecoverable
(amortised cost). Expected losses are
measured as the difference between the
carrying amount and the present value
of anticipated cash flows.
Expected losses are assessed for major
individual receivables or in groups at the
portfolio level based on the receivables'
age and maturity profile, as well as his-
torical records of losses. Calculated
expected losses are adjusted for specific
significant negative developments in
geographical areas.
Trade receivables are derecognised
once the criteria for derecognition have
been met, and all substantial risks and
rewards are transferred.
Trade payables and other payables
Trade payables are measured at amor-
tised cost, which typically corresponds
to the invoiced amounts.
Amounts payable to suppliers that are
included in supply chain finance pro-
grammes are classified as trade paya-
bles on the balance sheet and in the
cash flow statement as cash flow from
working capital.
Uncertainties and estimates
Inventory
The group uses monthly standard costs
to calculate inventory and revises all
indirect production costs at least once
a year. Standard costs are also revised
if they significantly deviate from the ac-
tual cost of the individual product. A key
component in the standard cost calcula-
tion is the cost of raw milk from farmers,
which is determined using the average
pre-paid milk price that matches the in-
ventory's production date.
Due to macroeconomic volatility and its
effect on commodity prices, the valua-
tion of individual cost components such
as milk-based components, energy,
packaging, consumables and utilities
in our standard cost models was fre-
quently updated throughout 2024 and
thoroughly assessed as at 31 December
2024.
Conversion from standard cost to reflect
the actual cost at the time of production
for individual inventory categories was
similarly assessed.
Indirect production costs are calculated
based on relevant assumptions regard-
ing capacity utilisation, production time
and other factors characterising the
individual product.
Assessing the net realisable value
requires judgement, particularly when
estimating the sales price of certain
cheese stocks with long maturities and
bulk products intended for sale on Euro-
pean or global commodity markets.
Receivables
Expected losses are calculated using
several parameters, such as the number
of days overdue, and are adjusted for
significant negative developments in
certain geographical areas.
The financial uncertainty related to the
provision for expected losses is gener-
ally considered to be limited. However, if
a customer's ability to pay deteriorates
in the future, further write-downs may
be necessary. Expected losses were
carefully assessed.
Customer-specific bonuses are calcu-
lated based on actual agreements with
retailers, however, some uncertainty
exists when estimating the exact
amounts to be settled and the timing of
these settlements.
Finance programmes
The classification of trade receivables
finance programmes and supply chain
finance programmes involves judge-
ment of the characteristics of the con-
tracts, for example the payment terms
and collaterals. The programmes are
recognised as part of the net working
capital positions.
Table 2.1.e Supply chain finance programmes
(EUR million)
2024
2023
Trade payables and other payables
1,433
1,425
Of which owner milk*
305
235
Trade payables and other payables excluding owner milk
1,128
1,190
Of which is eligible for financing arrangement
165
176
Range of payment terms for trade payables that are part of the arrangements
30 - 180 days
30 - 180 days
Range of payment terms for trade payables that are not part of an arrangement
1 - 120 days
1 - 120 days
* Owner milk due is not part of any supply chain finance programme.
In 2024, the average payment terms to farmers were 15 days.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Other receivables
Other receivables decreased by EUR 43
million to EUR 266 million (2023: EUR
309 million). They mainly consist of VAT
receivables, prepayments, income tax
receivables and other items.
Other items amounted to EUR 81 mil-
lion (2023: EUR 83 million), mainly
driven by insurance recoveries.
Other current liabilities
Other current liabilities increased by
EUR 59 million to EUR 365 million
(2023: EUR 306 million). They mainly
consist of employee-related accruals,
income tax and VAT payables, accrued
interests and other items.
Employee-related accruals amounted to
EUR 172 million (2023: EUR 174 mil-
lion), mainly driven by holiday pay, salary
and bonuses and related salary cost
accruals.
Other items amounted to EUR 126 mil-
lion (2023: EUR 64 million), mainly
driven by invoice financing payables
within the framework of our finance
programme.
Accounting policies
Other receivables and other
current liabilities
Other receivables and other current lia-
bilities are measured at amortised cost
usually corresponding to the nominal
amount.
Table 2.2 Other receivables and current liabilities
(EUR million)
2024
2023
VAT
95
125
Prepayments
63
55
Income tax
17
21
Accrued interest
8
5
Amounts owed by associates and joint ventures
2
20
Other
81
83
Other receivables
266
309
Employee related liabilities
172
174
Income tax
20
23
Accrued interest
17
12
VAT
16
17
Deferred income
13
9
Amounts owed to associates and joint ventures
1
7
Other
126
64
Other current liabilities
365
306
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Intangible assets and goodwill
Intangible assets and goodwill
amounted to EUR 1,207 million com-
pared to EUR 1,010 million last year.
Goodwill
The carrying amount of goodwill
amounted to EUR 938 million (2023: EUR
752 million). Additions during the year
amounted to EUR 157 million and related
to the acquisition of the Whey Nutrition
business and production facility in the UK
from Volac International Limited and of
the Lockerbie Biogas facility in the UK.
The fair value of the acquired net assets
has been identified and goodwill recog-
nised. Net assets, goodwill and contin-
gent assets and liabilities recognised at
the reporting date are preliminary.
Adjustments may be applied to the pur-
chase price allocation for a period of up to
12 months from the acquisition date in
accordance with IFRS 3. Please refer to ta-
ble 3.1.b for a specification of goodwill.
Licences and trademarks
The carrying amount of licences and
trademarks amounted to EUR 57 million
(2023: EUR 60 million). The carrying
amount primarily relates to the recogni-
tion of trademarks from business combi-
nations and includes Yeo Valley® and
Svensk Mjölk®. The decrease in value
was due to amortisation.
The strategic brands Arla®, Lurpak®,
Castello® and Puck® are internally gen-
erated trademarks and are consequently
not recognised in the balance sheet.
Arla holds long-term licence agree-
ments related to utilising Starbucks™,
Kraft™, Galaxy®, Milka® and other brands
on certain product categories and mar-
kets. No values are recognised for these
licence agreements.
IT and other development projects
The carrying amount of IT and other de-
velopment projects was EUR 212 million
(2023: EUR 198 million). The group con-
tinued to invest in IT projects, amount-
ing to EUR 74 million in 2024.
Accounting policies
Goodwill
Goodwill represents the premium paid
by Arla above the fair value of the identi-
fied net assets of an acquired company.
On initial recognition, goodwill is recog-
nised at cost. Goodwill is not amortised,
but is subsequently measured at cost
less any accumulated impairment. The
carrying amount of goodwill is allocated
to the group's cash-generating units,
which align with the management struc-
ture and internal financial reporting.
Cash-generating units are the smallest
group of assets capable of generating
independent cash inflows.
Table 3.1.a Intangible assets and goodwill
(EUR million)
Goodwill
Licences and
trademarks
IT and other
develop-
ment
projects
Total
2024
Cost at 1 January
752
161
508
1,421
Exchange rate adjustments
29
1
-3
27
Additions
-
-
74
74
Business combinations
157
-
-
157
Disposals
-
-
-20
-20
Cost at 31 December
938
162
559
1,659
Amortisation and impairment at 1 January
-
-101
-310
-411
Exchange rate adjustments
-
3
1
4
Amortisation and impairment for the year
-
-7
-59
-66
Amortisation on disposals
-
-
21
21
Amortisation and impairment at 31 December
-
-105
-347
-452
Carrying amount at 31 December
938
57
212
1,207
2023
Cost at 1 January
702
160
631
1,493
Exchange rate adjustments
5
1
-1
5
Additions
-
-
68
68
Business combinations
45
-
-
45
Disposals
-
-
-190
-190
Cost at 31 December
752
161
508
1,421
Amortisation and impairment at 1 January
-
-94
-445
-539
Exchange rate adjustments
-
-
-
-
Amortisation and impairment for the year
-
-7
-55
-62
Amortisation on disposals
-
-
190
190
Amortisation and impairment at 31 December
-
-101
-310
-411
Carrying amount at 31 December
752
60
198
1,010
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Licences and trademarks
Licences and trademarks are initially
recognised at cost. This cost is then
amortised on a straight-line basis over
their expected useful lives, with a maxi-
mum period of 20 years.
IT and other development projects
Costs incurred during the research or
exploration phase, which involves gen-
eral assessments of requirements and
available technologies, are treated as ex-
penses as they occur. In contrast, costs
directly related to the development
stage of IT and other development pro-
jects – including design, programming,
installation and testing – are recognised
as intangible assets. This recognition oc-
curs only if the expenditure can be
measured reliably, the project is techni-
cally and commercially viable, there is a
likelihood of future economic benefits
and the group intends to and has the
necessary resources to complete and
utilise the asset. These IT and develop-
ment projects are then amortised on a
straight-line basis over a period of five to
eight years.
Financial comments
Goodwill is allocated to relevant cash-
generating units, primarily within the
group's UK activities in the commercial
segment Europe.
Basis for impairment test and
applied estimates
Impairment tests are conducted using
expected future cash flows derived from
forecasts and long-term strategic tar-
gets. Projections for future cash flows
and earnings targets are made for each
individual cash-generating unit, consid-
ering expected developments identified
in the Future 26 strategy process and
past experience. This includes costs re-
lated to sustainability initiatives under-
taken as part of Arla's Future 26 ambi-
tions. The impairment tests do not in-
clude revenue growth in the terminal
value.
Procedure for impairment tests
Impairment tests of goodwill are based
on an assessment of the value in use.
Milk costs in the forecast are recognised
at a milk price that corresponds to the
price at the time the test was performed
and longer term. The key operational
assumption is future profitability, which
considers the impact of moving milk
intake into value-add products and more
profitable markets as well as operational
efficiency initiatives.
Test results
In 2024, the interest rate level de-
creased on the majority of our markets
compared to 2023. In general, this led
to lower discount rates that together
with a strong cash flow supported our
goodwill positions. Throughout the year,
close monitoring of all goodwill posi-
tions and assessments of supporting
business cases were conducted. No
impairment was identified.
Sensitivity calculations indicated that
with the currently applied discount rate,
a 1 percentage point reduction in mar-
gins would not result in impairment on
any markets.
Table 3.1.b Goodwill split by commercial segment and country
(EUR million)
2024
2023
UK
513
480
Finland
40
40
Sweden
19
20
Denmark
62
62
Europe
634
602
MENA
85
80
China
16
16
International
101
96
Argentina
9
9
UK
194
45
Arla Foods Ingredients
203
54
Total
938
752
Table 3.1.1 Applied key assumptions
2024
2023
(EUR million)
Discount rate,
net of tax
Discount rate,
before tax
Discount rate,
net of tax
Discount rate,
before tax
UK
8.9%
10.2%
8.5%
9.5%
Finland
7.2%
8.1%
7.5%
8.3%
Sweden
6.8%
7.7%
6.9%
7.7%
Denmark
6.7%
7.7%
7.4%
8.3%
MENA
9.4%
10.7%
11.1%
12.4%
China
6.6%
7.2%
7.8%
8.5%
Arla Foods Ingredients
7.6%
8.6%
7.9%
8.7%
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Accounting policies
Impairment occurs when the carrying
amount of an asset exceeds its recover-
able amount through use or sale. For im-
pairment testing, assets are grouped
into the smallest cash-generating units
that generate largely independent cash
inflows. However, for goodwill, which
does not generate independent cash in-
flows, impairment tests are conducted
at the level where cash flows are consid-
ered to be largely independent.
The grouping of cash-generating units is
determined based on the management
structure and internal financial report-
ing, which is assessed annually.
The carrying amount of goodwill is
tested for impairment together with
other non-current assets in the cash-
generating unit to which the goodwill is
allocated. The recoverable amount of
goodwill is calculated as the present
value of the expected future net cash
flows from the group of cash-generating
units to which the goodwill is allocated,
discounted using a pre-tax discount rate
that reflects the current market assess-
ment of the time value of money and
risks specific to the asset or cash-gener-
ating unit.
The carrying amount of other non-cur-
rent assets is assessed annually against
their recoverable amount to identify any
indications of impairment. Any impair-
ment of goodwill is separately recog-
nised in the income statement and can-
not be reversed.
The recoverable amount of other non-
current assets is determined as the
higher value of the asset's value in use
(present value of estimated future net
cash flows from its use or the group of
cash-generating units) and its market
value (fair value) less expected disposal
costs.
An impairment loss on other non-cur-
rent assets is recognised in the income
statement under production costs, sell-
ing and distribution costs or administra-
tion costs, respectively. Impairment rec-
ognised can only be reversed to the ex-
tent that the assumptions and estimates
that led to the impairment have
changed. An impairment loss is reversed
only to the extent that the asset's carry-
ing amount does not exceed the carry-
ing amount that would have been deter-
mined, net of depreciation or amortisa-
tion, if no impairment loss had been
recognised.
Uncertainties and estimates
Uncertainties and estimates play a sig-
nificant role in the goodwill impairment
tests. The group of cash-generating
units to which goodwill is allocated is
defined based on the management
structure and assessed annually.
Goodwill impairment tests are con-
ducted at least once a year for each
group of cash-generating units. The ex-
pected cash flow approach is used to de-
termine the value in use, with key pa-
rameters including anticipated future
free cash flows and assumptions on dis-
count rates.
Anticipated future free cash flows
The anticipated future free cash flows
are determined based on current fore-
casts and long-term 2026 targets de-
rived from the Future 26 process. These
forecasts and targets are established at
the cash-generating unit level during
the forecast and target planning pro-
cess. External sources of information
and industry-relevant observations, such
as macroeconomic and market condi-
tions, are considered in this determina-
tion.
All applied assumptions undergo scru-
tiny during the forecast and target plan-
ning process, relying on management's
best estimates and expectations, which
inherently involve judgement. These as-
sumptions encompass expectations re-
lated to revenue growth, EBIT margins
and capital expenditure. They also in-
clude moving milk intake into value-add
products and more profitable markets
and operational efficiency initiatives.
Furthermore, future cash flow
projections include cost and capital ex-
penditures related to sustainability initi-
atives undertaken as part of Arla's Future
26 ambitions. For the growth rate be-
yond the strategy period, it has been set
to the expected inflation rate in the ter-
minal period, assuming no nominal
growth.
Discount rates
A discount rate, specifically the
weighted average cost of capital (WACC),
is applied for each individual cash-gen-
erating unit. The rate is determined
based on assumptions regarding inter-
est rates and risk premiums. WACC is re-
calculated to a before-tax rate. Changes
in future cash flow or discount rate esti-
mates can lead to significantly different
recoverable amounts.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Arla's main property, plant and equip-
ment are located in Denmark, the UK,
Germany and Sweden. The carrying
amount was EUR 3,521 million (2023:
EUR 3,149 million).
Additions amounted to EUR 689 million
(2023: EUR 533 million).
Additions included major projects such
as investments in butter capacity in Hol-
stebro, Denmark, and growth invest-
ments in Arla Foods Ingredients.
In 2024, new investments were initiated,
including investments in state-of-the-art
mozzarella technology in Taw Valley
Dairy, UK.
Depreciation amounted to EUR 445 mil-
lion (2023: EUR 417 million).
Accounting policies
Property, plant and equipment are
measured at cost less accumulated de-
preciation and accumulated impairment
losses. Assets under construction, land
and decommissioned plants are not de-
preciated.
Property, plant and equipment by country
(EUR million)
2024
2023
Denmark
Sweden
UK
Germany
Other
1,573
324
763
431
430
1,467
320
570
433
359
Table 3.2.a Property, plant and equipment including right-of-use assets
(EUR million)
Land and
buildings
Plant and
machinery
Fixtures and
fittings, tools
and equipment
Assets under
construction
and payment
on account
Total
2024
Cost at 1 January
2,158
4,193
843
450
7,644
Exchange rate adjustments
18
28
11
-3
54
Additions
131
130
76
352
689
Business combinations
38
71
3
15
127
Transferred from assets in the course of construction
64
168
29
-261
-
Disposals
-56
-21
-58
-
-135
Reclassification
52
113
-20
-
145
Cost at 31 December
2,405
4,682
884
553
8,524
Depreciation and impairment at 1 January
-974
-2,883
-638
- -4,495
Exchange rate adjustments
-7
-13
-5
-
-25
Depreciation and impairment for the year
-107
-253
-85
-
-445
Depreciation on disposals
37
19
51
-
107
Reclassification
-52
-113
20
-
-145
Depreciation and impairment at 31 December
-1,103
-3,243
-657
- -5,003
Carrying amount at 31 December
1,302
1,439
227
553
3,521
2023
Cost at 1 January
2,047
3,984
805
333
7,169
Exchange rate adjustments
-2
4
1
-2
1
Additions
79
101
68
285
533
Business combinations
2
19
-
3
24
Transferred from assets in the course of construction
43
109
17
-169
-
Disposals
-11
-24
-48
-
-83
Cost at 31 December
2,158
4,193
843
450
7,644
Depreciation and impairment at 1 January
-888
-2,641
-609
- -4,138
Exchange rate adjustments
1
-16
-1
-
-16
Depreciation and impairment for the year
-94
-248
-75
-
-417
Depreciation on disposals
7
22
47
-
76
Depreciation and impairment at 31 December
-974
-2,883
-638
- -4,495
Carrying amount at 31 December
1,184
1,310
205
450
3,149
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Cost
Cost includes the acquisition price and
any costs directly related to an asset un-
til it is ready for its intended use. For self-
constructed assets, cost covers both di-
rect and indirect costs related to materi-
als, components, payroll and borrowing
costs from both specific and general
borrowing directly associated with asset
construction. Further, payment on ac-
count is included in the carrying amount
of assets under construction. If signifi-
cant parts of a property, plant or equip-
ment item have different useful lives,
they are recognised as separate items
(major components) and depreciated in-
dividually. When component parts are
replaced, any remaining carrying
amount of the replaced parts is derec-
ognised from the balance sheet and
recognised as an accelerated deprecia-
tion charge in the income statement.
Subsequent expenditure on property,
plant and equipment is only added to
the carrying amount of the item when it
is likely that the cost will bring financial
benefits to the group. Other expenses,
such as general repairs and mainte-
nance, are recognised in the income
statement as they occur.
Depreciation
Depreciation is intended to allocate the
cost of an asset, minus any estimated re-
coverable amounts at the end of its ex-
pected use, to the periods in which the
group benefits from its use. Property,
plant and equipment are depreciated on
a straight-line basis from the time of ac-
quisition or when the asset is ready for
use, based on an assessment of its esti-
mated useful life.
The depreciation base is calculated by
considering the asset's residual value,
which is the estimated value the asset
could generate through sale or scrap-
page at the balance sheet date if it was
of the expected age and condition at the
end of its useful life, and reduced by any
impairment losses. The residual value is
determined at the acquisition date and
reviewed annually. Depreciation stops
when the carrying amount of an item is
less than the residual value, or when the
item is decommissioned.
Any changes to the useful life or the re-
sidual value are treated as changes to
accounting estimates, affecting only
current and future periods. Depreciation
is recognised in the income statement
in production costs, sales and distribu-
tion costs or administration costs.
Uncertainties and estimates
Estimates are used to assess the useful
lives of property, plant and equipment,
which determine the period over which
the asset's depreciable amount is ex-
pensed in the income statement. The
depreciable amount of an item is based
on the asset's cost or carrying amount
and its residual value. Estimates are also
made to determine the amount the
group can recover at the end of an as-
set's useful life. An annual review is con-
ducted to evaluate the appropriateness
of the depreciation method, as well as
the useful life and residual values of
property, plant and equipment.
Due to climate-related risks, Arla may
face future impairment of production
capacity, as equipment could become
outdated during the sustainability trans-
formation, or from excess production
capacity if milk volumes and operations
decline.
In 2024, non-current assets in the bal-
ance sheet were not affected by such
impairment. Sustainability has become
an integral part of all CapEx investments,
ensuring that future investments ad-
dress the identified risks.
Investments in and depreciation of property, plant and equipment and right-of-use assets
(EUR million)
Investments in property, plant and equipment
Depreciation of property, plant and equipment
Right-of-use assets
580
521
429
533
689
381
406
414
417
445
478
452
373
445
557
314
332
340
347
366
2020
2021
2022
2023
2024
56
88
132
79
74
70
69
74
67
102
Table 3.2.b Estimated useful life in years
(EUR million)
2024
2023
Office buildings
50
50
Production buildings
20-30
20-30
Technical facilities
5-20
5-20
Other fixtures and fittings, tools and equipment
3-7
3-7
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Arla leases various offices, warehouses,
vehicles and other equipment. Leases
are typically agreed for a fixed duration,
but may include an extension option.
Significant right-of-use assets include
office buildings and warehouses in
Denmark, Germany, Sweden and the UK
with remaining useful lives between 10
and 20 years.
Filling machinery and other technical
plants represent another major right-of-
use asset category. Filling machines typ-
ically have useful lives of seven years,
whereas other technical plants are de-
preciated between one and seven years.
Cars and trucks have on average useful
lives of four and five years, respectively.
In total, the group has approximately
3,900 leases.
The total carrying amount of right-of-
use assets was EUR 253 million (2023:
EUR 222 million), as specified in table
3.2.1.a. Additions to right-of-use assets
during the year amounted to EUR 132
million (2023: EUR 88 million). Lease lia-
bilities are specified in Note 4.3.
Accounting policies
All leases, except for short-term and
low-value leases, are recognised as a
right-of-use asset and a corresponding
liability at the date at which the leased
asset becomes available for use by the
group. A lease liability is initially meas-
ured on a present value basis, which in-
cludes the net present value of fixed
lease payments, variable lease pay-
ments based on an index or a rate and a
potential exercise price if a purchase
option exists, less any lease incentives
receivable.
The lease payments are discounted us-
ing an incremental borrowing rate.
The corresponding right-of-use asset is
measured at cost, which includes the in-
itial measurement of the lease liability,
any lease payments made at or before
the commencement date minus any
lease incentives received, as well as any
initial direct costs and restoration costs.
The right-of-use asset is subsequently
depreciated on a straight-line basis over
the shorter of the asset's useful life and
the lease term.
Each lease payment includes a reduc-
tion of the lease liability and a finance
cost. The finance cost is charged to
profit or loss over the lease period as a
constant periodic rate of interest on the
remaining balance of the liability.
Short-term leases and leases of low-
value assets are recognised as an
expense in the income statement.
Uncertainties and estimates
The group has applied estimates and
judgements affecting the recognition
and measurement of right-of-use assets
and lease liabilities. This includes an as-
sessment of the incremental borrowing
rate, service components and facts and
circumstances that could create an eco-
nomic incentive to utilise the extension
options of lease arrangements.
Table 3.2.1.a Right-of-use assets
(EUR million)
RoU
Land and
buildings
RoU
Plant and
machinery
RoU
Fixtures and
fittings, tools
and equipment
Total
2024
Carrying amount at 1 January
120
19
83
222
Additions
82
1
49
132
Disposals
-54
-4
-47
-105
Depreciation and impairment for the year
-35
-4
-40
-79
Depreciation on disposals
36
4
40
80
Exchange rate adjustments
2
-
1
3
Carrying amount at 31 December
151
16
86
253
2023
Carrying amount at 1 January
124
11
74
209
Additions
29
12
47
88
Disposals
-10
-8
-26
-44
Depreciation and impairment for the year
-30
-4
-36
-70
Depreciation on disposals
8
8
24
40
Exchange rate adjustments
-1
-
-
-1
Carrying amount at 31 December
120
19
83
222
Table 3.2.1.b Amounts recognised in the income statement and the cash flow statement
(EUR million)
2024
2023
Expenses related to short-term and low-value leases
-
39
Interest expenses on lease liabilities
11
8
Total amounts recognised in the income statement
11
47
Payment of lease debt
78
78
Total cash flow from right of use assets
89
125
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
The share of the profit in associates and
joint ventures amounted to EUR 33 mil-
lion (2023: EUR 51 million) and related
primarily to the profit from our invest-
ment in COFCO Dairy Holdings Limited
and thereby indirectly to dividend re-
ceived from the listed company China
Mengniu Dairy Company Limited.
COFCO Dairy Holdings Limited (CDH)
and China Mengniu Dairy Company
Limited (Mengniu)
The group's proportionate share of the
net asset value of CDH including the in-
vestment in Mengniu was EUR 453 mil-
lion, compared to EUR 445 million last
year. The fair value of the indirect share
in Mengniu equalled EUR 453 million
(2023: EUR 507 million) based on the
official listed share price at 31 Decem-
ber 2024.
In March 2024, Mengniu announced sig-
nificant changes to their executive man-
agement team. As a consequence of
this, the influence on the indirect invest-
ment in Mengniu was reassessed, and
classification of the investment was
transferred from an investment in asso-
ciates to an investment in a portfolio
company, included in the carrying
amount of the investment in CDH.
The indirect investment held in Mengniu
is measured at fair value based on the
official listed share price at 31 Decem-
ber 2024, with fair value adjustments
recognised in other comprehensive
income and received dividends recog-
nised as profit from associates as the
shares are held through the investment
in CDH.
The effect of the reclassification was a
net gain of EUR 15 million recognised as
profit from associates. In 2024 adjust-
ments of EUR -14 million was recog-
nised in other comprehensive income.
CDH holds no significant investments
other than the investment in Mengniu,
and reported revenue relates to re-
ceived dividend payments from
Mengniu. Through the investment in
CDH, Arla holds a 5.3% indirect invest-
ment in Mengniu. See table 3.3.b for
more details on CDH.
Lantbrukarnas Riksförbund (LRF)
The carrying amount of the investment
related to the membership of Lant-
brukarnas Riksförbund in Sweden
amounted to EUR 90 million (2023: EUR
91 million).
Accounting policies
Investments in which Arla has a signifi-
cant but not controlling influence are
classified as associates. Investments in
which Arla has joint control are classified
as joint ventures.
Investments in associates and joint ven-
tures are recognised using the equity
method and measured at the propor-
tionate share of the entities' net asset
values, calculated in accordance with
Arla's accounting policies. Goodwill
related to acquisitions of these invest-
ments is added separately.
The proportionate share of the net profit
or loss in associates and joint ventures is
recognised in the consolidated income
statement, after elimination of the pro-
portionate share of unrealised inter-
company profits or losses.
Dividends received from associates and
joint ventures reduce the value of the
investment.
Table 3.3.a Associates and joint ventures
(EUR million)
2024
2023
Carrying amount of associates and joint ventures
COFCO Dairy Holdings Ltd.
453
445
LRF and other associates
94
91
Other joint ventures
13
24
Carrying amount of associates and joint ventures
560
560
Table 3.3.b COFCO Dairy Holdings Ltd. (CDH) Disclosures
(EUR million)
2024
2023
Financial information*
Revenue
38
36
Net profit
38
36
Other comprehensive income
-14
-
Non-current assets
757
708
COFCO Dairy Holdings Ltd. has no other significant assets or liabilities
* Based on the latest available financial reporting
Other information
Dividends received from CDH
13
11
Ownership share of CDH
30%
30%
Group share of net profit in CDH
22
34
Fair value of Mengniu based on listed share price
453
507
Table 3.3.c Transactions with associates and joint ventures
(EUR million)
2024
2023
Sales of goods
-
-
Purchase of goods
47
77
Trade receivables*
2
15
Trade payables*
-10
-6
* Included in other receivables and other payables
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Investments in associates and joint ven-
tures with negative net asset values are
measured at zero. If Arla has a legal or
constructive obligation to cover a loss in
the associate or joint venture, the loss is
recognised under provisions. Any
amounts owed by associates and joint
ventures are written down to the extent
that they are deemed irrecoverable.
An impairment test is performed when
there are indications of impairment,
such as significant adverse changes in
the environment in which the equity-
accounted investee operates, or a signif-
icant or prolonged decline in the fair
value of the investment below its carry-
ing amount.
Where the equity-accounted investment
is considered an integral part of a cash-
generating unit (CGU), the impairment
test is performed at the CGU level using
expected future net cash flows of the
CGU. An impairment loss is recognised
when the recoverable amount of the
equity-accounted investment (or CGU)
falls below the carrying amount. The
recoverable amount is defined as the
higher of value in use and fair value less
costs to sell of the equity-accounted
investment (or CGU).
Uncertainties and estimates
Significant influence is defined as the
power to participate in financial and
operating policy decisions of the inves-
tee, without having control or joint con-
trol over those policies. Judgement is
required to determine when significant
influence exists. Factors considered
include representation on the Board of
Directors, participation in policy-making
processes, material transactions be-
tween the entities and interchange of
managerial personnel.
CDH and Mengniu
The group holds a 30% investment in
CDH, which is classified as an associate
due to a cooperation agreement that
extends significant influence, including
the right to representation on the Board
of Directors.
CDH holds an investment in Mengniu,
which at the Arla group level in March
2024 was reclassified to an indirect in-
vestment in a portfolio company follow-
ing a change in the executive manage-
ment team. The indirect ownership
amounts to 5.3% of the shares of
Mengniu.
Lantbrukarnas Riksförbund (LRF)
Arla holds a 24% ownership interest in
LRF, a politically independent profes-
sional organisation for Swedish entre-
preneurs involved in agriculture, forestry
and horticulture.
Based on a detailed analysis of the LRF
arrangement, Arla's active ownership in-
terest constitutes a significant influence
in LRF. This includes, but is not limited
to, owner representation on the Board
of Directors. Additionally, Arla's owners
have represented the Swedish dairy in-
dustry on the Board of Directors of LRF,
and both Arla and its Swedish owners
are individual members of LRF.
Based on this, it is assessed that Arla ex-
ercises significant influence in LRF, and
the investment is therefore classified as
an associate.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Acquisition of enterprises 2024
Volac Whey Nutrition business
In November 2024, Arla acquired a
Whey Nutrition business and production
facility in the UK from Volac Interna-
tional Limited.
The acquisition included production and
energy facilities and related working
capital items. This was in line with the
AFI business strategy to expand the busi-
ness and to improve and secure whey
production capacity in the UK.
Goodwill from the acquisition amounted
to EUR 147 million. It is supported by
strategic advantages and synergies.
First, we improve the AFI business with
significant growth in whey intake and we
leverage our supply chain by expanding
our AFI business to the UK where we are
already well positioned with our dairy
business. Second, bringing the Volac
business into AFI consolidates our posi-
tion as the whey nutrition market leader
and it is an enabler for expanded market
reach, where we can serve more cus-
tomers and strengthen our global sup-
ply chain.
In 2024, the revenue contribution from
the Volac Whey Nutrition business was
EUR 24 million.
Lockerbie Biogas Limited
In May 2024, Arla acquired Lockerbie
Biogas Limited in the UK.
The acquired biogas facilities serve as an
integrated facility for Arla's site in Lock-
erbie to handle effluent from the manu-
facturing processes.
Goodwill from the acquisition amounted
to EUR 10 million, and represents the
value of securing vital infrastructure for
the dairy production on the site.
There is no external revenue contribu-
tion from the acquisition of Lockerbie Bi-
ogas, as the acquired entity serves as a
supporting function for Arla's dairy pro-
duction only.
Acquisition of enterprises 2023
MV Ingredients Ltd.
In August 2023, Arla acquired the re-
maining 50% of the shares in the joint
venture MV Ingredients Ltd. located
in UK.
The fair value of the acquired activities
amounted to EUR 62 million including
recognised goodwill of EUR 45 million.
The remeasurement of the existing
share in MV Ingredients Ltd. to fair value
generated a gain of EUR 22 million rec-
ognised as other operating income in
the income statement.
Accounting policies
Newly acquired companies are included
in the consolidated financial statements
when the group gains control. The ac-
quisition amount is measured at its fair
value. If the agreement allows for pay-
ment changes due to future events
(contingent consideration), it is meas-
ured at fair value at the acquisition date.
Changes in contingent consideration
estimates are recognised in the income
statement. Acquisition-related costs are
also recognised in the income state-
ment as they occur. Acquired assets, lia-
bilities and contingent liabilities are
measured at fair value on the acquisition
date.
In step acquisitions, the shareholding
held before gaining control is remeas-
ured at fair value on the acquisition date,
with any gains or losses recognised in
the income statement. The total fair
value of the shareholding post-step ac-
quisition is recognised as the cost of the
entire shareholding in the company.
Goodwill arises when the total of the fair
value of the transferred consideration,
any previously held interest and the
value of the non-controlling interest
holders exceeds the fair value of the
identifiable net assets of the acquired
company. Goodwill is not subject to
amortisation, but is annually assessed
for impairment.
This approach also applies in mergers
with other cooperatives, where the own-
ers of the acquired company become
owners of Arla Foods amba. The pur-
chase price is determined at the acquisi-
tion date when the net assets' fair values
are transferred, and equity instruments
are issued. If the consideration exceeds
the fair value of the identifiable net as-
sets, it is recognised as goodwill.
Changes in the group's interest in a sub-
sidiary that do not lead to loss of control
are recognised as equity transactions.
Divested enterprises are included in the
consolidated income statement until
disposal. Comparative figures remain
unchanged.
Gains or losses on the sale of subsidiar-
ies and associates are calculated as the
difference between the sales price and
the carrying amount of the net assets,
including goodwill, at the selling date,
plus sales costs.
Uncertainties and estimates
To classify investments, assessing the
group's influence is crucial. Judgement
is needed to determine if and when the
group controls a company.
Upon gaining control via acquisition, the
acquisition method is applied. However,
there can be uncertainty in identifying
the acquired assets, liabilities and con-
tingent liabilities as well as measuring
the company's fair value at the time of
acquisition.
Table 3.4 Business combinations
(EUR million)
2024
2023
Property, plant and equipment
127
11
Inventory
16
2
Trade receivables
24
2
Trade payables
-24
-2
Other net assets
15
4
Fair value of net assets
158
17
Goodwill
157
45
Consideration transferred
315
62
Cash in acquired business
-25
-5
Fair value of previously held investments
-
-31
Cash flow from business combinations
290
26
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Financial risks are an inherent part of the
group's operating activities and as a re-
sult, the group's profit is impacted by the
development in currencies, interest
rates and certain types of commodities.
The global financial markets are volatile,
and so it is critical for the group to have
an appropriate financial risk manage-
ment approach in place to mitigate
short-term market volatility, while simul-
taneously achieving the highest possible
milk price.
The group's comprehensive financial
risk management strategy and system
builds on a thorough understanding of
the interaction between the group's
operating activities and underlying
financial risks. The overall framework
for managing financial risks, being the
Treasury Policy, is approved by the
Board of Directors and managed cen-
trally. The policy outlines risk limits for
each type of financial risk, permitted fi-
nancial instruments and counterparties.
The group's financial risk exposure is re-
ported to the Board of Directors on a
monthly basis. Hedging the volatility of
milk prices is not within the scope of fi-
nancial risk management, but is an in-
herent component of the group's busi-
ness model.
Adequate liquidity reserves
In 2024, liquidity reserves increased by
EUR 189 million to EUR 1,538 million.
Looking at the maturity profile of the
group's debt and the forecasted cash
flow, the liquidity reserves are consid-
ered adequate and are expected to re-
main at the same level during 2025. En-
suring the availability of sufficient oper-
ating liquidity and credit facilities for
operations is the primary goal of manag-
ing liquidity risk. Based on the liquidity
models suggested by the rating
agencies, Arla's liquidity reserves of EUR
1,538 million are assessed as adequate
for the coming 12 months.
Supply chain finance programmes and
trade receivables financing relating to
customers form part of the group's
liquidity management. Selected suppli-
ers have access to the group's supply
chain finance facilities, which allow
those suppliers to benefit from the
group's credit profile. For further details
regarding supply chain finance pro-
grammes and trade receivables financ-
ing, please refer to Note 2.1.
More than 94% (2023: 93%) of the day-
to-day liquidity flow of the group is man-
aged and controlled centrally and to a
wide extent via cash pooling arrange-
ments. This secures a scalable and effi-
cient operating model. As a result, the
group is able to ensure cost-efficient uti-
lisation of credit facilities.
Liquidity reserves
2024
2023
Free cash and cash
equivalents
Free securities
Unutilised committed
loan facilities > 1 year
Other unutilised
loan facilities
Interest-bearing debt
maturing < 1 year
62
10
952
514
659
78
29
615
627
477
Table 4.1.1.a Liquidity reserves
(EUR million)
2024
2023
Free cash and cash equivalents
62
78
Restricted cash
14
16
Not readily available cash
15
44
Cash and cash equivalents
91
138
Free securities
10
29
Restricted securities
20
37
Securities used in repurchase arrangements
547
337
Securities
577
403
Free cash and cash equivalents
62
78
Free securities
10
29
Unutilised committed loan facilities > 1 year
952
615
Other unutilised loan facilities
514
627
Liquidity reserves
1,538
1,349
Interest-bearing debt maturing < 1 year
659
477
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Arla operates in several countries with
restrictions and regulations on the
transferability of cash and securities. At
31 December 2024, cash of EUR 14 mil-
lion (2023: EUR 16 million) was located
in countries with restrictions and regula-
tions on the transferability of cash, while
the amount related to restricted securi-
ties was EUR 20 million (2023: EUR 37
million). Cash and securities in Argen-
tina, China, Bangladesh and Senegal are
reported as restricted.
Cash is considered not readily available
for upstreaming in the group if a transfer
is not possible within five days. Arla has
cash positions in a number of countries
where a transfer is deemed to take more
than five days due to various circum-
stances such as local administrative pro-
cesses or shareholder agreements. At
31 December 2024, EUR 15 million
(2023: EUR 44 million) was considered
as not readily available cash.
Contractual cash flow of gross
financial liabilities
Table 4.1.1.b lists the contractual
maturity of gross financial liabilities
summarising the gross liquidity risk. The
non-discounted contractual cash flow of
these liabilities amounted to EUR 6,277
million (2023: EUR 5,579 million), of
which EUR 2,863 million (2023: EUR
Table 4.1.1.b Maturity of gross financial liabilities
Maturity
(EUR million)
Carrying
amount
Total
2025
2026
2027
2028
2029
2030
2031
2032-
2034 After 2034
2024
Issued bonds
524
523
105
174
131
113
-
-
-
-
-
Mortgage credit institutions
1,203
1,209
86
49
54
61
68
71
71
267
482
Credit institutions
1,672
1,672
999
31
478
1
160
1
1
1
-
Schuldschein
351
352
-
201
-
151
-
-
-
-
-
Lease liabilities
252
252
71
57
41
26
18
39
-
-
-
Other non-current liabilities
10
10
10
-
-
-
-
-
-
-
-
Interest expense – interest-bearing debt
-
762
105
81
64
52
45
44
44
130
197
Trade payables and other payables
1,433
1,433
1,433
-
-
-
-
-
-
-
-
Derivative instruments
64
64
54
3
3
2
1
1
-
-
-
Total
5,509
6,277
2,863
596
771
406
292
156
116
398
679
Maturity
(EUR million)
Carrying
amount
Total
2024
2025
2026
2027
2028
2029
2030
2031-
2033 After 2033
2023
Issued bonds
535
534
127
109
181
-
117
-
-
-
-
Mortgage credit institutions
1,212
1,216
10
85
49
54
61
68
90
295
504
Credit institutions
852
852
582
51
1
108
1
108
1
-
-
Schuldschein
350
352
-
-
201
-
151
-
-
-
-
Lease liabilities
223
223
63
50
37
25
16
32
-
-
-
Other non-current liabilities
10
18
18
-
-
-
-
-
-
-
-
Interest expense – interest-bearing debt
-
916
110
101
84
68
59
52
52
156
234
Trade payables and other payables
1,425
1,425
1,425
-
-
-
-
-
-
-
-
Derivative instruments
43
43
36
2
2
1
1
1
-
-
-
Total
4,650
5,579
2,371
398
555
256
406
261
143
451
738
Assumptions
The contractual cash flows are based on the following assumptions:
- The cash flows are based on the earliest possible date at which the group can be required to settle the financial liability
- The interest rate cash flows are based on the contractual interest rate. Floating interest payments have been determined using the current floating rate for each item at the reporting date.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
2,371) can be required to settle during
the next 12 months. The carrying
amount was EUR 5,509 million (2023:
EUR 4,650 million). The difference be-
tween the non-discounted contractual
cash flow and carrying amount arises at
initial recognition and is treated as a
cost that is capitalised and amortised
over the duration of the liabilities.
Throughout the year and at year-end
there has been significant headroom
towards covenants in credit facilities. For
further details regarding covenants on
credit facilities, please refer to Note 4.3.
Risk mitigation
Risk
Liquidity and funding are vital for the
group to be able to pay its financial lia-
bilities as they become due. Risk man-
agement impacts our ability to attract
new funding in the longer term and is
crucial to fulfilling the group's strategic
ambitions.
Policy
The Treasury Policy states the minimum
average maturity threshold for net inter-
est-bearing debt and sets limitations on
debt maturing within the next 12- and
24-month periods. Unused committed
facilities are taken into account when
calculating
average maturity.
How we act and operate
In addition to the Treasury Policy, the
Board of Directors has approved a long-
term financing strategy, which defines
the direction for financing of the group.
This includes counterparties, instru-
ments and risk appetite and describes
future funding opportunities to be ex-
plored and implemented. The funding
strategy is supported by farmer owners'
long-term commitment to investing in
the business. It is the group's objective
to maintain its credit quality at a robust
investment grade level.
Financial comments
The group is exposed to both transac-
tion and translation effects from foreign
exchange rates.
Transaction effects are due to sales in
currencies other than the functional
currencies of the individual entities. The
group is mainly exposed to USD and
USD-pegged currencies as well as GBP.
Revenue increased by EUR 1 million
(2023: EUR -24 million) compared to
last year due to positive transaction ef-
fects. Part of this exposure is hedged by
costs in the same currency. Financial
instruments such as trade receivables,
trade payables and other items denomi-
nated in currencies other than the indi-
vidual entities' functional currencies are
also exposed to currency risks. The net
effect from the revaluation of these
financial instruments is recognised in
financial income or financial costs. A net
loss of EUR 4 million (2023: EUR -62 mil-
lion) was recognised in financial costs.
Exchange rate losses are primarily
related to the Argentine, Bangladeshi
and Nigerian currencies, amounting to
EUR 13 million in total.
To manage short-term volatility from
currency fluctuations, derivatives are
used to hedge the currency exposure.
When settling the hedging instrument, a
positive or negative amount is recog-
nised in other income or other costs,
respectively. A net loss impact of EUR 25
million (2023: EUR +3 million) was rec-
ognised. Please refer to table 1.3. A loss
impact from hedging should be ex-
pected in years where export currencies
strengthen during the year and vice
versa.
The group is exposed to translation
effects from entities reporting in curren-
cies other than EUR. The group is mainly
exposed to translation of entities report-
ing in GBP, SEK, USD and DKK. Due to
translation effects, revenue increased by
EUR 31 million (2023: EUR -317 million)
compared to the revenue reported last
year.
Simultaneously, costs decreased by EUR
17 million (2023: EUR +41 million) com-
pared to last year's reported costs. The
group's financial position is similarly
exposed, impacting the value of assets
and liabilities reported in currencies
other than EUR. The translation effect
on net assets is recognised in other
comprehensive income as foreign cur-
rency translation adjustments. In 2024,
a net income of EUR 60 million (2023:
EUR -47 million) was recognised in other
comprehensive income.
The pre-paid milk price indirectly ab-
sorbs both transaction and translation
effects, and therefore the net profit or
loss has limited exposure to currency
risks. The pre-paid milk price is set based
on achieving an annual profit of 2.8% to
3.2%. The pre-paid milk price is initially
measured and paid out based on an EUR
Revenue split by currency
(EUR million)
2024
2023
EUR
GBP
SEK
DKK
USD
SAR
Other
4,612
3,495
1,601
1,419
1,369
382
892
4,531
3,423
1,552
1,428
1,392
406
941
Table 4.1.1.c Average maturity
Policy
2024
2023
Minimum
Maximum
Average maturity, gross debt
3.9 years
4.9 years
2 years
-
Maturity < 1 year, net debt
0%
0%
-
25%
Maturity > 2 year, net debt
91%
96%
50%
-
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
amount and is consequently exposed
to EUR fluctuations against GBP, SEK
and DKK.
Compared to last year, the development
in the average exchange rates for the
main currencies was limited. The most
significant development was in GBP
which strengthened by 2.7%.
The group is increasingly involved in
emerging markets where efficient hedg-
ing is often not feasible due to currency
regulations, illiquid financial markets or
expensive hedging costs. Among the
most important markets are Nigeria, the
Dominican Republic, Bangladesh, Leba-
non and Argentina. Countries with less
efficient currency markets represented
4% (2023: 4%) of the group's revenue
in 2024.
Risk mitigation
The group's external exposure is calcu-
lated as external financial assets and lia-
bilities denominated in currencies other
than the functional currency of each
legal entity, plus any external derivatives
converted at group level into currency
risk against DKK, i.e. EUR/DKK, USD/DKK
etc. The same also applies to the group's
net internal exposure. The aggregate of
the group's external and internal cur-
rency exposure is the net exposure,
which is outlined in table 4.1.2.b, where
the amounts listed are in EUR.
Net foreign currency investments in
subsidiaries, as well as instruments
hedging those investments, are
excluded.
Risk
According to the Treasury and Funding
Policy, the Treasury function can hedge:
· Up to 15 months of the net forecasted
cash receipts and payables.
· Up to 100% of the net recognised
trade receivables and trade payables.
The currency exposure is continuously
managed by the Treasury function. Indi-
vidual currency exposures are hedged in
accordance with the Treasury and Fund-
ing Policy.
Financial instruments used to hedge the
currency exposure do not necessarily
need to qualify for hedge accounting,
and hence some of the applied financial
instruments, i.e. some option strategies,
are accounted for as fair value through
the income statement.
Arla Foods amba's functional currency
is DKK. However, the risk in relation to
the EUR currency is assessed in the
same manner as for DKK. The Executive
Management Team has the discretion to
decide if and when investments in for-
eign operations should be hedged
(translation risks) with an obligation to
inform the Board of Directors at the next
meeting.
Table 4.1.2.a Exchange rates
Closing rate
Average rate
2024
2023
Change
2024
2023
Change
EUR/GBP
0.829
0.869
4.8%
0.846
0.870
2.7%
EUR/SEK
11.474
11.048
-3.7%
11.434
11.468
0.3%
EUR/DKK
7.458
7.454
-0.1%
7.459
7.451
-0.1%
EUR/USD
1.041
1.106
6.3%
1.082
1.081
0.0%
EUR/SAR
3.893
4.164
7.0%
4.059
4.057
0.0%
EUR/PLN
4.278
4.336
1.4%
4.305
4.537
5.4%
Table 4.1.2.b Currency exposure
Balance sheet exposure
Potential accounting impact
(EUR million)
Open
positions
Hedging of
future cash
flows
External
exposure
Sensitivity
Income
statement
Other com-
prehensive
income
2024
EUR/DKK
211
-
211
1.0%
2
-
USD/DKK*
39
-560
-521
5.0%
2
-28
GBP/DKK
31
-380
-349
5.0%
2
-19
SEK/DKK
-5
-35
-40
5.0%
-
-2
SAR/DKK
16
-259
-243
5.0%
1
-13
PLN/DKK
-
9
9
5.0%
-
-
2023
EUR/DKK
107
-
107
1.0%
1
-
USD/DKK*
-12
-335
-347
5.0%
-1
-17
GBP/DKK
45
-311
-266
5.0%
2
-16
SEK/DKK
-30
-14
-44
5.0%
-2
-1
SAR/DKK
3
-84
-81
5.0%
-
-4
PLN/DKK
-
3
2
5.0%
-
-
*Including AED
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
The average duration of the group's in-
terest hedging of interest-bearing debt,
including derivatives but excluding pen-
sion liabilities, decreased by 0.1 to 2.2.
The duration decreased due to a higher
level of net interest-bearing debt and a
reduction in interest rate hedges com-
pared to last year. The increase in time
to maturity had a minor offsetting effect.
The value of hedged future interest cash
flow amounted to EUR 71 million (2023:
EUR 80 million). Please refer to table
4.4.a.
Risk mitigation
Risk
The group is exposed to interest rate risk
on interest-bearing borrowings, pension
liabilities, interest-bearing assets and on
the value of non-current assets where
an impairment test is performed. The
risk is divided between profit exposure
and other comprehensive income expo-
sure. Profit exposure relates to net po-
tential impairment of non-current as-
sets. Other comprehensive income ex-
posure relates to revaluation of net
pension liabilities and interest hedging
of future cash flows.
Fair value sensitivity
A change in interest rates will impact the
fair value of the group's interest-bearing
assets, interest rate derivative instru-
ments and debt instruments. Measured
using a 1% increase in interest rates, a
EUR 33 million (2023: EUR 35 million)
positive effect would be recognised in
other comprehensive income. A de-
crease in the interest rate would have
the opposite effect. Please refer to table
4.1.3.a.
A change in interest rates will also im-
pact headroom calculated in connection
with impairment test of goodwill and
gross pension liabilities.
Cash flow sensitivity
A change in interest rates will impact in-
terest rate payments on the group's un-
hedged floating-rate debt. Table 4.1.3.a
shows the one-year cash flow sensitivity.
Depicting a 1% increase in interest rates
at 31 December 2024, a EUR 1 million
negative effect (2023: EUR -6 million)
would be recognised in the income
statement. A decrease in the interest
rate would have the opposite effect.
Policy
Interest rate risk must be managed
according to the Treasury and Funding
Policy. Interest rate risk is measured as
the duration of the debt portfolio,
including hedging instruments, but
excluding pension liabilities.
How we act and operate
The purpose of interest rate hedging is
to mitigate risk and secure relatively sta-
ble and predictable financing costs. The
interest rate risk from net borrowing is
managed by having an appropriate split
between fixed and floating interest
rates.
The group actively uses derivatives to
reduce risks related to fluctuations in
the interest rate, and to manage the
interest profile of the interest-bearing
debt. By having a portfolio approach and
using derivatives, the group can inde-
pendently manage and optimise interest
rate risk, as the interest rate profile can
be changed without having to change
the funding itself. This allows the group
to operate in a fast, flexible and cost-effi-
cient manner without changing underly-
ing loan agreements.
The mandate from the Board of Direc-
tors provides the group with the oppor-
tunity to use derivatives, such as interest
rate swaps and options, in addition to in-
terest conditions embedded in the loan
agreements.
Table 4.1.3.a Interest rate risk
Potential accounting impact
(EUR million)
Carrying
amount
Sensitivity
Income
statement
Other
comprehensive
income
2024
Financial assets
-645
1.0%
7
-1
Derivatives
-
1.0%
11
34
Financial liabilities
4,012
1.0%
-19
-
Net interest-bearing debt excluding
pension liabilities
3,367
-1
33
2023
Financial assets
-499
1.0%
5
-1
Derivatives
-
1.0%
6
36
Financial liabilities
3,182
1.0%
-17
-
Net interest-bearing debt excluding
pension liabilities
2,683
-6
35
Table 4.1.3.b Duration
Policy
2024
2023
Minimum
Maximum
Duration
2.2
2.3
1
7
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Energy commodity contracts, except for
electricity contracts covered by power
purchase agreements, are predomi-
nately related to a floating official price
index. The Treasury function uses finan-
cial derivatives to hedge energy com-
modity price risk. This secures full flexi-
bility to change suppliers without having
to take future hedging into considera-
tion.
Hedging activities focus on the most
significant risks, including electricity,
natural gas and diesel. For 2025, the
forecasted energy commodity spend,
excluding taxes and distribution costs,
for the countries covered by hedging
amounts to EUR 184 million with the
prices at 31 December 2024.
The purpose of hedging is to reduce vol-
atility in energy-related costs. In 2024,
hedging activities resulted in a net loss
of EUR 29 million (2023: EUR -61 mil-
lion), please refer to table 1.3. The net
loss in 2024 was partly offset by lower
physical energy costs. The result of
hedging activities, classified as hedge
accounting, is recognised in other in-
come and costs.
At the end of 2024, 57% of the fore-
casted energy spend for 2025 was
hedged. A 50% increase in commodity
prices would negatively impact the fore-
casted unhedged energy spend by ap-
proximately EUR 40 million (2023: EUR -
43 million). If the forecasted energy
prices were 50% higher at 31 December
2024, a gain of EUR 42 million (2023:
EUR +48 million) would positively im-
pact other comprehensive income.
For other physical supplier contracts
covering ingredients and packaging pri-
marily depend on a fluctuating official
price index.
Power purchase agreements
Arla has signed power purchase agree-
ments covering 549 GWh (2023: 446
GWh), of which a yearly production of
194 GWh was in operation at 31 Decem-
ber 2024 (2023: 83 GWh). In 2024, an
additional five agreements covering 126
GWh were signed. Compared to last
year, one agreement in Sweden has
been adjusted downwards by 10 GWh to
eliminate a possible conflict with the
own use criteria. The committed quan-
tity of 549 GWh is intended for own use,
however, due to seasonality and intra-
day production fluctuations, the sale
and purchase of imbalance between
production and consumption might
take place.
Power purchase agreements that went
into operation in 2024 are expected to
cover 10% of the yearly electricity con-
sumption in Europe (based on 2024
numbers), and 14% of the yearly elec-
tricity consumption coming from renew-
able sources in Europe (based on 2024
numbers).
All agreements include green electricity
certificates for the electricity produced,
and the certificates are received
monthly. The certificates are held for
own use and not traded.
The average price per MWh, including
green electricity certificates for the
agreements, is EUR 72 (2023: EUR 67).
The majority of the agreements do not
contain price adjustment clauses like in-
dexation. Only a few of the low quantity
agreements have an indexation element
with a maximum increase included,
however, no indexation of the agreed
prices was made in 2024.
Under normal circumstances, none of
the agreements are terminable during
the contract period. However, termina-
tion can happen in case of default re-
lated to various circumstances. In gen-
eral, termination does not affect the par-
ties' obligation and liability to fulfil
obligations accrued during the term of
the agreements. Termination in case of
default will most likely result in a termi-
nation payment by the defaulting party
to the non-defaulting party.
Table 4.1.4.a Contracted power purchase agreements
Country
Annual MWh
of energy
contracted
Price terms
Average
duration
Operating
Objective
Classification
2024
Denmark
323,400
Fixed
10 years 2023 - 2027
Own use
Executory contracts
Sweden
90,000
Fixed
10 years
2025
Own use
Executory contracts
Germany
91,703
Fixed
12 years 2024 - 2025
Own use
Executory contracts
UK
43,727
Fixed
16 years 2024 - 2026
Own use
Executory contracts
Total
548,830
Type of energy
Solar
289,524
Wind
259,306
Total
548,830
Country
Annual MWh
of energy
contracted
Price terms
Average
duration
Operating
Objective
Classification
2023
Denmark
276,630
Fixed
10 years 2023 - 2025
Own use
Executory contracts
Sweden
100,000
Fixed
10 years
2025
Own use
Executory contracts
Germany
49,207
Fixed
12 years 2024 - 2025
Own use
Executory contracts
UK
19,732
Fixed
15 years
2024
Own use
Executory contracts
Total
445,569
Type of energy
Solar
286,754
Wind
158,815
Total
445,569
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Similar to last year, the accounting clas-
sification of new contracts entered dur-
ing the year was assessed through a
structured process based on the latest
available guidance and suggestions
from IASB as well as involvement of
external expertise. It was concluded that
all contracts are physical and for the
purpose of own use and are therefore
classified as executory supplier con-
tracts. Existing contracts were reas-
sessed using the latest available guid-
ance.
At 31 December 2024, contractual obli-
gations covering power purchase agree-
ments amounted to EUR 408 million
(2023: EUR 308 million). For additional
information covering contractual obliga-
tions, please refer to Note 5.5.
Risk mitigation
Risk
The group is exposed to commodity
risks related to the production and distri-
bution of dairy products. Increased com-
modity prices negatively impact produc-
tion and distribution costs.
Fair value sensitivity
A change in commodity prices will
impact the fair value of the group's
hedged commodity derivative instru-
ments, measured through other com-
prehensive income and the unhedged
energy consumption through the
income statement. Table 4.1.4.b shows
the sensitivity of a 50% increase in
commodity prices for both hedged and
unhedged commodity purchases. A
decrease in commodity prices would
have the opposite effect.
Policy
According to the Treasury and Funding
Policy, the forecasted consumption of
electricity, natural gas and diesel can
behedged for up to 48 months, of which
100% can be hedged for the first 18
months, with a declining proportion
thereafter.
How we act and operate
Energy commodity price risks are man-
aged by the Treasury function. Com-
modity price risks are mainly hedged by
entering into financial derivative con-
tracts, which are independent of the
physical supplier contracts. Arla is also
exploring other commodities relevant
for financial risk management.
Arla's energy exposure and hedging are
managed as a back-to-back setup across
energy type and country. Not all energy
commodities can be effectively hedged
by matching the underlying costs, but
Arla aims to minimise the basic risk.
Dairy derivative markets in the EU, the
USA and New Zealand remain small, but
are evolving. The group has engaged in
hedging activities for a small part of the
group's dairy commodity trading vol-
ume. As the dairy derivative market de-
velops, we expect this to play an increas-
ing role in managing fixed price con-
tracts with customers in the coming
years.
Table 4.1.4.b Hedged commodities
Potential accounting impact
Sensitivity
Carrying
amount
Income
statement
Other
comprehensive
income
2024
Diesel/natural gas
50%
9
-20
38
Electricity
50%
-
-20
4
Total
9
-40
42
2023
Diesel/natural gas
50%
-9
-26
30
Electricity
50%
-9
-17
18
Total
-18
-43
48
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
In 2024, the group continued to experi-
ence very limited losses from defaulting
counterparties such as customers, sup-
pliers and financial counterparties.
All major financial counterparties had
satisfactory credit ratings at year-end.
The Arla requirement is a credit rating
of at least A-/A-/A3 from either S&P,
Fitch or Moody's either for the financial
counterparty or its parent company. In a
small number of geographical locations
which are not serviced by our relation-
ship banks and where financial counter-
parties with a satisfactory credit rating
do not operate, the group deviated from
the rating requirement. Out of the EUR
30 million (2023: EUR 59 million) placed
in weaker speculative grade, EUR 20 mil-
lion (2023: EUR 37 million) was re-
stricted surplus cash in Argentina in-
vested in securities.
Further information on trade receivables
is provided in table 2.1.c.
The maximum exposure to credit risk is
approximately equal to the carrying
amount.
As in previous years, the group continu-
ously worked with credit exposure and
experienced a very low level of losses
arising from customers.
To manage the financial counterparty
risk, the group uses master netting
agreements when entering into deriva-
tive contracts. Table 4.1.5 shows the
counterparty exposure for those agree-
ments covered by entering into netting
agreements that qualify for netting in
case of default.
Risk mitigation
Risk
Credit risks arise from operating activi-
ties and engagement with financial
counterparties. Furthermore, a weak
counterparty credit quality can reduce
their ability to support the group going
forward, thereby jeopardising the fulfil-
ment of our group strategy.
Policy
Counterparties for financial contracts
are selected based on a relationship
bank strategy. New financial counterpar-
ties must be approved by the Executive
Board (CEO and CFO), following a recom-
mendation from Treasury. A minimum
long-term rating of A3 from Moody's, A-
from S&P or A- from Fitch is needed for a
counterparty (or its parent company). If
credit is solely obtained from the coun-
terparty, no rating is necessary. If the
counterparty has multiple credit ratings,
the average rating is used (rounded up).
However, in geographies without suffi-
cient coverage from our relationship
banks, Treasury may deviate from these
requirements.
How we act and operate
The group has a comprehensive Credit
Risk Policy and utilises credit insurance
and trade financing products extensively
for exports. In some emerging markets,
obtaining the required credit coverage
may be challenging, but the group
strives to secure the best available cov-
erage. This is considered an acceptable
risk due to the group's investments in
emerging markets. If a customer pay-
ment is delayed, internal procedures are
followed to minimise losses. The group
works with a select few financial coun-
terparties and continuously monitors
their credit ratings.
Credit rating of financial assets placement
2024
2023
AAA
AA
AA-
A+
A
A-
BBB+
Stronger
speculative
grade*
Weaker
speculative
grade*
73%
0%
2%
14%
2%
2%
1%
2%
4%
54%
2%
3%
21%
1%
3%
2%
4%
9%
Table 4.1.5 Credit rating of financial assets placement
(EUR million)
AAA
AA
AA-
A+
A
A-
BBB+
Stronger
speculative
grade*
Weaker
speculative
grade*
Total
2024
Securities
557
-
-
-
-
-
-
-
20
577
Cash
-
-
8
24
17
16
4
12
10
91
Derivatives
-
-
4
82
-
-
1
3
-
90
Total
557
-
12
106
17
16
5
15
30
758
2023
Securities
366
-
-
-
-
-
-
-
37
403
Cash
-
15
5
30
4
22
11
29
22
138
Derivatives
-
-
15
114
-
1
1
1
-
132
Total
366
15
20
144
4
23
12
30
59
673
*Definition based on S&P rating scale. Stronger speculative grade: BB+ to B- and weaker speculative grade: CCC+ to D.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Financial items decreased by EUR 10
million to EUR 135 million mainly due to
the development in exchange rate
gains/losses, however, partly offset by
an increase in interest expenses.
Net interest expenses amounted to EUR
148 million, representing an increase of
EUR 51 million compared to last year
driven by an increase in net interest-
bearing debt and to some degree higher
interest rates.
Average interest expenses, excluding
interest related to pension assets and
liabilities, were 4.4% (2023: 3.9%). Inter-
est cover decreased to 7.5 (2023: 11.1)
as a result of an increase in net interest
expenses. For a definition of average
interest expenses, excluding interest
related to pension assets and liabilities,
and interest cover, please refer to the
glossary.
Accounting policies
Financial income and financial costs as
well as capital gains and losses are rec-
ognised in the income statement at
amounts that can be attributed to the
year. Financial items comprise realised
and unrealised value adjustments of
securities and currency adjustments of
financial assets and financial liabilities as
well as the interest portion of financial
lease payments. Additionally, realised
and unrealised gains and losses on
derivatives not classified as hedging
contracts are included. Borrowing costs
from general borrowing, or loans that
directly relate to the acquisition, con-
struction or development of qualified
assets are attributed to the costs of such
assets and are therefore not included in
financial costs.
Capitalisation of interest was performed
by using an interest rate matching the
group's average external interest rate in
2024. For 2024, an interest rate of 4.4%
was used (2023: 4.0%). Financial income
and financial costs relating to financial
assets and financial liabilities were rec-
ognised using the effective interest
method.
Table 4.2 Financial income and financial costs
(EUR million)
2024
2023
Financial income:
Interest securities, cash and cash equivalents
34
57
Foreign exchange rate gains
137
74
Fair value adjustments and other financial income
12
4
Total financial income
183
135
Financial costs:
Interest on financial instruments measured at amortised cost
-178
-151
Foreign exchange rate losses
-141
-136
Interest on pension liabilities
-4
-3
Interest transferred to property, plant and equipment
18
14
Fair value adjustments and other financial costs
-13
-4
Total financial costs
-318
-280
Net financial costs
-135
-145
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Net interest-bearing debt, excluding
pension liabilities, increased to EUR
3,367 million (2023: EUR 2,683 million).
The development was driven by in-
creased net working capital, the acquisi-
tion of Volac's Whey Nutrition business
and investments in our dairies and ware-
houses.
Pension liabilities decreased by EUR 1
million to EUR 166 million. Net interest-
bearing debt, including pension liabili-
ties, amounted to EUR 3,533 million
(2023: EUR 2,850 million). The UK pen-
sion scheme net assets were EUR 11
million (2023: EUR 21 million). The net
pension asset position in the UK was ex-
cluded from the calculation of net inter-
est-bearing debt including pension lia-
bilities, hence also leverage.
Arla's leverage ratio was 3.2, an increase
of 0.6 compared to last year, driven by
an increase in net interest-bearing debt.
The result of 3.2 was slightly above
expectations, however, still within the
long-term target range of 2.8-3.4. Lever-
age adjusted for business combinations
was 2.9.
The average maturity of interest-bearing
borrowings decreased by 1.0 year to 3.9
years. Average maturity is impacted by a
lapse of time to maturity, the level of net
interest-bearing debt and offset by new
facilities.
The equity ratio decreased to 33%
(2023: 36%).
Funding
The group applies a diversified funding
strategy to balance the liquidity and refi-
nancing risk with the aim of achieving
low financing costs. Major business
combinations or investments are funded
separately.
A diverse funding strategy includes di-
versification of markets, currencies, in-
struments, banks, lenders and maturi-
ties to secure broad access to funding
and to ensure that the group is inde-
pendent of one single funding partner
or one single market. All funding oppor-
tunities are benchmarked against the
three-month EURIBOR rate, and deriva-
tives are applied to match the currency
of our funding needs. The interest pro-
file is managed with interest rate swaps
independently of the individual loans. At
31 December 2024, 33% (2023: 24%) of
the total interest-bearing borrowings
was covered by interest rate swaps.
The credit facilities contain financial
covenants on equity/total assets (equity
ratio) of at least 20% and minimum eq-
uity of EUR 750 million as well as stand-
ard non-financial covenants. Reporting
of covenants varies from quarterly,
semi-annually to annually. At 31 Decem-
ber 2024, the carrying amount of credit
facilities containing covenants was EUR
2,098 million with 19% maturing within
one year, 35% maturing between one to
five years and 46% after five years. The
group did not default on or fail to fulfil
any loan agreements in 2024. Arla
expects to meet all required covenants
within the next 12 months.
During 2024, the group's most signifi-
cant funding activities were:
· Bond issue of SEK 1,500 million with
maturity in July 2027.
· Bridge facility of EUR 500 million with
maturity in January 2027.
· Maturity extended to 2026 on various
overdraft facilities totalling EUR 330
million.
· Facility of EUR 100 million with an
original maturity in 2024 which was
extended to 2027.
· Five-year long-term loan of EUR 50
million with maturity in July 2029.
· Arla has a commercial paper pro-
gramme in Sweden denominated in
SEK and EUR. The average utilisation in
2024 was EUR 148 million (2023: EUR
144 million).
· During the year, Arla entered into sale
and repurchase arrangements based
on its holdings of listed AAA-rated
Danish mortgage bonds. Please refer
to Note 4.6 for more details.
3.2
Leverage in 2024 (2.9 adjusted for business combinations)
(2023: 2.6)
Net interest-bearing debt consists of current and non-current liabilities,
less interest-bearing assets.
The definition of leverage is the ratio between net interest-bearing debt,
including pension liabilities and EBITDA, and expresses the group's capacity
to service its debt.
The group's long-term target range for leverage is between 2.8 and 3.4.
Net interest-bearing debt
(EUR million)
Target range leverage 2.8-3.4
Pension liabilities
Net interest-bearing debt
excluding pension liabilities
Leverage
2,180
2,221
2,825
2,683
3,367
247
245
161
167
166
2.0
2.3
2.6
2.9
3.2
3.5
3.8
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2020
2021
2022
2023
2024
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Table 4.3.c Cash flow, net interest-bearing debt
Cash flow
Non-cash changes
(EUR million)
1 January
Included
in financing
activities
Additions
Reclassifi-
cations
Foreign
exchange
movements
Fair value
changes
Restricted
cash and
securities
31 De-
cember
2024
Long-term borrowings
2,369
54
132
269
-10
-6
-
2,808
Short-term borrowings
813
480
-
-58
-31
-
-
1,204
Pension liabilities
167
-23
-
-6
-5
33
-
166
Total interest-bearing debt
3,349
511
132
205
-46
27
-
4,178
Securities
-366
25
-
-205
4
2
-17
-557
Cash and cash equivalents
-122
49
-
-
-2
-
-2
-77
Other interest-bearing assets
-11
-
-
-
-
-
-
-11
Net interest-bearing debt
2,850
585
132
-
-44
29
-19
3,533
Long- and short-term borrowings payments of EUR 534 million (EUR 480 million and EUR 54 million, respectively)
can be reconciled to the cash flow statement as new loans obtained (EUR 54 million), other changes in loans (EUR 557 million) and lease
payments (EUR -78 million)
2023
Long-term borrowings
2,640
-27
76
-335
2
13
-
2,369
Short-term borrowings
727
-241
-
335
-8
-
-
813
Pension liabilities
161
-22
-
9
-
19
-
167
Total interest-bearing debt
3,528
-290
76
9
-6
32
-
3,349
Securities
-432
17
-
-
3
-5
37
-366
Cash and cash equivalents
-106
-40
-
-
8
-
16
-122
Other interest-bearing assets
-4
7
-11
Net interest-bearing debt
2,986
-313
76
9
5
34
53
2,850
Long- and short-term borrowings payments of EUR -268 million (EUR -241 million and EUR -27 million, respectively)
can be reconciled to the cash flow statement as new loans obtained (EUR 777 million), other changes in loans (EUR -967 million) and
lease payments (EUR -78 million)
Table 4.3.a Net interest-bearing debt
(EUR million)
2024
2023
Long-term borrowings
2,808
2,369
Short-term borrowings
1,204
813
Securities, cash and cash equivalents (excluding restricted securities and cash)
-634
-488
Other interest-bearing assets
-11
-11
Net interest-bearing debt excluding pension liabilities
3,367
2,683
Pension liabilities
166
167
Net interest-bearing debt including pension liabilities
3,533
2,850
Table 4.3.b Borrowings
(EUR million)
2024
2023
Long-term borrowings:
Issued bonds
419
407
Mortgage credit institutions
1,118
1,201
Bank borrowings
734
251
Schuldschein
351
350
Lease liabilities
186
160
Total long-term borrowings
2,808
2,369
Short-term borrowings:
Issued bonds
105
128
Commercial papers
153
103
Mortgage credit institutions
85
11
Bank borrowings
238
161
Repurchased liability
547
337
Lease liabilities
66
63
Other current liabilities
10
10
Total short-term borrowings
1,204
813
Total interest-bearing borrowings
4,012
3,182
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Maturity of net interest-bearing debt excluding pension
liabilities at 31 December 2024
(EUR million)
Debt
Unused committed facilities
0-1Y
1-2Y
2-3Y
3-4Y
4-5Y
5-6Y
6-7Y
7-10Y
>10Y
Maturity of net interest-bearing debt excluding pension
liabilities at 31 December 2023
(EUR million)
Debt
Unused committed facilities
0-1Y
1-2Y
2-3Y
3-4Y
4-5Y
5-6Y
6-7Y
7-10Y
>10Y
Interest profile for net interest-bearing debt excluding
pension liabilities at 31 December 2024
(EUR million)
Fixed debt
Fixed via swap
Floating
Fixed via options
1Y
2Y
3Y
4Y
5Y
6Y
7Y
10Y
Interest profile for net interest-bearing debt excluding
pension liabilities at 31 December 2023
(EUR million)
Fixed debt
Fixed via swap
Floating
Fixed via options
1Y
2Y
3Y
4Y
5Y
6Y
7Y
10Y
559
512
678
353
337
110
71
266
481
302
250
400
315
291
469
181
345
200
90
293
499
215
400
0
500
1,000
1,500
2,000
2,500
3,000
0
500
1,000
1,500
2,000
2,500
3,000
Table 4.3.d Net interest-bearing debt excluding pension liabilities and the effect of hedging, maturity
(EUR million)
Total
2025
2026
2027
2028
2029
2030
2031
2032-
2034
After
2034
2024
DKK
998
88
65
63
66
72
73
66
236
269
SEK
688
266
176
132
114
-
-
-
-
-
EUR
1,483
101
235
466
162
259
13
5
30
212
GBP
21
-13
11
10
6
2
5
-
-
-
Other
177
117
25
7
5
4
19
-
-
-
Total
3,367
559
512
678
353
337
110
71
266
481
Total
2024
2025
2026
2027
2028
2029
2030
2031-
2033
After
2033
2023
DKK
982
-9
99
60
59
64
76
66
215
352
SEK
671
239
116
187
5
120
4
-
-
-
EUR
930
79
14
209
108
156
112
24
78
150
GBP
34
5
8
7
6
3
5
-
-
-
Other
66
1
54
6
3
2
3
-
-
-3
Total
2,683
315
291
469
181
345
200
90
293
499
Table 4.3.e Currency profile of net interest-bearing debt excluding pension liabilities*
(EUR million)
Original
principal
Effect
of swap
After swap
2024
DKK
998
-
998
SEK
688
-549
139
EUR
1,483
-259
1,224
GBP
21
485
506
Other
177
323
500
Total
3,367
-
3,367
2023
DKK
982
-
982
SEK
671
-570
101
EUR
930
64
976
GBP
34
506
558
Other
66
-
66
Total
2,683
-
2,683
*Before and after derivative financial instruments
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Table 4.3.f Interest rate risk excluding effect of hedging
(EUR million)
Interest
rate
Average
interest rate
Fixed for
Carrying
amount
Interest
rate risk
2024
Issued bonds:
Commercial papers
Fixed
3.2%
0-1 year
153
Fair value
1,200 mSEK maturing 16.06.2025
Floating
3.8%
0-1 year
105
Cash flow
500 mSEK maturing 14.01.2026
Floating
4.0%
1-2 years
44
Cash flow
1,500 mSEK maturing 17.07.2026
Floating
3.7%
1-2 years
131
Cash flow
1,500 mSEK maturing 23.07.2027
Floating
4.1%
2-3 years
131
Cash flow
500 mSEK maturing 14.01.2028
Floating
4.3%
3-4 years
44
Cash flow
400 mSEK maturing 12.10.2028
Floating
4.9%
3-4 years
35
Cash flow
400 mSEK maturing 12.10.2028
Fixed
4.9%
3-4 years
34
Fair value
Total issued bonds
3.9%
677
Mortgage credit institutions:
Fixed-rate
Fixed
3.8%
0-1 year
71
Fair value
Floating-rate
Floating
3.7%
0-1 year
1,132
Cash flow
Total mortgage credit institutions
3.7%
1,203
Bank borrowings:
Fixed-rate
Fixed
3.2%
0-1 year
1,057
Fair value
Floating-rate
Floating
3.6%
0-1 year
813
Cash flow
Total bank borrowings
3.4%
1,870
Other borrowings:
Finance leases
Fixed
4.4%
0-20 years
252
Cash flow
Other borrowings
Floating
2.5%
0-1 year
10
Cash flow
Total other borrowings
4.3%
262
Interest
rate
Average
interest rate
Fixed for
Carrying
amount
Interest
rate risk
2023
Issued bonds:
Commercial papers
Fixed
4.4%
0-1 year
103
Fair value
652 mSEK maturing 03.04.2024
Floating
5.3%
0-1 year
59
Cash flow
750 mSEK maturing 03.04.2024
Fixed
1.6%
0-1 year
68
Fair value
1,200 mSEK maturing 16.06.2025
Floating
5.2%
1-2 years
109
Cash flow
500 mSEK maturing 14.04.2026
Floating
5.5%
2-3 years
45
Cash flow
1,500 mSEK maturing 17.07.2026
Floating
4.8%
2-3 years
137
Cash flow
500 mSEK maturing 14.01.2028
Floating
5.8%
4-5 years
45
Cash flow
400 mSEK maturing 12.10.2028
Floating
5.9%
4-5 years
36
Cash flow
400 mSEK maturing 12.10.2028
Fixed
4.9%
4-5 years
36
Fair value
Total issued bonds
4.7%
638
Mortgage credit institutions:
Fixed-rate
Fixed
3.8%
1-2 years
71
Fair value
Floating-rate
Floating
4.7%
0-1 year
1,141
Cash flow
Total mortgage credit institutions
4.6%
1,212
Bank borrowings:
Fixed-rate
Fixed
3.8%
0-1 year
402
Fair value
Floating-rate
Floating
4.7%
0-1 year
697
Cash flow
Total bank borrowings
4.4%
1,099
Other borrowings:
Finance leases
Fixed
3.8%
0-20 years
223
Cash flow
Other borrowings
Floating
3.0%
0-1 year
10
Cash flow
Total other borrowings
3.7%
233
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Accounting policies
Financial instruments
Financial instruments are recognised at
the date of trade. The group ceases to
recognise financial assets when the con-
tractual rights to the underlying cash
flows either cease to exist or are trans-
ferred to the purchaser of the financial
asset, and substantially all risks and
rewards related to ownership are also
transferred to the purchaser.
Financial assets and liabilities are offset,
and the net amount is presented in the
balance sheet when, and only when, the
group has a legal right of offsetting and
either intends to offset or settle the
financial asset and the liability simulta-
neously.
Financial assets
Financial assets are classified on initial
recognition and subsequently measured
at amortised cost, fair value through
other comprehensive income or fair
value through the income statement.
The classification of financial assets on
initial recognition depends on the finan-
cial asset's contractual cash flow charac-
teristics and how these are managed.
Financial assets where the group
intends to collect the contractual cash
flow are classified and measured at
amortised cost.
Financial assets that are part of liquidity
management are classified and meas-
ured at fair value through other compre-
hensive income. All other financial as-
sets are classified and measured at fair
value through the income statement.
Financial assets measured at
amortised cost
Financial assets measured at amortised
cost consist of readily available cash
at bank and deposits, together with
exchange-listed debt securities with an
original maturity of three months or less,
which have an insignificant risk of
change in value and can be readily con-
verted to cash or cash equivalents.
Financial assets measured at
fair value through other
comprehensive income
Financial assets measured at fair value
through other comprehensive income
consist of mortgage credit bonds, which
correspond in part to raised mortgage
debt.
Financial assets are measured on initial
recognition at fair value plus transaction
costs. The financial assets are subse-
quently measured at fair value with
adjustments made in other
comprehensive income and accumu-
lated in the fair value reserve in equity.
Interest income, impairment and foreign
currency translation adjustments of
debt instruments are recognised in the
income statement on a continuous
basis under financial income and finan-
cial costs. In connection with the sale of
financial assets classified at fair value
through other comprehensive income,
accumulated gains or losses previously
recognised in the fair value reserve are
recycled to financial income and finan-
cial costs.
Financial assets measured at fair
value through profit or loss
Securities classified at fair value through
the income statement consist primarily
of listed securities which are monitored,
measured and reported continuously in
accordance with the group's Treasury
and Funding Policy. Changes in fair value
are recognised in the income statement
under financial income and financial
costs.
Liabilities
Upon initial recognition, debt to mort-
gage credit and credit institutions as
well as issued bonds are measured at
the trade date at fair value plus transac-
tion
costs. Subsequently, liabilities are meas-
ured at amortised cost with the differ-
ence between loan proceeds and the
nominal value recognised in the income
statement over the expected life of the
loan.
Capitalised residual lease obligations re-
lated to leases are recognised under lia-
bilities and measured at amortised cost.
Other financial liabilities are measured
at amortised cost. For details on pension
liabilities, please refer to Note 4.7.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
The group has entered into derivative
contracts to secure a stable cash flow
in future years. The value of cash flow
hedges decreased by EUR 27 million to
EUR 43 million. The decrease was due to
lower values of currency and interest
rate contracts, while the value of com-
modity hedge contracts has increased.
Currency contracts
The value of currency contracts de-
creased by EUR 45 million compared to
last year. The lower value was due to
changed currency exchange rates com-
bined with maturing of existing con-
tracts and value adjustments of new
contracts.
Interest rate contracts
The value of interest rate contracts used
for hedging decreased by EUR 9 million
compared to last year. The lower value
was a result of lower long-term interest
levels and utilisation of interest hedges
during the year.
Commodity contracts
The value of commodity contracts used
for hedging increased by EUR 27 million
compared to last year. The higher value
was a result of market prices increasing
to levels above the hedged prices com-
bined with maturing of existing
contracts and value adjustments of new
contracts.
Hedging of future cash flows
The group uses currency forwards to
hedge currency risks on expected future
net revenue and costs. Interest rate
swaps are used to hedge risks against
movements in expected future interest
payments, and commodity swaps are
used for energy hedging.
Fair value of hedge instruments not
qualifying for hedge accounting
(financial hedge)
The group uses currency options which
hedge forecasted sales and purchases.
Some of these options do not qualify for
hedge accounting and the fair value
adjustment is therefore recognised
directly in the income statement.
Currency swaps are used as part of the
daily liquidity management. The objec-
tive of the currency swaps is to match
the timing of the in- and outflow of for-
eign currency cash flows.
Accounting policies
Derivatives are recognised from the
trade date and measured in the financial
statements at fair value. Positive and
negative fair values of derivatives are
recognised as separate items in the bal-
ance sheet.
Fair value hedging
Changes in the fair value of derivatives
which meet the criteria for hedging the
fair value of recognised assets and liabil-
ities are recognised alongside changes
in the value of the hedged asset or the
hedged liability for the portion that is
hedged.
Cash flow hedging
Changes in the fair value of derivatives
that are classified as hedges of future
cash flows and effectively hedge
changes in future cash flows are recog-
nised in other comprehensive income as
a reserve for hedging transactions under
equity until the hedged cash flows im-
pact the income statement. The reserve
for hedging instruments under equity is
presented net of tax. The cumulative
gains or losses from hedging transac-
tions retained in equity are reclassified
and recognised under the same item as
the basic adjustment for the hedged
item.
The accumulated change in value rec-
ognised in other comprehensive income
is recycled to the income statement
once the hedged cash flows affect the
income statement or are no longer
likely to be realised. For derivatives that
do not meet the criteria for classification
as hedging instruments, changes in fair
value are recognised as they occur in
the income statement under financial
income and costs.
Table 4.4.a Hedging of future cash flows from highly probable forecast transactions
Expected recognition
(EUR million)
Carrying
amount
Fair value
recognised
in OCI
2025
2026
2027
2028 After 2028
2024
Currency contracts
-37
-37
-37
-
-
-
-
Interest rate contracts
71
71
23
15
13
9
11
Commodity contracts
9
9
9
-
-
-
-
Hedging of future cash flows
43
43
-5
15
13
9
11
Expected recognition
(EUR million)
Carrying
amount
Fair value
recognised
in OCI
2024
2025
2026
2027 After 2027
2023
Currency contracts
8
8
8
-
-
-
-
Interest rate contracts
80
80
22
21
12
11
14
Commodity contracts
-18
-18
-18
-
-
-
-
Hedging of future cash flows
70
70
12
21
12
11
14
Table 4.4.b Value adjustment of hedging instruments
(EUR million)
2024
2023
Deferred gains and losses on cash flow hedges arising during the year
27
-112
Value adjustments of currency hedging instruments reclassified to other operating in-
come and costs
-25
3
Value adjustments of commodity hedging instruments reclassified to other operating
income and costs
-29
-61
Value adjustments of currency hedging instruments reclassified to financial items
-1
20
Value adjustments of interest hedging instruments reclassified to financial items
1
9
Total value adjustment of hedging instruments recognised in other
comprehensive income during the year
-27
-141
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Table 4.5.a Categories of financial instruments
(EUR million)
2024
2023
Derivatives
2
45
Shares
8
8
Financial assets measured at fair value through the income statement
10
53
Securities
577
403
Financial assets measured at fair value through other comprehensive income
577
403
Currency instruments
-
9
Interest rate instruments
62
66
Commodity instruments
26
12
Derivative assets used as hedging instruments
88
87
Trade receivables
1,317
1,145
Other receivables
266
309
Cash
91
138
Financial assets measured at amortised cost
1,674
1,592
Derivatives
4
2
Financial liabilities measured at fair value through the income statement
4
2
Currency instruments
37
1
Interest rate instruments
6
10
Commodity instruments
17
30
Derivative liabilities used as hedging instruments
60
41
Long-term borrowings
2,808
2,369
Short-term borrowings
1,204
813
Trade payables and other payables
1,433
1,425
Financial liabilities measured at amortised cost
5,445
4,607
Table 4.5.b Fair value hierarchy – carrying amount
(EUR million)
Level 1
Level 2
Level 3
Total
2024
Financial assets:
Bonds
577
-
-
577
Shares
8
-
-
8
Derivatives
-
90
-
90
Total financial assets
585
90
-
675
Financial liabilities:
Issued bonds
-
524
-
524
Mortgage credit institutions
1,203
-
-
1,203
Derivatives
-
64
-
64
Total financial liabilities
1,203
588
-
1,791
2023
Financial assets:
Bonds
403
-
-
403
Shares
8
-
-
8
Derivatives
-
132
-
132
Total financial assets
411
132
-
543
Financial liabilities:
Issued bonds
-
535
-
535
Mortgage credit institutions
1,212
-
-
1,212
Derivatives
-
43
-
43
Total financial liabilities
1,212
578
-
1,790
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Risk mitigation
Methods and assumptions applied when
measuring the fair values of financial
instruments:
Bonds and shares
The fair value is determined using the
listed prices in an active market.
Non-option derivatives
The fair value is calculated using dis-
counted cash flow models and observa-
ble market data. The fair value is deter-
mined as a termination price and, conse-
quently, the value is not adjusted for
credit risks.
Option instruments
The fair value is calculated using option
models and observable market data
such as option volatilities. The fair value
is determined as a termination price
and, consequently, the value is not
adjusted for credit risks.
Fair value hierarchy
Level 1: Fair values measured using
unadjusted listed prices in an active
market.
Level 2: Fair values measured using valu-
ation techniques and observable market
data.
Level 3: Fair values measured using valu-
ation techniques and observable as well
as significant non-observable market
data.
Financial comments
The group has invested in listed Danish
mortgage bonds underlying its mort-
gage debt. By entering into a sale and
repurchase arrangement on the mort-
gage bonds, the group is able to achieve
a lower interest rate compared to cur-
rent market interest rates on mortgage
debt. The mortgage bonds are meas-
ured at fair value through other compre-
hensive income.
The proceeds from these bonds create a
repurchase obligation which is recog-
nised in short-term borrowings and
measured at fair value.
In addition to mortgage bonds, the
group holds other securities with a car-
rying amount of EUR 23 million (2023:
EUR 40 million).
Table 4.6 Transfer of financial assets
(EUR million)
Carrying
amount
Notional
amount
Fair value
2024
Mortgage bonds
554
556
554
Repurchased liability
-547
-544
-547
Net position
7
12
7
2023
Mortgage bonds
363
363
363
Repurchased liability
-337
-335
-337
Net position
26
28
26
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Pension liabilities
The group's pension assets and liabilities
consist primarily of defined benefit plans
in Sweden and the UK.
The group also operates defined contri-
bution plans for employees. For these
defined contribution plans, the group is
not subject to the same investment,
interest rate, inflation or longevity risks
as it is for the defined benefit plans. The
benefits that employees receive are
dependent on the contribution paid,
investment returns and the form of ben-
efit chosen at retirement.
Pension plans in Sweden
The recognised net pension liability
in Sweden was EUR 150 million at
31 December 2024, a decrease of EUR 2
million compared to last year. While dis-
count rates remained flat compared to
last year, the inflation assumptions in-
creased compared to last year resulting
in higher pension liabilities. Despite this,
we still saw lower net pension liabilities
at 31 December 2024 compared to
31 December 2023 due to a stronger
SEK vs EUR. Mortality assumptions
remained consistent with last year. See
Note 4.7.f for a summary of assumptions
used.
These pension plans are contribution-
based plans, guaranteeing a defined
benefit pension at retirement. The plan
assets are legally structured as a trust,
and the group has control over the oper-
ation of the plan and the associated
investments.
These pension plans do not include a
risk-sharing element between the group
and the plan participants.
Pension plans in the UK
The recognised net pension asset in the
UK was EUR 11 million at 31 December
2024, a decrease of EUR 10 million
compared to last year.
Similarly to Sweden, we saw a modest
increase in inflation expectations in the
UK, resulting in increased liabilities,
however, this was more than offset by
an increase in the discount rate assump-
tion resulting in a net decrease in pen-
sion liabilities. Pension liabilities in the
UK decreased by EUR 51 million from
the previous year to EUR 881 million at
31 December 2024.
The return on plan assets in 2024 was
negative with EUR 102 million. This was
predominantly driven by the perfor-
mance of the matching assets which are
designed to track liability movements as
closely as possible. Matching assets
make up a significant portion of the as-
set portfolio and are part of the strategy
to maintain stability within the pension
plan. As well as this, however, we also
saw decreases in the value of other plan
assets. See the plan asset investments
in the UK section for further details on
the strategy adopted by the trustees.
These decreases were partially offset by
interest income, contributions to the
plan and favourable exchange rate ad-
justments, leading to an overall net de-
crease in the fair value of plan assets in
the UK of EUR 61 million. All values
within the asset portfolio are unlisted.
The defined benefit plan in the UK is a
defined benefit final salary scheme. The
plan is closed to both new entrants and
future accruals, but retains a salary link.
The plan is a registered pension scheme,
and the assets are held in legally sepa-
rate, trustee-administered funds. The
trustees of the plan are required by law
to act in the best interests of the plan
participants while at the same time ad-
ministering the plan in accordance with
the purpose for which the trust was cre-
ated, and are responsible for drawing
up the investment, funding and govern-
ance policies. A representative of the
group attends trustee meetings to pro-
vide the group's view on the investment
strategy, but the ultimate control lies
with the trustees.
Table 4.7.a Pension liabilities recognised in the balance sheet
(EUR million)
Sweden
UK
Other
Total
2024
Present value of funded liabilities
161
881
34
1,076
Fair value of plan assets
-12
-892
-19
-923
Deficit/(surplus) of funded plans
149
-11
15
153
Present value of unfunded liabilities
1
-
1
2
Net pension liabilities recognised in the balance
sheet
150
-11
16
155
Specification of total liabilities:
Present value of funded liabilities
161
881
34
1,076
Present value of unfunded liabilities
1
-
1
2
Total liabilities
162
881
35
1,078
Presented as:
Pension assets
-
-11
-
-11
Pension liabilities
150
-
16
166
Net pension liabilities
150
-11
16
155
2023
Present value of funded liabilities
162
932
31
1,125
Fair value of plan assets
-12
-953
-17
-982
Deficit/(surplus) of funded plans
150
-21
14
143
Present value of unfunded liabilities
2
-
1
3
Net pension liabilities recognised in the balance
sheet
152
-21
15
146
Specification of total liabilities:
Present value of funded liabilities
162
932
31
1,125
Present value of unfunded liabilities
2
-
1
3
Total liabilities
164
932
32
1,128
Presented as:
Pension assets
-
-21
-
-21
Pension liabilities
152
-
15
167
Net pension liabilities
152
-21
15
146
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Employer contributions are determined
based on the advice of an independent
qualified actuary on the basis of triennial
valuation negotiations between the plan
and Arla, and ultimately approved by The
Pensions Regulator. The most recent tri-
ennial valuation of the plan was carried
out at 31 December 2022, and on the
agreed funding basis, the plan was in a
surplus position.
Defined contribution plans are in place
for other employees. Contributions are
made both by Arla and the employee at
a rate determined by Arla.
Plan asset investments in the UK
Plan assets generate returns that are
used to satisfy the plan liabilities. They
are not necessarily intended to be real-
ised in the short term. The trustees in-
vest in different categories of assets and
with different allocations among those
categories according to the plan invest-
ment principles.
Currently, the plan investment strategy
is to maintain a balance of growth assets
(property and infrastructure), income as-
sets (comprising credit investments and
corporate bonds) and matching assets
(comprising a liability hedge portfolio
and a buy-in annuity policy), with a
weighting towards matching assets. In
2021, a strategy was adopted to reduce
the plan's exposure to the UK property
market, with a large portion of it being
completed during 2024.
Part of the investment objective is to
minimise fluctuations in the plan's fund-
ing levels due to changes in the value of
the liabilities. This is primarily achieved
using a Liability Driven Investment (LDI)
portfolio, the main goal of which is to
align movements in the value of the as-
sets with movements in the liabilities
caused by changes in market conditions.
The plan has hedging in place that
covers the majority of interest rate and
inflation movements, as measured
based on the trustees' funding assump-
tions which use a discount rate derived
from gilt yields.
Maturity of pension liabilities at 31 December 2024
(EUR million)
UK 936
Sweden 162
Other 30
0-1Y
1-5Y
5-10Y
10-20Y 20-30Y 30-40Y
>40Y
Maturity of pension liabilities at 31 December 2023
(EUR million)
UK 943
Sweden 155
Other 37
0-1Y
1-5Y
5-10Y
10-20Y 20-30Y 30-40Y
>40Y
0
100
200
300
400
500
600
0
100
200
300
400
500
600
Table 4.7.b Development in pension liabilities
(EUR million)
2024
2023
Present value of liabilities at 1 January
1,128
1,135
Current service costs
-
1
Interest costs
49
50
Actuarial gains and losses from changes in financial assumptions (OCI)
-70
22
Actuarial gains and losses from changes in demographic assumptions (OCI)
1
-33
Benefits paid
-68
-65
Exchange rate adjustment
38
18
Present value of pension liabilities at 31 December
1,078
1,128
Table 4.7.c Development in fair value of plan assets
(EUR million)
2024
2023
Fair value of plan assets at 1 January
982
990
Interest income
45
47
Return on plan assets excluding amounts included in net interest on the net de-
fined benefit liability (OCI)
-102
-30
Contributions to plans
13
12
Benefits paid
-58
-55
Exchange rate adjustments
43
18
Fair value of plan assets at 31 December
923
982
Actual return on plan assets:
Calculated interest income
45
47
Return excluding calculated interest
-102
-30
Actual return
-57
17
The group expects to contribute EUR 23 million to the plan assets in 2025 and EUR 83 million in 2026-2029.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
LDI primarily involves the use of govern-
ment bonds. Derivatives such as interest
rate and inflation swaps are also used.
There are no annuities or longevity
swaps in the LDI portfolios. The value of
the LDI assets is determined based on
the latest market bid price for the under-
lying investments, which are traded daily
on liquid markets, but on aggregate are
segregated mandates managed on be-
half of the plan and therefore are un-
listed.
Annuity policies consist of a bulk annuity
contract with an insurance company.
This allows the trustees to reduce their
scheme's risk by acquiring an asset
(annuity contract) whose cashflows are
designed to exactly meet a specified set
of benefit payments under the pension
scheme.
Infrastructure investments are in large-
scale public systems, services and facili-
ties such as power, road and water sys-
tems. These investments aim to gener-
ate stable long-term inflation-linked
cash flows.
The remainder of the plan assets con-
sists of loans to companies or govern-
ments (debt vehicles and bonds), com-
mercial property investments
(properties) as well as insurance-linked
securities and cash (other assets).
All asset values are unlisted unless oth-
erwise specified.
Accounting policies
Pension liabilities and similar non-
current liabilities
The group has post-employment pen-
sion plan arrangements with a signifi-
cant number of current and former
employees. The post-employment pen-
sion plan agreements take the form of
defined contribution plans and defined
benefit plans.
Defined contribution plans
For defined contribution plans, the
group pays fixed contributions to inde-
pendent pension companies. The group
has no obligation to make supplemen-
tary payments beyond those fixed pay-
ments, and the risk and reward of the
value of the pension plan therefore rests
with plan members, and not the group.
Contributions to defined contribution
plans are expensed in the income state-
ment as incurred.
Defined benefit plans
Defined benefit plans are characterised
by the group's obligation to make spe-
cific payments from the date the plan
member is retired, depending on, for ex-
ample, the member's seniority and final
salary. The group is subject to the risks
and rewards associated with the
uncertainty whether the return gener-
ated by the assets will meet the pension
liabilities, which are affected by assump-
tions concerning mortality and inflation.
The group's net liability is the amount
presented as a pension liability in the
balance sheet.
The net liability is calculated separately
for each defined benefit plan. The net
liability is the amount of future pension
benefits that employees have earned in
current and prior periods (i.e. the liability
for pension payments for the portion of
the employee's estimated final salary
earned at the balance sheet date) dis-
counted to a present value (the defined
benefit liability), less the fair value of as-
sets held separately from the group in a
plan fund.
The group uses qualified actuaries to
annually calculate the defined benefit
liability using the projected unit credit
method.
Table 4.7.d Specification of plan assets
(EUR million)
2024
%
2023
%
Debt vehicles
349
38
295
30
Liability hedge portfolio
238
26
295
30
Annuity policies
200
22
211
21
Infrastructure
69
7
64
7
Properties
29
3
82
8
Bonds
6
1
9
1
Other assets
32
3
26
3
Fair value of plan assets at 31 December
923
100
982
100
Table 4.7.e Assumptions for the actuarial calculations
(%)
2024
2023
Discount rate assumptions
Discount rate, UK
5.5
4.6
Discount rate, Sweden
3.5
3.5
Inflation assumptions
Inflation (CPI), UK
2.7
2.4
Inflation (CPI), Sweden
1.8
1.5
Mortality assumptions (life expectancy in years at age 65)
Male in the UK
20.4
20.3
Female in the UK
22.8
22.5
Male in Sweden
22.0
22.0
Female in Sweden
24.0
24.0
Table 4.7.f Sensitivity of gross pension liabilities to key assumptions
(EUR million)
2024
2024
2023
2023
Impact on pension liabilities at 31 December
+
-
+
-
Discount rate +/- 10 bps
-12
12
-13
13
Life expectancy +/- 1 year
37
-37
41
-41
Inflation +/- 10 bps
7
-7
8
-8
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
The balance sheet amount of the net lia-
bility is impacted by remeasurements,
which include the effect of changes in
assumptions used to calculate the fu-
ture liability (actuarial gains and losses)
and the return generated on plan assets
(excluding interest). Remeasurements
are recognised in other comprehensive
income.
Interest costs for the period are calcu-
lated using the discounted rate used to
measure the defined benefit liability at
the start of the reporting period applied
to the carrying amount of the net liabil-
ity, taking into account changes arising
from contributions and benefit pay-
ments. The net interest costs and other
costs relating to defined benefit plans
are recognised in the income statement.
The net liability primarily covers defined
benefit plans in the UK and Sweden.
Uncertainties and estimates
The defined benefit liability is assessed
based on a number of assumptions,
including discount rates, inflation rates,
salary growth and mortality rates. Any
changes in assumptions can have a sig-
nificant impact on the net position.
The group is aware of a case in the UK in
2023 involving Virgin Media and NTL
Pension Trustee, which could potentially
lead to additional liabilities for some
pension schemes and sponsors, includ-
ing (if applicable) the group. In July
2024, the UK courts dismissed an
appeal against the 2023 judgment.
The group and pension trustees are dis-
cussing the judgment, and the impact (if
any) is being considered by the pension
trustees' legal advisers. Until this work is
complete, the group is unable to deter-
mine the impact (if any), and it will be as-
sessed as relevant in the future. As such
the figures provided in this disclosure
make no allowance for the judgment.
Table 4.7.g Recognised in the income statement
(EUR million)
2024
2023
Current service costs
-
1
Recognised as staff costs
-
1
Interest costs on pension liabilities
49
50
Interest income from plan assets
-45
-47
Recognised as financial costs
4
3
Total amount recognised in the income statement
4
4
Table 4.7.h Recognised in other comprehensive income
(EUR million)
2024
2023
Actuarial gains and losses on liabilities from changes in financial assumptions (OCI)
70
-22
Actuarial gains and losses on liabilities from changes in demographic assumptions
(OCI)
-1
33
Return on plan assets, excluding amounts included in net interest on the net de-
fined benefit liability
-102
-30
Total amount recognised in other comprehensive income
-33
-19
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Tax in the income statement
Total tax costs decreased to EUR 46 mil-
lion (2023: EUR 56 million), primarily
due to a decrease in total deferred tax
costs.
The effective tax rate decreased to 9.8%
compared to 12.3% last year, primarily
driven by changes in permanent differ-
ences and the effects of companies sub-
ject to cooperative tax.
Current income tax
Cost related to current income taxes in-
creased to EUR 45 million (2023: EUR
31 million). The increase is mainly due
to the 2024 introduction of the Global
Minimum Tax rules (Pillar Two), resulting
in a Pillar Two top-up tax of EUR 10 mil-
lion relating to our operations in the
Middle East and Argentina.
Deferred tax
Costs incurred in the income statement
relating to adjustments of deferred
taxes amounted to EUR 1 million, repre-
senting a decrease of EUR 24 million
compared to last year. The decrease was
driven by lower deferred tax costs in the
current year.
Net deferred tax liabilities amounted
to EUR 70 million, representing a net
increase of EUR 10 million compared to
last year. The primary changes in gross
temporary differences were driven by in-
creased deferred tax liabilities in prop-
erty, plant and equipment from acquisi-
tions made during the year.
Deferred tax liabilities equalled EUR 101
million which mainly relate to provisions,
pension liabilities and other liabilities.
These were in part offset by deferred tax
assets amounting to EUR 31 million
relating to tax losses carried forward
and other assets.
The group recognises deferred tax as-
sets, including the value of tax losses
carried forward, where management
assesses that the tax assets may be uti-
lised in the foreseeable future by offset-
ting against taxable income. The assess-
ment is performed on an ongoing basis
and is based on the budgets and busi-
ness plans for future years.
The group recognised deferred tax as-
sets in respect of tax losses carried for-
ward in the amount of EUR 12 million
(2023: EUR 7 million). The net increase
in tax losses carried forward is mainly
due to the effects of Argentinian tax
rules implemented in 2024, reducing
the local inflationary effects in the taxa-
ble income for companies operating in
Argentina.
Deferred tax assets relating to tax losses
carried forward not recognised totalled
EUR 40 million, primarily related to
activities in the UK, USA and Denmark.
Table 5.1.a Tax recognised in the income statement
(EUR million)
2024
2023
Current income tax
Current income tax on profit for the year relating to:
Cooperative tax
5
8
Corporate income tax
32
31
Pillar Two tax
10
-
Adjustments to current taxes of previous years
-2
-8
Total current income tax costs
45
31
Deferred tax
Change in deferred tax for the year
-
23
Adjustment to deferred taxes of previous years
1
2
Impact of changes in tax rates and laws
-
-
Total deferred tax costs
1
25
Total tax costs in the income statement
46
56
Table 5.1.b Calculation of effective tax rate
(EUR million)
2024
2023
Profit before tax
463
455
Tax applying the statutory Danish corporate income tax rate
22.0%
102
22.0%
100
Effect of tax rates in other jurisdictions
-0.2%
-1
-3.1%
-14
Effect of companies subject to cooperative taxation
-11.3%
-52
-8.1%
-37
Impact of Pillar Two tax
2.2%
10
0.0%
-
Non-deductible expenses, less tax-exempt income
-2.7%
-12
1.7%
8
Share of profit/loss after tax in associates and joint ventures
-1.3%
-6
-1.5%
-7
Adjustment for tax costs of previous years
-0.2%
-1
-1.3%
-6
Recognition and adjustments of previously unrecognised tax losses
-0.2%
-1
0.6%
3
Current year losses for which no deferred tax asset is recognised
0.8%
4
0.0%
-
Other adjustments
0.7%
3
2.0%
9
Total
9.8%
46
12.3%
56
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Accounting policies
Tax in the income statement
Tax in the income statement includes
current tax and adjustments to deferred
tax. Tax is recognised in the income
statement, except where it relates to a
business combination or items (income
or costs) recognised directly in other
comprehensive income.
Current tax
Current tax is assessed based on tax leg-
islation applicable to entities in the
group subject to cooperative or corpo-
rate income taxation. Cooperative taxa-
tion is based on the equity of the coop-
erative, while corporate income tax is
calculated based on the company's taxa-
ble income for the year. Current tax lia-
bilities include the expected tax payable
or receivable on the taxable result for
the year, any adjustments to tax payable
or receivable from previous years and
tax paid on account. Current tax liabili-
ties are disclosed as part of other cur-
rent liabilities.
Deferred tax
Deferred tax is measured using the bal-
ance sheet liability method for all tem-
porary differences between the tax base
of assets and liabilities and their carrying
amounts in the consolidated financial
statements. However, deferred tax is not
recognised for temporary differences on
the initial recognition of goodwill or
those arising at the acquisition date of
an asset or liability that do not affect
either the profit or loss for the year or
taxable income, except for those arising
from business combinations.
Deferred tax is determined by applying
tax rates (and laws) that have been en-
acted or substantially enacted by the
end of the reporting period and are
expected to apply when the related
deferred tax asset is realised or the
deferred tax liability is settled. Changes
in deferred tax assets and liabilities due
to changes in the tax rate are recognised
in the income statement, except for
items recognised in other comprehen-
sive income.
Deferred tax assets, including the value
of tax losses carried forward, are recog-
nised under other non-current assets at
the value at which they are expected to
be utilised, either by reducing tax on
future earnings or by offsetting against
deferred tax payable in companies
within the same legal tax entity or juris-
diction.
The mandatory exception in IAS 12
regarding the recognition and disclo-
sure of deferred tax assets and liabilities
related to Pillar Two income taxes has
been applied.
Uncertainties and estimates
Deferred tax
Deferred tax reflects assessments of
actual future tax due on items in the
financial statements, considering timing
and probability. These estimates also
take into account expectations about
future taxable profits. Actual future taxes
may differ from these estimates due
to changes in expectations regarding
future taxable income, future statutory
changes in income taxation or the out-
come of tax authorities' final review of
the group's tax returns. The recognition
of a deferred tax asset also depends on
an assessment of the future recoverabil-
ity of the asset.
Pillar Two tax
As the guidance and rules related to Pil-
lar Two taxes are continuously being up-
dated, the final 2024 Pillar Two top-up
tax payable may differ from the cost rec-
ognised in the income statement.
Income tax treatments
Since tax legislation, case law and tax au-
thority practice do not always provide
clarity on all transactions, uncertainties
exist. Arla recognises and measures un-
certain tax positions in line with the
IFRIC 23 standard.
Table 5.1.c. Deferred tax assets and liabilities
(EUR million)
2024
2023
Net deferred tax liability at 1 January
-60
-64
Deferred tax recognised in the income statement
-1
-25
Deferred tax recognised in other comprehensive income
5
13
Acquisitions in connection with business combinations
-15
-2
Exchange rate adjustments
1
-
Balance sheet reclassification of deferred tax assets/liabilities
-
18
Net deferred tax liability at 31 December
-70
-60
Deferred tax, by gross temporary difference
Intangible assets
-3
-4
Property, plant and equipment
-17
4
Provisions, pension liabilities and other
-28
-31
Tax losses carried forward
12
7
Other assets/liabilities
-34
-36
Total deferred tax, by gross temporary difference
-70
-60
Recognised in the balance sheet as:
Deferred tax assets
31
23
Deferred tax liabilities
-101
-83
Total
-70
-60
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Provisions amounted to EUR 61 million
(2023: EUR 51 million). Provisions pri-
marily relate to provisions for insurance
incidents that have occurred, but have
not yet been settled.
Uncertainties and estimates
Provisions are particularly associated
with estimates of insurance provisions.
These are assessed based on historical
records, including the number of insur-
ance events and the related costs con-
sidered. The scope and extent of oner-
ous contracts are also estimated.
Fees paid to EY
EY is appointed as auditors of Arla by the
Board of Representatives.
Table 5.2 Provisions
(EUR million)
Insurance
provisions
Restructuring
provisions
Other
provisions
Total
2024
Total
2023
Provisions at 1 January
24
4
23
51
48
New provisions during the year
18
-
7
25
7
Reversals
-
-
-
-
-3
Used during the year
-15
-
-
-15
-1
Provisions at 31 December
27
4
30
61
51
Non-current provisions
-
2
28
30
31
Current provisions
27
2
2
31
20
Provisions at 31 December
27
4
30
61
51
Table 5.3 Fees to auditors appointed by the Board of Representatives
(EUR million)
2024
2023
Statutory audit
1.9
1.8
Other assurance engagements
0.4
0.3
Tax assistance
0.2
0.3
Other services
1.1
0.3
Total fees to auditors
3.6
2.7
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Remuneration paid to
management
The remuneration to the 19 registered
members of the Board of Directors (BoD)
is assessed and adjusted on a bi-annual
basis and approved by the Board of Rep-
resentatives. The BoD's remuneration
was most recently adjusted in 2024. The
principles applied to the remuneration
of the BoD are described on page 81.
Members of the BoD are paid for milk
supplies to Arla Foods amba in accord-
ance with the same terms as apply to
other owners. Similarly, individual capital
instruments are issued to the BoD
on the same terms as apply to other
owners.
In 2024, the Executive Board consisted
of Chief Executive Officer Peder
Tuborgh, Chief Operations Officer,
Europe, Peter Giørtz-Carlsen and from
1 December 2024 Chief Financial
Officer Torben Dahl Nyholm. The princi-
ples applied to the remuneration of
the Executive Board are described on
page 97.
Table 5.4.a includes accrued amounts
related to the respective reporting
period. The amount was based on
reported key figures together with esti-
mates of performance compared to
peers and, consequently, the final future
payout may differ.
Table 5.4.a Management remuneration
(EUR million)
2024
2023
Board of Directors
Wages, salaries and remuneration
1.8
1.7
Total
1.8
1.7
Executive Board
Fixed compensation
2.8
2.5
Pension and other benefits
0.5
0.5
Short-term variable incentives
0.7
0.7
Long-term variable incentives
1.4
1.0
Total
5.4
4.7
Table 5.4.b Transactions with the Board of Directors
(EUR million)
2024
2023
Purchase of raw milk
33.2
30.3
Half-year supplementary payment
0.3
0.4
Supplementary payment regarding previous years
1.1
1.1
Total
34.6
31.8
Unsettled milk deliveries in trade payables and other payables
1.8
1.2
Individual capital instruments
3.3
2.8
Total
5.1
4.0
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial comments
Contractual obligations and commit-
ments amounted to EUR 869 million
(2023: EUR 614 million). Arla signed
power purchase agreements in Den-
mark, Germany and the UK during the
year, counting an increase in contractual
commitments of EUR 100 million. Com-
mitments relating to investments in
property, plant and equipment in-
creased by EUR 85 million. Other
contractual obligations and commit-
ments consisted of IT licences, short-
term and low-value leases and others
and increased by net EUR 70 million.
Arla provided security on property for
mortgage debt based on the Danish
Mortgage Act with a nominal value of
1,209 EUR million (2023: EUR 1,216 mil-
lion). Financial surety and guarantee ob-
ligations amounted to EUR 29 million
(2023: EUR 18 million).
Arla is party to a small number of law-
suits, disputes and other claims. It is
management's assessment that the out-
come of these will most likely not have a
material impact on the group's financial
position beyond what has already been
recognised in the financial statements.
Subsequent events
No subsequent events with a material
impact on the consolidated financial
statements have occurred after the bal-
ance sheet date.
Basis for preparation
The consolidated financial statements
included in this annual report are pre-
pared in accordance with IFRS Account-
ing Standards as adopted by the EU, and
additional disclosure requirements in
the Danish Financial Statements Act for
large class C companies. Arla is not an
EU public interest entity as the group
has no debt instruments traded in a reg-
ulated EU marketplace. The consoli-
dated financial statements were author-
ised for issue by the company's Board of
Directors on 17 February 2025 and pre-
sented for approval by the Board of Rep-
resentatives on 26 February 2025.
The functional currency of the parent
company is DKK. The presentation cur-
rency of the parent company and of the
group is EUR.
These consolidated financial statements
are prepared in million EUR with round-
ing.
Consolidated financial statements
The consolidated financial statements
are prepared as a compilation of the par-
ent company's and the individual subsid-
iaries' financial statements in line with
the group's accounting policies. Reve-
nue, costs, assets and liabilities, along
with items included in the equity of sub-
sidiaries, are aggregated and presented
on a line-by-line basis. Inter-company
shareholdings, balances and transac-
tions as well as unrealised income and
expenses arising from inter-company
transactions are eliminated.
The consolidated financial statements
comprise Arla Foods amba (parent com-
pany) and the subsidiaries in which the
parent company directly or indirectly
holds more than 50% of the voting
rights or otherwise maintains control to
obtain benefits from its activities. Enti-
ties in which the group exercises joint
control through a contractual arrange-
ment are considered joint ventures.
Entities in which the group exercises a
significant but not a controlling influ-
ence are considered associates. A signif-
icant influence is typically obtained by
holding or having at the group's dis-
posal, directly or indirectly, more than
20%, but less than 50% of the voting
rights in an entity.
Unrealised gains arising from transac-
tions with joint ventures and associates,
i.e. profits from sales to joint ventures or
associates and whereby the customer
pays with funds partly owned by the
group, are eliminated against the carry-
ing amount of the investment in propor-
tion to the group's interest in the com-
pany. Unrealised losses are eliminated in
the same manner, but only to the
extent that there is no evidence of
impairment.
The consolidated financial statements
are prepared on a historical cost basis,
except for certain items with alternative
measurement bases, which are identi-
fied in these accounting policies.
Translation of transactions and
monetary items in foreign
currencies
For each reporting entity in the group, a
functional currency is determined, being
the currency used in the primary eco-
nomic environment where the entity op-
erates. Where a reporting entity has
transactions in a foreign currency, it will
record the transaction in its functional
currency using the transaction date rate.
Monetary assets and liabilities denomi-
nated in foreign currencies are trans-
lated into the functional currency using
the exchange rate applicable at the re-
porting date. Exchange rate differences
are recognised in the income statement
under financial items. Non-monetary
items, for example property, plant and
Table 5.5 Contractual commitments*
(EUR million)
0-1 year
1-5 years
5+ years
Total
2024
IT contracts
52
64
-
116
Short-term and low value leases
46
-
-
46
Power purchase agreements
34
157
217
408
Property, plant and equipment investment commitments
219
80
-
299
Total
351
301
217
869
2023
IT contracts
34
31
-
65
Short-term and low value leases
27
-
-
27
Power purchase agreements
11
120
177
308
Property, plant and equipment investment commitments
187
27
-
214
Total
259
178
177
614
* Other contractual commitments not disclosed in the table include mortgaged property provided as security for
mortgage loans and financial surety and guarantee obligations.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
equipment, which are measured based
on historical cost in a foreign currency,
are translated into the functional cur-
rency upon initial recognition.
Translation of foreign operations
The assets and liabilities of consolidated
entities, including the share of net as-
sets and goodwill of joint ventures and
associates with a functional currency
other than EUR, are translated into EUR
using the year-end exchange rate. Reve-
nue, costs and the share of net profit or
loss for the year are translated into EUR
using the average monthly exchange
rate, provided it does not differ materi-
ally from the transaction date rate.
Exchange rate differences are recog-
nised in other comprehensive income
and accumulated in the translation
reserve.
On partial divestment of associates and
joint ventures, the relevant proportional
amount of the cumulative foreign cur-
rency translation adjustment reserve is
transferred to the net profit or loss for
the year, along with any gains or losses
related to the divestment.
Adoption of new or
amended IFRS
The group has implemented all new
standards and interpretations effective
in the EU from 1 January 2024. The dis-
closures on supply chain finance pro-
grammes in Note 2.1 and loan cove-
nants in Note 4.3 have been updated in
accordance with the amendments to
IFRS 7. The new standards and interpre-
tations did not have any other material
impact on the consolidated financial
statements.
Future implementations
The IASB has issued a number of new or
amended and revised accounting stand-
ards and interpretations which are not
yet applicable. Arla will adopt these new
standards when they become manda-
tory. The implementation of IFRS 18
from 2027 will have significant impact
on Arla's consolidated financial state-
ments from 2027 including restated
comparison figures in the 2027 report.
Preparation for the implementation has
been initiated. It is anticipated that
future implementation of other known
new or amended standards will not have
a material impact on the consolidated
financial statements.
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Country
Currency
Group equity
interest
Arla Foods amba
Denmark
DKK
%
Arla Foods GP Limited
UK
GBP
100
Arla Foods Limited Partnership
UK
GBP
100
Arla Foods Finance Limited
UK
GBP
100
Arla Foods Limited
UK
GBP
100
Arla Foods Hatfield Limited
UK
GBP
100
Lockerbie Biogas Limited
UK
GBP
100
Yeo Valley Dairies Limited
UK
GBP
100
Arla Foods Cheese Company Limited
UK
GBP
100
Arla Foods Ingredients UK Limited
UK
GBP
100
Arla Foods Ingredients Taw Valley Limited
UK
GBP
100
Arla Foods UK Property Co. Limited
UK
GBP
100
Arla Foods B.V.
Netherlands
EUR
100
Arla Foods Comércio, Importacâo e Exportacão
de Productos Alimenticios Ltda.
Brazil
BRL
100
Arla Foods Ltd.
Kingdom of Saudi Arabia SAR
75
Arla Foods Finance A/S
Denmark
DKK
100
Kingdom Food Products ApS
Denmark
DKK
100
Ejendomsanpartsselskabet St. Ravnsbjerg
Denmark
DKK
100
Arla Insurance Company (Guernsey) Limited
Denmark
EUR
100
Arla Foods Energy A/S
Denmark
DKK
100
Arla Foods Trading A/S
Denmark
DKK
100
Arla DP Holding A/S
Denmark
DKK
100
Arla Foods Investment A/S
Denmark
DKK
100
Arla Senegal SA.
Senegal
XOF
100
Country
Currency
Group equity
interest
Arla Foods amba
Denmark
DKK
%
Arla Foods Ingredients Group P/S
Denmark
DKK
100
Arla Foods Ingredients Energy A/S
Denmark
DKK
100
Arla Foods Ingredients Japan K.K.
Japan
JPY
100
Arla Foods Ingredients Inc.
USA
USD
100
Arla Foods Ingredients Korea, Co. Ltd.
Korea
KRW
100
Arla Foods Ingredients Trading (Beijing) Co. Ltd.
China
CNY
100
Arla Foods Ingredients S.A.
Argentina
USD
100
Arla Foods Ingredients Comércio de Produtos
Alimentícios Unipessoal LTDA
Brazil
BRL
100
Arla Foods Ingredients Singapore Pte. Ltd.
Singapore
SGD
100
Arla Foods Ingredients S.A. de C.V.
Mexico
MXN
100
Volac Whey Nutrition Holdings Limited
UK
GBP
100
Volac Whey Nutrition Limited
UK
GBP
100
Volac Renewable Energy Limited
UK
GBP
100
Arla Foods Holding A/S
Denmark
DKK
100
Arla Foods W.L.L.
Bahrain
BHD
100
Arla Oy
Finland
EUR
100
Osuuskunta MS tuottajapalvelu **
Finland
EUR
35
Arla Foods Distribution A/S
Denmark
DKK
100
Cocio Chokolademælk A/S
Denmark
DKK
50
Arla Foods International A/S
Denmark
DKK
100
Arla Foods UK Holding Limited
UK
GBP
100
Arla Foods UK Farmers Joint Venture Co. Limited
UK
GBP
100
Arla Foods UK plc
UK
GBP
100
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Country
Currency
Group equity
interest
Arla Foods amba
Denmark
DKK
%
Tholstrup Cheese A/S
Denmark
DKK
100
Arla Foods Belgien AG
Belgium
EUR
100
Arla Foods Ingredients (Deutschland) GmbH
Germany
EUR
100
ArNoCo GmbH & Co. KG*
Germany
EUR
50
Arla Foods Kuwait Company WLL
Kuwait
KWD
49
Arla Kallassi Foods Lebanon S.A.L.
Lebanon
LBP
50
Arla Foods Qatar WLL
Qatar
QAR
40
Arla Foods Trading and Procurement Limited
Hong Kong
HKD
100
Arla Foods Sdn. Bhd.
Malaysia
MYR
100
Arla Foods Corporation
Philippines
PHP
100
Arla Foods Limited
Ghana
GHS
100
Arla Global Dairy Products Ltd.
Nigeria
NGN
100
Arla Dairy Development Company Ltd.
Nigeria
NGN
99
TG Arla Dairy Products LFTZ Enterprise
Nigeria
NGN
50
TG Arla Dairy Products Ltd.
Nigeria
NGN
100
Arl For General Trading Ltd.
Iraq
USD
51
Arla Foods AB
Sweden
SEK
100
Årets Kock Aktiebolag
Sweden
SEK
67
Arla Foods Inc.
USA
USD
100
Arla Foods Production LLC
USA
USD
100
Country
Currency
Group equity
interest
Arla Foods amba
Denmark
DKK
%
Arla Foods Transport LLC
USA
USD
100
Arla Foods Deutschland GmbH
Germany
EUR
100
Dofo Cheese Eksport K/S °
Denmark
DKK
100
Dofo Inc.
USA
USD
100
Aktieselskabet J. Hansen
Denmark
DKK
100
J.P. Hansen USA Incorporated
USA
USD
100
AFI Partner ApS
Denmark
DKK
100
Andelssmør A.m.b.a.
Denmark
DKK
98
Arla Foods AS
Norway
NOK
100
Arla Foods Bangladesh Ltd.
Bangladesh
BDT
90
Arla Foods Dairy Products Technical Service (Beijing)
Co. Ltd.
China
CNY
100
Arla Foods FZE
UAE
AED
100
Arla Foods Hellas S.A.
Greece
EUR
100
Arla Foods Inc.
Canada
CAD
100
Arla Foods Logistics GmbH
Germany
EUR
100
Arla Foods Mayer Australia Pty, Ltd.
Australia
AUD
51
Arla Foods Mexico S.A. de C.V.
Mexico
MXN
100
Arla Foods S.A.
Spain
EUR
100
Arla Foods France S.a.r.l.
France
EUR
100
Arla Foods S.R.L.
Dominican Republic
DOP
100
Primary statements
Notes
/ Introduction to notes
Note 1: Revenue and costs
Note 2: Net working capital
Note 3: Capital employed
Note 4: Funding
Note 5: Other areas /
Financial statements
of the parent company
Under section 149 of the Danish Finan-
cial Statements Act, these consolidated
financial statements represent an ex-
tract of Arla's complete annual report.
To make this report more manageable
and user-friendly, we publish consoli-
dated financial statements that do not
include the financial statements of the
parent company, Arla Foods amba. The
annual report of the parent company is
an integral part of the full annual report
and is available at www.arla.com. Profit
sharing and supplementary payments
from the parent company are detailed in
the equity section of the consolidated
financial statements. The full annual
report contains the statement by the
Board of Directors and the Executive
Board, as well as the independent audi-
tor's report.
Country
Currency
Group equity
interest
Arla Foods amba
Denmark
DKK
%
Arla Foods SA
Poland
PLN
100
Arla Global Shared Services Sp. Z.o.o.
Poland
PLN
100
Arla Foods LLC
UAE
AED
49
Arla Foods LLC
Oman
OMR
70
Cocio Chokolademælk A/S
Denmark
DKK
50
Marygold Trading K/S °
Denmark
DKK
100
Mejeriforeningen
Denmark
DKK
91
COFCO Dairy Holdings Limited **
British Virgin Islands
HKD
30
Svensk Mjölk Ekonomisk förening
Sweden
SEK
75
Svensk Mjölk AB
Sweden
SEK
100
Tillväxtbolaget för Sveriges Lantbrukare AB **
Sweden
SEK
25
Lantbrukarnas Riksförbund upa **
Sweden
SEK
24
Jörd International A/S
Denmark
DKK
100
Ejendomsselskabet Gjellerupvej 105 P/S
Denmark
DKK
100
Baby&Me ApS
Denmark
DKK
100
Svenska Ostklassiker AB
Sweden
SEK
68
Komplementarselskabet Gjellerupvej 105 ApS
Denmark
DKK
100
PT Arla Foods Indonesia
Indonesia
IDR
100
Arla Foods Arinco A/S
Denmark
DKK
90
Green Fertilizer Denmark ApS **
Denmark
DKK
25
* Joint ventures
** Associates
° According to section 5 of the Danish Financial Statements Act, the company does not prepare a statutory report.
In addition, the group owns a number of entities without material commercial activities.
REPORTS
162 Board of Directors' and Executive Board's report
163 Independent auditor's report
165 Independent auditor's assurance report on the
sustainability statements
Together with Arla B.O.B, the 1-litre
bottles of Arla® Cravendale produced
at Stourton Dairy at the UK now use
post-consumer recycled PET (rPET).
ARLA®
CRAVENDALE
MANAGEMENT'S
AND AUDITOR'S
BOARD OF DIRECTORS' AND
EXECUTIVE BOARD'S REPORT
Today, the Board of Directors and the
Executive Board have discussed and
approved the annual report of Arla
Foods amba for the financial year 2024.
The annual report has been prepared
in accordance with IFRS Accounting
Standards as adopted by the EU and
additional disclosure requirements of
the Danish Financial Statements Act.
It is our opinion that the consolidated
financial statements and the parent
company financial statements give a
true and fair view of the group's and the
parent company's financial position at
31 December 2024 and of the results of
the group's and the parent company's
activities and cash flows for the financial
year 1 January - 31 December 2024.
In our opinion, the management's
review of the annual report (pages
4-99) includes a true and fair view of
the development in the group's and the
parent company's financial position,
activities, financial matters, results for
the year and cash flows as well as a
description of the most significant risks
and uncertainties which may affect the
group and the parent company.
Arla's consolidated environmental,
social and governance statements
have been prepared in accordance with
Arla's ESG accounting principles. In our
opinion, they give a true and fair view
and a balanced and reasonable presen-
tation of the group's environmental,
social and governance performance in
accordance with these principles.
We hereby recommend the annual
report for adoption by the Board of
Representatives.
Aarhus, 17 February 2025
Peder Tuborgh
CEO
Torben Dahl Nyholm
CFO
Jan Toft Nørgaard
Chair
Inger-Lise Sjöström
Vice Chair
Arthur
Fearnall
Bjørn
Jepsen
Daniel
Halmsjö
George
Holmes
Gustav
Kämpe
Jørn Kjær
Madsen
Marcel
Goffinet
Marita
Wolf
Markus
Hübers
René Lund
Hansen
Simon
Simonsen
Steen Nørgaard
Madsen
Anders
Olsson
Holger
Lund
Paul
Cullen
Florence
Rollet
Nana
Bule
PAGE 162
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
Independent auditor's report
Independent auditor's assurance report
Board of Directors' and Executive Board's report
INDEPENDENT
AUDITOR'S REPORT
TO THE OWNERS OF
ARLA FOODS AMBA
Opinion
We have audited the consolidated
financial statements and the parent
company financial statements of
Arla Foods amba for the financial
year 1 January - 31 December 2024,
which comprise income statement,
statement of comprehensive income,
balance sheet, statement of changes in
equity, cash flow statement and notes,
including material accounting policy in-
formation, for the Group and the Parent
Company. The consolidated financial
statements and the parent company
financial statements are prepared
in accordance with IFRS Accounting
Standards as adopted by the EU and
additional requirements of the Danish
Financial Statements Act.
In our opinion, the consolidated
financial statements and the parent
company financial statements give
a true and fair view of the financial
position of the Group and the Parent
Company at 31 December 2024 and
of the results of the Group's and the
Parent Company's operations and cash
flows for the financial year 1 January -
31 December 2024 in accordance with
IFRS Accounting Standards as adopted
by the EU and additional requirements
of the Danish Financial Statements Act.
Basis for opinion
We conducted our audit in accordance
with International Standards on
Auditing (ISAs) and additional require-
ments applicable in Denmark. Our
responsibilities under those standards
and requirements are further described
in the 'Auditor's responsibilities for
the audit of the consolidated financial
statements and the parent company
financial statements' (hereinafter
collectively referred to as 'the financial
statements') section of our report. We
believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the Group in
accordance with the International
Ethics Standards Board for Accountants'
International Code of Ethics for
Professional Accountants (IESBA Code)
and the additional ethical requirements
applicable in Denmark, and we have ful-
filled our other ethical responsibilities
in accordance with these requirements
and the IESBA Code.
Statement on the Management's
review
Management is responsible for the
Management's review.
Our opinion on the financial statements
does not cover the Management's
review, and we do not express any
assurance conclusion thereon.
In connection with our audit of the
financial statements, our responsibility
is to read the Management's review
and, in doing so, consider whether
the Management's review is mate-
rially inconsistent with the financial
statements, or our knowledge obtained
during the audit, or otherwise appears
to be materially misstated.
Moreover, it is our responsibility to
consider whether the Management's
review provides the information
required under the Danish Financial
Statements Act.
Based on our procedures, we conclude
that the Management's review is in ac-
cordance with the financial statements
and has been prepared in accordance
with the requirements of the Danish
Financial Statements Act. We did not
identify any material misstatement of
the Management's review.
Management's responsibilities for
the financial statements
Management is responsible for the
preparation of consolidated financial
statements and parent company
financial statements that give a true
and fair view in accordance with IFRS
Accounting Standards as adopted by the
EU and additional requirements of the
Danish Financial Statements Act and for
such internal control as Management
determines is necessary to enable the
preparation of financial statements that
are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements,
Management is responsible for assessing
the Group's and the Parent Company's
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern and using the going
concern basis of accounting in pre-
paring the financial statements unless
Management either intends to liquidate
the Group or the Parent Company or
to cease operations, or has no realistic
alternative but to do so.
Auditor's responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance as to whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor's
report that includes our opinion.
Reasonable assurance is a high level
of assurance, but is not a guarantee
that an audit conducted in accordance
with ISAs and additional requirements
applicable in Denmark will always detect
a material misstatement when it exists.
Misstatements can arise from fraud or
error and are considered material if, indi-
vidually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on
the basis of the financial statements.
As part of an audit conducted in
accordance with ISAs and additional
requirements applicable in Denmark,
we exercise professional judgement
and maintain professional scepticism
throughout the audit. We also:
· Identify and assess the risks of
material misstatement of the
financial statements, whether due
to fraud or error, design and perform
audit procedures responsive to those
risks and obtain audit evidence that is
sufficient and appropriate to provide
a basis for our opinion. The risk of not
detecting a material misstatement
resulting from fraud is higher than for
one resulting from error, as fraud may
involve collusion, forgery, intentional
omissions, misrepresentations or the
override of internal control.
PAGE 163
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
Board of Directors' and Executive Board's report
Independent auditor's assurance report
Independent auditor's report
· Obtain an understanding of internal
control relevant to the audit in order
to design audit procedures that are
appropriate in the circumstances, but
not for the purpose of expressing an
opinion on the effectiveness of the
Group's and the Parent Company's
internal control.
· Evaluate the appropriateness of
accounting policies used and the
reasonableness of accounting
estimates and related disclosures
made by Management.
· Conclude on the appropriateness of
Management's use of the going con-
cern basis of accounting in preparing
the financial statements and, based
on the audit evidence obtained,
whether a material uncertainty exists
related to events or conditions that
may cast significant doubt on the
Group's and the Parent Company's
ability to continue as a going con-
cern. If we conclude that a material
uncertainty exists, we are required to
draw attention in our auditor's report
to the related disclosures in the
financial statements or, if such disclo-
sures are inadequate, to modify our
opinion. Our conclusions are based
on the audit evidence obtained up
to the date of our auditor's report.
However, future events or conditions
may cause the Group and the Parent
Company to cease to continue as a
going concern.
· Evaluate the overall presentation,
structure and contents of the financial
statements, including the note
disclosures, and whether the financial
statements represent the underlying
transactions and events in a manner
that gives a true and fair view.
· Plan and perform the group audit to
obtain sufficient appropriate audit
evidence regarding the financial in-
formation of the entities or business
units within the group as a basis for
forming an opinion on the group
financial statements and the parent
company financial statements. We
are responsible for the direction,
supervision and review of the audit
work performed for purposes of
the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged
with governance regarding, among
other matters, the planned scope and
timing of the audit and significant
audit findings, including any significant
deficiencies in internal control that we
identify during our audit.
Aarhus, 17 February 2025
EY Godkendt Revisionspartnerselskab
CVR no. 33 94 61 71
Henrik Kronborg Iversen
State Authorised Public Accountant
MNE no. 24687
Jan K. Mortensen
State Authorised Public Accountant
MNE no. 40030
PAGE 164
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
Board of Directors' and Executive Board's report
Independent auditor's assurance report
Independent auditor's report
INDEPENDENT AUDITOR'S
ASSURANCE REPORT ON THE
SUSTAINABILITY STATEMENTS
TO THE STAKEHOLDERS OF
ARLA FOODS AMBA
As agreed, we have performed an
examination with combined reasonable
and limited assurance, as defined by the
International Standards on Assurance
Engagements, of Arla Foods amba's
Sustainability Statements in the annual
report on pages 31-89 for the period
from 1 January 2024 to 31 December
2024.
Specifically, we are to conclude on:
Reasonable assurance over the follow-
ing KPIs identified in the Sustainability
Statements (in the following referred
to as 'Selected sustainability KPIs under
reasonable assurance'):
· KPIs in the table on greenhouse gas
emissions progress, greenhouse
gas emissions (scope 1, 2, 3), GHG
intensity by net revenue, energy
consumption, energy intensity based
on net revenue, electricity consump-
tion in Europe and animal welfare on
pages 48-50
· KPIs in the tables on accidents,
number of employees (headcount)
by country and gender, number of
employees (headcount) by contract
type, distribution of employees by
age group on page 76
· KPI in the table on recalls on page 85
Limited assurance over the remaining
information in the Sustainability
Statements on pages 31-89 of the
annual report.
In preparing the Sustainability
Statements, Arla Foods Amba applied
the general accounting policies on
pages 31-89 and the accounting
policies listed along with KPIs. The
Sustainability Statements should
be read and understood together
with the accounting policies, which
Management is solely responsible for
selecting and applying. The absence
of an established practice on which
to derive, evaluate and measure the
Sustainability Statements allows for
different, but acceptable, measurement
techniques and can affect comparabili-
ty between entities and over time.
Management's responsibilities
Arla Foods amba's Management is
responsible for selecting the account-
ing policies and for presenting the
Sustainability Statements in accord-
ance with the accounting policies, in
all material respects. This responsibility
includes establishing and maintaining
internal controls, maintaining adequate
records and making estimates that
are relevant to the preparation of the
Sustainability Statements, such that
they are free from material misstate-
ment, whether due to fraud or error.
Auditor's responsibilities
Our responsibility is to express a con-
clusion based on our examinations on
the presentation of the Sustainability
Statements in accordance with the
scope defined above.
We conducted our examinations in
accordance with ISAE 3000 Assurance
Engagements Other than Audits
or Reviews of Historical Financial
Information and additional require-
ments under Danish audit regulation
to obtain assurance for the purposes of
our conclusion.
EY Godkendt Revisionspartnerselskab
applies the International Standard
on Quality Management 1, ISQM1,
which requires the firm to design,
implement and operate a system of
quality management including policies
or procedures regarding compliance
with ethical requirements, professional
standards and applicable legal and
regulatory requirements.
We have complied with the independ-
ence and other ethical requirements
of the International Ethics Standards
Board for Accountants' International
Code of Ethics for Professional
Accountants (IESBA Code), which is
founded on fundamental principles
of integrity, objectivity, professional
competence and due care, confidenti-
ality and professional behaviour as well
as ethical requirements applicable in
Denmark.
Description of procedures
performed
In obtaining reasonable assurance over
the selected sustainability KPIs under
reasonable assurance, our objective
was to perform such procedures and
to obtain such evidence which we
consider necessary in order to provide
us with sufficient appropriate evidence
to express an opinion with reasonable
assurance.
In obtaining limited assurance over
the remaining information in the
Sustainability Statements, our objective
was to perform such procedures so as
to obtain information and explanations
which we consider necessary in order
to provide us with sufficient appropriate
evidence to express a conclusion with
limited assurance. The procedures
performed in connection with our
limited assurance engagement are
less extensive than those performed in
connection with a reasonable assur-
ance engagement. Consequently, the
degree of assurance for our conclusion
is substantially less than the assurance
which would be obtained had we
performed a reasonable assurance
engagement.
As part of our examination, we
performed the below procedures:
· Interviewed those in charge of
Sustainability Statements to develop
an understanding of the process for
the preparation of the Sustainability
Statements and for carrying out
internal control procedures.
· Performed analytical review of the
data and trends to identify areas of
the Sustainability Statements with
a significant risk of misleading or
unbalanced information or material
misstatements and obtained an
understanding of any explanations
provided for significant variances.
· Based on inquiries, we evaluated
the appropriateness of accounting
policies used, their consistent
application and related disclosures
in the Sustainability Statements.
This includes the reasonableness of
estimates made by Management.
· Designed and performed further
PAGE 165
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
Board of Directors' and Executive Board's report
Independent auditor's report
Independent auditor's assurance report
procedures responsive to those
risks and obtained evidence that is
sufficient and appropriate to provide
a basis for our conclusion.
In addition to the above, we performed
the following procedures for the select-
ed sustainability KPIs under reasonable
assurance:
· Agreed key items and representative
samples based on generally accepted
sampling methodology to source
information to check the accuracy
and completeness of the data
· Site visits to conduct walkthroughs
of data gathering, calculation and
consolidation processes related to
the reasonable assurance of metrics.
In our opinion, the examinations
performed provide a sufficient basis for
our conclusion.
Conclusion
In our opinion, the selected sustaina-
bility KPIs under reasonable assurance
for the period from 1 January 2024 to
31 December 2024, which have been
subject to our reasonable assurance
procedures have, in all material
respects, been prepared in accordance
with the accounting policies on pages
48-50, 76 and 85.
Based on the limited assurance exam-
inations and the evidence obtained,
nothing has come to our attention that
causes us to believe that the remaining
information in Arla Foods amba's
Sustainability Statements in the annual
report on pages 31-89 for the period
from 1 January 2024 to 31 December
2024 has not been prepared, in all ma-
terial respects, in accordance with the
general accounting policies on pages
31-89 and the accounting policies
listed along with KPIs.
Copenhagen, 17 February 2025
EY Godkendt Revisionspartnerselskab
CVR no. 30 70 02 28
Henrik Kronborg Iversen
Partner, State Authorised
Public Accountant
MNE no. 24687
Monica Mai Bak Larsen
Partner, Climate Change and
Sustainability Services
PAGE 166
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
Board of Directors' and Executive Board's report
Independent auditor's report
Independent auditor's assurance report
DISCLOSURES
168 UN Global Compact commitment
169 EU legislation datapoints
170 Glossary
171 Corporate calendar
OTHER
Free from palm oil,
preservatives, colourings and
other additives, Lurpak® Plant
Based is suitable for cooking,
baking and spreading.
LURPAK®
PLANT-BASED
UN GLOBAL COMPACT
COMMITMENT
UN GLOBAL COMPACT
OUR PROGRESS TOWARDS THE
UN SUSTAINABLE DEVELOPMENT GOALS
In early 2008, Arla signed up to the
Global Compact, an initiative from the
UN to promote ethical business prac-
tices. As a signatory, we are committed
to observing the Global Compact's 10
fundamental principles.
Human rights
1. Support and respect the
protection of internationally
proclaimed human rights
2. Make sure that we are not
complicit in human rights abuses
Labour
3. Uphold the freedom of association
and the effective recognition of
the right to collective bargaining
4. The elimination of all forms of
forced and compulsory labour
Since 2008, Arla has been a participant of the
Global Compact's Nordic Network. In May 2009,
Arla signed up to Caring for Climate, a voluntary
and complementary action platform seeking
to demonstrate leadership around the issue
of climate change. In 2010, Arla's CEO signed
a CEO Statement of Support for the Women's
Empowerment Principles, an initiative from the
Global Compact and UNIFEM (the UN Devel-
opment Fund for Women). Read more about
the Global Compact and its principles at www.
unglobalcompact.org and more about Arla's
Code of Conduct at arla.com.
5. The effective abolition of child
labour
6. The elimination of discrimination
in respect of employment and
occupation
Environment
7. Support a precautionary approach
to environmental challenges
8. Undertake initiatives to pro-
mote greater environmental
responsibility
9. Encourage the development
and diffusion of environmentally
friendly technologies
Anti-corruption
10. Work against corruption in all its
forms, including extortion and
bribery
Standard
UN SDGs
Page
Environmental data
CO₂e emissions
2.3, 2.4, 12.2, 12.3, 12.5, 13.1
48
CO₂e reduction scope 1 and 2 (baseline: 2015)
48
CO₂e reduction scope 3 per kg of milk and whey (baseline: 2015)
48
Total CO₂e (mkg)
48
Energy mix
Renewable electricity share EU (%)
7.2, 7.3
50
Waste and water
6.3, 6.4
Solid waste (tonnes)
67
Water withdrawal (thousand m3)
60
Animal welfare
15.1
Somatic cell count (thousand cells/ml)
50
Share of audited farmers with no major cleanliness issues
50
Share of audited farmers with no major mobility issues
50
Share of audited farmers with no major injury issues
50
Share of audited farmers with no major issues related to body condition
50
Social data
Total share of women (%)
5.1, 5.5
77
Share of women at level director and above (%)
5.1, 5.5
77
Share of women in Executive Management Team (%)
5.1, 5.5
77
Gender pay ratio, white-collar (man to woman)
5.1, 5.5, 8.5, 8.7
77
Employee turnover (%)
8.5, 8.7
77
Food safety – number of recalls
2.1
85
Accident frequency (per 1 million working hours)
8.8
76
Governance data
Share of women, Board of Directors (%)
5.1, 5.5
38
Non-audited targets and ambitions
Nutrition and affordability
2.1, 3.4
80-85
Responsible sourcing
2.3, 2.4, 6.3, 6.4, 8.7, 8.8, 12.2, 12.4, 13.1, 15.1, 15.2
53-61
Anti-corruption and bribery
16.5
87-88
PAGE 168
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
EU legislation datapoints
Glossary
Corporate calendar
UN Global Compact commitment
EU LEGISLATION
DATAPOINTS
Find below a table with a list of
datapoints in cross-cutting and topical
standards that derive from other EU
legislation as listed in ESRS 2 (Appendix
2), indicating where the data points can
be found in the report.
Disclosure
requirement
Data
point
SFDR
reference
Pillar 3
reference
Benchmark
Regulation
reference
EU
Climate Law
reference
Page
ESRS 2 GOV-1
21 (d)
38
ESRS 2 GOV-1
21 (e)
93
ESRS 2 GOV-4
30
37
ESRS 2 SBM-1
40 (d) i
not material
ESRS 2 SBM-1
40 (d) ii
not material
ESRS 2 SBM-1
41 (d) iii
not material
ESRS 2 SBM-1
42 (d) iv
not material
ESRS E1-1
14
41-43, 45
ESRS E1-1
16 (g)
50
ESRS E1-4
34
41-43, 45, 48
ESRS E1-5
38
49
ESRS E1-5
37
49
ESRS E1-5
40-43
49, 50
ESRS E1-6
44
48
ESRS E1-6
53-55
48, 49
ESRS E1-7
56
not material
ESRS E1-9
66
not material
ESRS E1-9
66 (a), 66 (c)
not material
ESRS E1-9
67 (c)
not material
ESRS E1-9
69
not material
ESRS E2-4
28
not stated
ESRS E3-1
9
not stated
ESRS E3-1
13
not stated
ESRS E3-1
14
not stated
ESRS E3-4
28 (c)
not stated
ESRS E3-4
29
not stated
ESRS 2-IRO1-E4
16 (a) i
not stated
ESRS 2-IRO1-E4
16 (b)
54
ESRS 2-IRO1-E4
16 (c)
54
ESRS E4-2
24 (b)
50, 60
ESRS E4-2
24 (c)
not stated
ESRS E4-2
24 (d)
50, 60
Disclosure
requirement
Data
point
SFDR
reference
Pillar 3
reference
Benchmark
Regulation
reference
EU
Climate Law
reference
Page
ESRS E5-5
37 (d)
67
ESRS E5-5
39
67
ESRS 2-SBM3-S1
14 (f)
75
ESRS 2-SBM3-S1
14 (g)
75
ESRS S1-1
20
37, 71, 75, 78
ESRS S1-1
21
78
ESRS S1-1
22
78
ESRS S1-1
23
71, 79
ESRS S1-3
32 c
79
ESRS S1-14
88 (b), 88 (c)
not stated
ESRS S1-14
88 (e)
not stated
ESRS S1-16
97 (a)
not stated
ESRS S1-16
97 (b)
not stated
ESRS S1-17
103 (a)
78
ESRS S1-17
104 (a)
75
ESRS 2-SBM3-S2
11 (b)
75
ESRS S2-1
17
71, 73, 78, 79
ESRS S2-1
18
78
ESRS S2-1
19
78, 79
ESRS S2-1
19
78, 79
ESRS S2-4
36
75
ESRS S3-1
16
not material
ESRS S3-1
17
not material
ESRS S3-4
36
not material
ESRS S4-1
16
37, 75, 78,
84, 85
ESRS S4-1
17
75, 78
ESRS S4-4
35
75
ESRS G1-1
10 (b)
78, 79
ESRS G1-1
10 (d)
78, 79
ESRS G1-4
24 (a)
88
ESRS G1-4
24 (b)
88
PAGE 169
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
UN Global Compact commitment
Glossary
Corporate calendar
EU legislation datapoints
GLOSSARY
A
Arlagården® is the name of our quality assurance
programme.
Arla® Nutrition Criteria are our guidelines to
ensure the nutritional quality of our products.
Average interest expenses excluding
interest related to pension assets
and liabilities. The net interest expense is
calculated as a total of interest expenses excluding
cash discounts and default interest, plus borrowing
charges and interest on finance leases, and reduced
by interest income on securities. To calculate the
average interest expense, the net interest expense
is divided by net interest-bearing debt excluding
pension assets and liabilities.
B
BEPS is an abbreviation referring to base erosion
and profit shifting. These are tax avoidance strate-
gies that exploit gaps and mismatches in tax rules to
artificially shift profits to low or no-tax locations.
Biogas is the mixture of gases produced by the
break-down of organic matter in the absence of
oxygen, primarily consisting of methane and carbon
dioxide. In Arla, biogas is primarily produced from
cow manure.
Biomass is plant or animal material used for energy
production. It can be purposely grown energy crops,
wood or forest residues, waste from food crops,
horticulture, food processing, animal farming or
human waste from sewage plants.
BoD is an abbreviation of Board of Directors. In Arla,
it consists of 14 farmer owners, three employee
representatives chosen by Arla's employees and
two external members elected by the BoR. The
BoD represents a diverse group of interests and is
responsible for managing Arla in the best interests
of the farmer-owners.
C
CapEx is an abbreviation of capital expenditure.
Capacity cost is defined as the cost of running the
general business, and includes staff costs, mainte-
nance, energy, cleaning, IT, travel, consultancy etc.
Carbon pricing describes a mechanism that
places a financial cost on carbon dioxide and other
greenhouse gas emissions, thereby financially
incentivising low-carbon investments and more
sustainable solutions.
Carbon sequestration refers to a natural or
artificial process by which carbon dioxide is removed
from the atmosphere and held in solid or liquid
form.
CoCS is an abbreviation of Arla's Code of Conduct
for Suppliers.
COD is an abbreviation of Carbon Oxygen Demand,
a measure of the amount of organic compounds in
water, used to assess water quality.
CPI is an abbreviation of Consumer Price Index.
CSRD is an abbreviation of Corporate Sustainability
Reporting Directive and is a regulatory framework
proposed by the European Commission. It aims
at improving the transparency, comparability and
reliability of companies' sustainability disclosures on
environmental, social and governance matters.
D
DCF is an abbreviation of deforestation- and
conversion-free.
Digital engagement is defined as the number
of interactions consumers have across digital
channels. The interaction is measured in a number
of different ways, for example by viewing a video
on all media channels for more than 10 seconds,
visiting a webpage, commenting, liking or sharing
on our social media channels.
Digital reach is defined as engagement with Arla's
digital content, i.e. spending more than two minutes
on our website, watching our videos to the end on
YouTube and liking or commenting on content on
our social media platforms.
E
EBIT is an abbreviation of earnings before
interest and tax, and is a measure of earnings from
operations.
EBITDA is an abbreviation of earnings before
interest, tax, depreciation and amortisation from
ordinary operations.
EBIT margin measures EBIT as a percentage of
total revenue.
EMEA is an abbreviation of Europe, the Middle East
and Africa.
EMT is an abbreviation of Executive Management
Team. In Arla, the team consists of the Executive
Board, a manager for each of the European and
International commercial segments and four
functional heads.
Equity ratio is the ratio of equity, excluding minority
interests, to total assets, and is a measure of the
financial strength of Arla.
ESRS is an abbreviation of European Sustainability
Reporting Standards and refers to a proposed set
of reporting standard for sustainability-related
disclosures by companies operating in the European
Union. This standard is developed by the European
Financial Reporting Advisory Group and aims to
provide a common framework for companies to
disclose their environmental, social and governance
performance.
ETS is an abbreviation of Emission Trading System,
a market-based approach used to control pollution
by providing economic incentives for achieving
reductions in the emissions of pollutants.
F
FarmAhead™ Technology is a toolbox of data-driv-
en and science-based technologies consisting of
the FarmAhead™ Check, the FarmAhead™ Incentive,
the FarmAhead™ Innovation and the FarmAhead™
Customer Partnership. It is designed to enable our
farmer owners to measure, understand and advance
their individual sustainability transitions on the farm.
FMCG is an abbreviation of fast-moving consumer
goods.
Fortification is the process of adding essential
vitamins and minerals to foods to enhance their
nutritional value. This is often done to address
nutrient deficiencies in a population and improve
public health.
Free cash flow is defined as cash flow from
operating activities after deducting cash flow from
investing activities.
FTE is an abbreviation of full-time equivalents. FTEs
are defined as the contractual working hours of an
employee compared to a full-time contract in the
same position and country. The FTE figure is used to
measure the active workforce counted in full-time po-
sitions. An FTE of 1.0 is equivalent to a full-time worker,
while an FTE of 0.5 equals half of the full workload.
G
GDPR is an abbreviation of the General Data
Protection Regulation, which regulates data protec-
tion and privacy in the European Union (EU) and the
European Economic Area (EEA). It also addresses
the transfer of personal data outside the EU and EEA
areas. The GDPR aims primarily to give control to in-
dividuals over their personal data and to simplify the
regulatory environment for international business
by unifying the regulation within the EU.
Global industry share is a measure of the total milk
consumption for producing commodity products
relative to the total milk consumption, i.e. based on
volumes. Commodity products are sold with lower or
no value added, typically via business-to-business sales
for other companies to use in their production as well
as via industry sales of cheese, butter or milk powder.
Greenhouse Gas Protocol (GHGP) provides ac-
counting and reporting standards, sector guidance
and calculation tools to account for greenhouse
gas emissions. It establishes a comprehensive,
global, standardised framework for measuring
and managing emissions from private and public
sector operations, value chains, products, cities and
policies.
I
IFRS is an abbreviation of International Financial
Reporting Standards which are a globally recognised
set of accounting standards developed and main-
tained by the International Accounting Standards
Board (IASB).
lncoterms refer to International Commercial
Terms. These are a series of pre-defined commercial
terms published by the International Chamber of
Commerce (ICC) relating to international com-
mercial law. They are widely used in international
commercial transactions or procurement processes,
and their use is encouraged by trade councils,
courts and international lawyers.
Innovation pipeline is defined as the net incremen-
tal revenue generated from innovation projects up
to 36 months from their launch.
Interest cover is the ratio of EBITDA to net interest
costs.
L
LCA is an abbreviation of life-cycle assessment.
Leverage is the ratio of net interest-bearing debt,
inclusive of pension liabilities, to EBITDA. It enables
evaluation of the ability to support future debt and
obligations: the long-term target range for leverage
is between 2.8 and 3.4.
M
MBB is an abbreviation of milk-based beverages.
MENA is an abbreviation of the Middle East and
North Africa.
Meal kits are a subscription service food business
model where a company sends customers pre-por-
tioned and sometimes partially prepared food
ingredients and recipes to prepare homecooked
meals.
Milk volume is defined as total intake of raw milk in
kg from owners and contractors.
PAGE 170
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
UN Global Compact commitment
EU legislation datapoints
Corporate calendar
Glossary
FEB
AUG
FEB
JUN
SEP-OCT
26-27
28
27
17-18
30-1
Board of Representatives
meeting
Publication of the consolidated
half-year results for 2025
Publication of the consolidated annual
report for 2024
Extraordinary Board of
Representatives meeting
Board of Representatives
meeting
CORPORATE
CALENDAR
N
Net interest-bearing debt is defined as current
and non-current interest-bearing liabilities less
securities, cash and cash equivalents and other
interest-bearing assets. Securities, cash and cash
equivalents defined as restricted are not included
when deducting liabilities with securities, cash and
cash equivalents.
Net interest-bearing debt inclusive of pension
liabilities is defined as current and non-current
interest-bearing liabilities less securities, cash and
cash equivalents and other interest-bearing assets
plus pension liabilities. Securities, cash and cash
equivalents defined as restricted are not included
when deducting liabilities with securities, cash and
cash equivalents.
Net working capital is the capital tied up in
inventories, trade receivables and trade payables
including payables for owner milk.
Net working capital excluding owner milk is
defined as capital that is tied up in inventories, trade
receivables and trade payables excluding payables
for owner milk.
Non-GMO means non-genetically modified
organisms, for example non-genetically modified
feed crops for cows.
O
OCI is an abbreviation of other comprehensive
income. OCI includes revenue, expenses, gains and
losses that have yet to be realised.
OECD refers to the Organisation for Economic
Cooperation and Development.
On-the-go refers to food consumed while on the
go, and also to packaging solutions supporting this
food consumption trend.
Other supported brands are brands other than
Arla®, Lurpak®, Puck®, Castello® and milk-based
branded beverages that contribute to strategic
branded volume-driven revenue growth.
P
Performance price for Arla Foods is defined as the
pre-paid milk price plus Arla Foods amba's share of
profit for the period divided by total member milk
volume intake. It measures the value creation per
kg of owner milk including retained earnings and
supplementary payments.
PPA is an abbreviation of power purchase agree-
ments which are contractual agreements between
two parties, typically a power producer and a buyer,
for the purchase and sale of electricity.
Pre-paid milk price is the cash payment farmers
receive per kg of milk delivered during the settle-
ment period.
Private label refers to retail brands which are
owned by retailers, but produced by Arla based on
contract manufacturing agreements.
Profit margin is a measure of profitability. It is the
amount by which revenue from sales exceeds costs
in a business.
Profit share is a measure of profit relative to
revenue, calculated as Arla Foods amba's share of
profit for the period divided by total revenue.
PPWR is an abbreviation of the Packaging and
Packaging Waste Regulation. It refers to regulations
aimed at managing the environmental impact
of packaging and packaging waste, promoting
recycling and reducing waste generation to protect
the environment.
Q
QEHS stands for Quality, Environmental, Health
and Safety. It is a function within Arla's supply chain
safeguarding the quality and safety of production.
R
Risk commodities refer to commodities that are
associated with environmental, social and govern-
ance risks throughout their supply chains.
S
SBTi is an abbreviation of the Science Based
Targets initiative that helps companies set
greenhouse gas emission reduction targets aligned
with climate science and the Paris Agreement,
aiming to limit global warming to well below 2°C
and pursue efforts to limit it to 1.5°C.
SCC is an abbreviation of somatic cell count.
SEA is an abbreviation of South-East Asia.
SMP is an abbreviation of skimmed milk powder.
Strategic brands are defined as products sold
under branded products such as Arla®, Lurpak®,
Castello®, Puck® and Starbucks™.
Strategic branded volume-driven revenue
growth is defined as revenue growth associated
with growth in volumes from strategic branded
products while keeping prices constant. It is also
referred to in the report as branded volume growth.
U
UNGP is an abbreviation of United Nations Guiding
Principles on Business and Human Rights. These
principles provide a global standard for preventing
and addressing the adverse human rights impacts of
business activities.
UN SDGs is an abbreviation of United Nations
Sustainability Development Goals. The United
Nations established these 17 goals in 2015 with the
aim of providing a comprehensive framework to
address various social, economic and environmental
challenges and to guide global efforts towards
sustainable development by 2030.
USD-related currencies are currencies which
move in the same direction as the USD (i.e. when
the USD depreciates against the EUR, it also
depreciates against the EUR). Currencies in the
MENA region are typical examples.
V
Value-added protein segment contains
products with special functionality and compounds,
compared to standard protein concentrates with a
protein content of approximately 80%.
Volume-driven revenue growth is defined as
revenue growth associated with growth in volumes
while keeping prices constant.
W
Whey protein hydrolysate is a concentrate or iso-
late in which some of the amino bonds have been
broken by exposure of the proteins to heat, acids or
enzymes. This pre-digestion means that hydrolysed
proteins are more rapidly absorbed in the gut than
either whey concentrates or isolates.
WMP is an abbreviation of whole milk powder.
PAGE 171
ARLA FOODS ANNUAL REPORT 2024
I.
MANAGEMENT'S AND AUDITOR'S REPORTS
OTHER DISCLOSURES
II.
III.
UN Global Compact commitment
EU legislation datapoints
Glossary
Corporate calendar
Arla Foods amba Sønderhøj 14
DK-8260 Viby J.
Denmark
CVR: 25 31 37 63
Phone: +45 89 38 10 00
E-mail: arla@arlafoods.com
www.arla.com
Arla Foods UK plc
4 Savannah Way
Leeds Valley Park
Leeds, LS10 1 AB
England
Phone: +44 113 382 7000
E-mail: arla@arlafoods.com
www.arlafoods.co.uk