ANNUAL
REPORT
2025
ABOUT THIS REPORT
This annual report for 2025 provides a comprehensive over-
view of our financial performance, sustainability performance
and governance structure. It includes our externally audited
consolidated financial statements and externally assured
sustainability statements.
The report also covers statutory reporting on Corporate Social
Responsibility (CSR) in accordance with sections 99a and 99d
of the Danish Financial Statements Act.
Consolidated financial statements
The consolidated financial statements section highlights
our financial results for the year and our financial position at
year-end. These statements exclude the parent company's
financials, which are filed separately with the Danish authori-
ties. The structure of this section remains consistent with last
year's annual report.
Sustainability statements
The sustainability statements cover our Environmental, Social,
and Governance (ESG) reporting and reflect our strategic
priorities. They are inspired by, but not yet compliant with, the
Corporate Sustainability Reporting Directive (CSRD), which we
are obliged to comply with from 2027. The report is guided by
our assessment of material impacts, risks and opportunities.
ON THE FRONTPAGE
Feed Life™
Enabling good food choices
that make life better
Across the company and among consumers, we have
introduced Feed Life™ as Arla's updated brand position.
It expresses our commitment to enabling good food
choices that make life better, rooted in a farmer‑owned
cooperative built on responsibility and care.
Feed Life™ reflects our long‑term commitment to
sustainability and the role we play in dairy. It guides how
we contribute to healthy food and more resilient food
systems.
Our priorities are shaped by five interconnected areas: in-
spiration for healthy diets, food security, sustainable dairy,
giving farmers a strong voice, and fostering a great place
to work. Together, these priorities shape our strategy and
ensure that we actively engage in the societal efforts to
make a lasting positive change for people and planet.
Food skills are life skills
According to data from the Arla
Foundation, families in Denmark are
spending less time cooking than they
used to and children are growing up
with fewer basic food skills.
By making cooking more accessible
for everyone, we help shape healthier
habits, stronger communities and
more responsible food choices over
time. Read more on page 62.
02
ARLA FOODS ANNUAL REPORT 2025
Table of contents
2025 in focus
06 Chair letter
07 CEO letter
08 Performance at a glance
09 Five-year overview
11 Highlights
About Arla
15 Business model
16 Strategy
17 Risk management
Performance review
20 Executive summary
21 External market overview
23 Performance overview
33 2026 outlook
Primary statements
93 Income statement
93 Comprehensive income
94 Profit appropriation
95 Balance sheet
96 Equity
99 Cash flow
Notes
102 Introduction to notes
105 Note 1: Revenue and costs
112 Note 2: Net working capital
116 Note 3: Capital employed
125 Note 4: Funding
147 Note 5: Other areas
Management's
and auditor’s reports
158 Board of directors'
and executive board's report
159 Independent auditor's report
on the consolidated and parent
company financial statements
161 Independent auditor's assurance
report on the sustainability
statements
Other disclosures
164 Glossary
165 Corporate calendar
Sustainability
statements
35 General disclosures
Environment
41 Climate
52 Biodiversity
57 Circular
Social
62 Consumers and end-users
64 Employees
71 Workers in the value chain
Governance
74 Animal welfare
76 Political engagement,
corruption and bribery
Appendix
Our governance
82 Governance framework
84 Management
88 Management remuneration
89 Business ethics
MANAGEMENT
REVIEW
1.
CONSOLIDATED
FINANCIAL
STATEMENTS
2.
REPORTS
AND OTHER
DISCLOSURES
3.
03
ARLA FOODS ANNUAL REPORT 2025
MANAGEMENT
REVIEW
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
3
2
ARLA FOODS ANNUAL REPORT 2025
04
1
2025
IN FOCUS
In this section
06 Chair letter
07 CEO letter
08 Performance at a glance
09 Five-year overview
11 Highlights
From Finland to global markets, powering active lives
Did you know that Arla® Protein was born in Finland? Officially launched on shelves in October 2014, it has
stayed true to its purpose of providing high-protein, natural and high-quality nutrition to support active
individuals. Today, it spans 28 markets with a portfolio ranging from shakes to yoghurts and with the latest
additions including mousses and milkshakes. In 2025, it achieved 19.5% volume-driven revenue growth.
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MANAGEMENT REVIEW
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CHAIR LETTER
A competitive home
for our milk
JAN TOFT NØRGAARD
Chair of the Board of Directors
In a year of two halves, we confirmed that
our cooperative model is a foundation for
creating value for our owners and securing
the future of dairy.
As farmers, we are used to cycles. But the speed of the shift we
witnessed this year was extraordinary. We entered 2025 with
high prices and tight global availability of milk, only to see the
tables turn rapidly in the second half. Exceptional weather and
strong harvests across Europe triggered a wave of milk that
surged into the market, causing global commodity prices to
correct sharply downwards.
cooperative, we can secure an even more robust platform
for our milk. As we await the regulatory outcome in 2026, I
am confident that we are taking the right steps to secure the
future for the next generation of dairy farmers.
2025 was a year of two halves, but it told one consistent
story: Arla is working. We have a strategy that drives value, a
democracy that drives progress, and a cooperative spirit that
binds us together through every turn of the market.
“I am proud that we can
look back on a year where
Arla delivered a highly
competitive performance
price.”
PERFORMANCE PRICE
EUR-CENT/KG
SUPPLEMENTARY PAYMENT
EUR-CENT/KG
56.4
2.2
Delivering a competitive result
Despite the pressure on prices in the second half of the year, I
am proud that we can look back on a year where Arla delivered
a highly competitive performance price of 56.4 EUR-cent/kg.
This result did not happen by accident. It is the reward for
the strategic choices we have made as owners. By ensuring a
solid footing, through our brands and ingredients, we are less
vulnerable when the wind changes. When commodity markets
fell this autumn, this strength helped us deliver a competitive
milk price.
Based on our solid financial result, the Board of Directors (BoD)
were pleased to propose a supplementary payment of 2.2
EUR-cent/kg to our owners. This payment is a testament to
the robustness of our cooperative.
Farming with the future in mind
While the markets fluctuated, the dedication on our farms
remained constant. Our data from 2025 shows that Arla
farmers are not just talking about the future – we are actively
building it.
We saw the average FarmAhead™ Incentive score rise from 53
to 55 points this year. This is not just a statistic for a report – it
represents real, tangible actions taken on thousands of farms
to lower emissions and increase biodiversity. As owners, we
are proving that modern dairy farming is part of the solution to
the climate challenge.
Strength through unity
Looking ahead, the need for a strong, unified cooperative is
clearer than ever. Overcoming the challenges we face, from
market volatility to regulatory demands, requires scale.
This is why the proposed merger with DMK Group marks such
a pivotal moment for our cooperative. In June, our Board of
Representatives (BoR) voted to pursue this union, recognising
that by joining forces with another strong farmer-owned
In such a volatile environment, the strength of our collective
business becomes our greatest asset. Arla has once again
proven its fundamental worth: securing a competitive home
for our milk.
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ARLA FOODS ANNUAL REPORT 2025
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CEO LETTER
Dairy is more
important
than ever
Arla has delivered a robust performance in
a complex market, proving the resilience
of our brands and staying true to our
long-term promise: providing nutritious,
sustainable food to a world that needs it.
PEDER TUBORGH
CEO of Arla
REVENUE
EUR BILLION
TOTAL INVESTMENT IN 2025
EUR MILLION
15.1
731
“By navigating a sharp
transition from tight global
supply to sudden abundance,
we proved the resilience of
our business.”
Navigating a sharp transition from tight global supply to
sudden abundance, we proved the resilience of our business.
We secured a strong financial performance for our owners
not just to deliver a return, but to ensure we remain robust
enough to fulfill our long-term promise: providing nutritious,
sustainable food to a world that needs it.
Navigating contrasting realities
We began 2025 with firm markets, but the landscape shifted
rapidly. Exceptional weather and strong harvests triggered a
surge in milk production, causing commodity prices to drop
significantly in the second half of the year.
Despite this rapid shift, our strategic business mix stood firm.
By leveraging a high-performing ingredients business and
capturing returning consumer demand, we managed the
volatility to deliver a performance price of 56.4 EUR-cent/kg.
Ingredients engine drives value
A standout driver of our strong performance was Arla Foods
Ingredients (AFI). Delivering revenue growth of 43.1%,
boosted by the successful integration of the newly acquired
Whey Nutrition business from Volac (now AFI Felinfach), AFI
has cemented its role as a high-value growth engine.
AFI's success provides a critical financial counterweight to
volatility in the general dairy market, validating our strategy of
shifting more milk into specialised nutrition.
Investing in a world that needs dairy
Crucially, we did not let short-term market fluctuations pause
our long-term ambition. In 2025, we executed on a high level
of investments, including capacity expansions in Lockerbie
(UHT) and Holstebro (cream cheese).
We did not pause these investments when the market turned,
and that is a deliberate choice. We know that the world will
need significantly more protein in the coming decades to feed
a growing population. Dairy is a central part of the solution.
By investing in these key growth engines, we are sending a
clear signal: We believe in the future of dairy. We are assuming
responsibility for ensuring that nutritious, sustainable dairy
is available to the world and we are building the capacity
required to lead that charge.
Introducing Feed Life™
This ambition is also at the heart of our updated corporate
brand position, Feed Life™. It expresses our commitment to
enabling good food choices that make life better, rooted in
the responsibility and care of our farmer‑owners.
Feed Life™ is more than a position; it is a guide for how we
contribute to healthy diets and resilient food systems. By
connecting food security, sustainability and a strong voice
for farmers, it ensures that we actively engage in efforts
to make a positive change for people and the planet.
Resilient brands drive value
Our brands demonstrated resilience and value creation in 2025.
Our total branded revenue increased by 6.9% to EUR 7,029
million, driven by our ability to maintain rightful price points.
Our branded volumes told a story of recovery. While the higher
price points meant consumers started the year hesitantly,
increasing wages and easing inflation restored purchasing power.
Momentum built steadily, returning our strategic brands to
volume growth in the second half. This recovery proves that our
brands remain highly relevant. As economic pressure eased,
consumers returned to the products they trust, and we ended
the year with full-year volume growth of 0.2%.
Outlook for 2026
We enter 2026 fully prepared for the market conditions
ahead. The supply pressure from late 2025 will continue to
impact the first half of the new year. However, lower price
levels are expected to stimulate volume growth for our
brands, and we are well-positioned to drive this momentum.
We also look to the future with the ambition of strength-
ening our cooperative even further. The intended merger
with DMK Group represents a unique opportunity to create
a more robust European foundation, and we look forward to
the regulatory process concluding in the coming year.
In 2025, Arla Foods delivered a highly competitive result
with revenue reaching EUR 15.1 billion in a year defined by a
distinct shift in market dynamics.
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ARLA FOODS ANNUAL REPORT 2025
2025 in focus About Arla Performance review Sustainability statements Our governance
2025
performance
at a glance
F26
F26
F26
F26
F26
F26
Competitiveness
Value creation
Sustainability
Sustainability
Sustainability
Supplementary payment
56.4
15.1
2.8%
158
14.3
3.3
0.2%
-5.6%p
4.4%p
-0.4%p
PERFORMANCE
PRICE
EUR-CENT/KG
REVENUE
EUR BILLION
PROFIT SHARE2
OF REVENUE
NET EFFICIENCIES
EUR MILLION
MILK VOLUME3
BILLION KG
LEVERAGE
STRATEGIC BRANDED
VOLUME-DRIVEN
REVENUE GROWTH
SCOPE 1+2 EMISSIONS
DEVELOPMENT IN 2025
SCOPE 3 FLAG EMISSIONS1
DEVELOPMENT IN 2025
SCOPE 3 OWNER MILK
EMISSIONS PER KG OF MILK
DEVELOPMENT IN 2025
2023
2023
2023
2023
2023
2023
2023
2015
2020
2020
2024
2024
2024
2025
2025
2025
47.0
2.1
13.7
2.8%
114
13.9
2.6
-0.7%
Baseline
Baseline
Baseline
-4.0%p
-2.7%p
-1.1%p
-5.6%p
4.4%p
-0.4%p
50.9
2.2
13.8
2.9%
131
13.7
3.2
3.7%
56.4
2.2
15.1
2.8%
158
14.3
3.3
0.2%
2024
2024
2024
2024
2024
2024
2024
2025
2025
2025
2025
2025
2025
2025
Within guidance announced
in our Half‑Year Report 2025.
KPIs without target and guidance.
1 Emissions related to forest, land and
agriculture activities.
2 Based on profit allocated to owners of Arla
Foods amba.
3 Standardised milk: 4.2% fat, 3.4% protein.
The milk volume includes both owner milk
and other milk.
Read more about our Future26
strategy on page 16.
-43.6%
-3.7%
-9.9%
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ARLA FOODS ANNUAL REPORT 2025
2025 in focus About Arla Performance review Sustainability statements Our governance
Five-year overview
Financial figures (EUR million)
2025
2024
2023
2022
2021
Performance price
EUR-cent/kg owner milk
56.4
50.9
47.0
55.1
39.7
Income statement
Revenue
15,066
13,770
13,674
13,793
11,202
EBITDA
1,156
1,109
1,079
1,001
948
EBIT
647
598
600
529
468
Net financials
-133
-135
-145
-80
-61
Profit for the year
433
417
399
400
346
Arla Foods amba's share of profit for the year
415
401
380
382
332
Profit appropriation for the year
Individual capital
43
40
41
39
42
Common capital
76
69
69
74
83
Supplementary payment
296
292
270
269
207
Balance sheet
Total assets
9,427
9,330
8,299
8,746
7,813
Investments in property, plant and equipment
570
557
445
373
452
Investments in right of use assets
75
132
88
56
69
Non-current assets
5,366
5,354
4,788
4,611
4,668
Current assets
4,061
3,976
3,511
4,135
3,145
Equity
3,016
3,138
3,052
3,168
2,910
Non-current liabilities
3,309
3,105
2,650
2,915
2,446
Current liabilities
3,102
3,087
2,597
2,663
2,457
Net interest-bearing debt including pension liabilities
3,766
3,533
2,850
2,986
2,466
Net working capital
1,521
1,519
1,104
1,442
810
Cash flows
Cash flow from operating activities
862
652
1,151
184
780
Cash flow from investing activities
-630
-887
-519
-443
-482
Free cash flow
232
-235
632
-259
298
Cash flow from financing activities
-241
186
-592
269
-330
2025
2024
2023
2022
2021
Financial ratios
Profit share1
2.8%
2.9%
2.8%
2.8%
3.0%
EBIT margin
4.3%
4.3%
4.4%
3.8%
4.2%
Leverage
3.3
3.22
2.6
3.0
2.6
Interest cover
8.0
7.5
11.1
19.6
23.7
Equity ratio
32%
34%
37%
36%
37%
Inflow of standard milk (mkg)
Inflow from owners in Denmark
5,467
5,279
5,277
5,185
5,185
Inflow from owners in the United Kingdom
3,714
3,449
3,412
3,360
3,345
Inflow from owners in Sweden
2,008
1,901
1,925
1,876
1,896
Inflow from owners in Germany
1,574
1,554
1,646
1,637
1,683
Inflow from owners in the Netherlands, Belgium and Luxembourg
814
790
798
757
749
Inflow from others
752
762
816
858
968
Total inflow of raw milk
14,329
13,735
13,874
13,673
13,826
Number of owners
Owners in the United Kingdom
1,852
1,919
1,981
2,053
2,127
Owners in Sweden
1,848
1,938
1,996
2,108
2,236
Owners in Denmark
1,713
1,828
1,948
2,105
2,274
Owners in Germany
1,159
1,218
1,329
1,429
1,497
Owners in the Netherlands, Belgium and Luxembourg
693
721
745
797
822
Total number of owners
7,265
7,624
7,999
8,492
8,956
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 2024 was 2.9.
More details in the Financial Statements, starting from page 91.
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ARLA FOODS ANNUAL REPORT 2025
2025 in focus About Arla Performance review Sustainability statements Our governance
Five-year overview
Sustainability key figures
Target
Target year
2025
2024
2023
2022
2021
Climate
Scope 1+2 emission reductions compared to baseline year 2015
-63%
2030
-43.6%
-38.0%
-34.0%
-30.5%
-26.5%
Scope 3 FLAG emission reductions compared to baseline year 2020
-30.3%
2030
-3.7%
-8.1%
-5.4%
-2.5%
0.4%
Scope 3 owners' milk emission reductions per kg of milk compared to baseline year 2020
-9.9%
-9.5%
-8.4%
-6.7%
-1.8%
Scope 3 supplier and partner engagement1
82.6%
2029
42.5%
Renewable electricity in Europe2
100%
2025
82.2%
71.6%
66.0%
50.2%
38.9%
Biodiversity
Direct soy to be deforestation and conversion free (DCF)
100%
2025
100%
94%
69%
Direct palm to be DCF
100%
2025
77%
96%
79%
Direct forest fibre to be DCF
100%
2025
98%
96%
96%
Indirect soy (feed) to be DCF
100%
2025
82%
48%
27%
Indirect palm (feed) to be DCF3
100%
2028
Not available
Not available
Not available
Circularity
Packaging designed for recycling (branded products)
100%
2025
94%
94%
95%
93%
Food waste reduction at our production sites
-50%
2030
10%
-2%
Employees and workers in the value chain
Average number of full-time employees
22,052
21,895
21,307
20,907
20,617
Gender diversity in management (director+)
40%
2030
32.4%
30.9%
29.3%
28.9%
27.2%
Lost-time accidents per million working hours (LTA)
0
Ongoing
2.9
Consumers – healthy and safe nutrition
Branded products that qualify as healthy under Health Star Rating
80%
Ongoing
79.5%
Product recalls
0
Ongoing
2
2
1
1
0
More details in the Sustainability Statements, starting from page 34.
Note: Certain figures in the table above have been restated from numbers presented in historical reports.
1 Suppliers measured by emissions for which have science-based targets are in place.
2 From December 2025 onwards we will only use renewable electricity in Europe.
3 Data is not made available from feed companies.
New incentive model points
From January 2026, our
FarmAhead™ Incentive Model
will introduce new points to
strengthen efforts in nature
and biodiversity. Read more on
page 53.
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ARLA FOODS ANNUAL REPORT 2025
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Creating the
future of dairy
together
proposed merger, marking a key milestone in bringing together
the farmer-owned organisations under shared values and
complementary strengths. Regulatory approval of the merger
is still pending and expected in the first half of 2026. Until then,
both companies will continue to operate independently.
Why this matters
With the merger, we will continue to build resilience for the
farmer owners of both dairy groups, to support food security
and healthy food habits and to advance sustainability through
data, science and technology.
The move is expected to accelerate innovation, improve
efficiency and ensure a competitive milk price for farmer
owners. By pairing Arla's international reach and innovation
capabilities with DMK Group's diversified product portfolio,
craftsmanship and strong presence in the German market, we
aim to strengthen our relevance to consumers and customers.
As one joint supplier, we will offer well‑known brands,
including Europe's leading dairy brand, alongside a broader
and stronger product portfolio. This combination also brings
greater innovation capacity and new opportunities for growth
and partnership. In addition, whey volumes from expanded
The intended merger between Arla and
DMK Group marks a bold step towards
creating Europe’s strongest dairy
cooperative, driving forward nutritious,
high-quality products and innovation.
Towards a stronger
cooperative
Arla and DMK Group aim to
form a joint cooperative to
shape the future of dairy.
cheese production will increase, creating further opportunities
for AFI to deliver high-value solutions and drive growth in our
ingredients business.
Shared commitment and foundation
The intended merger builds on a strong business fit and a
long-term partnership between the two companies, including
the ArNoCo joint venture. The companies share a commitment
to cooperative values and a unified vision for the future of dairy.
Clear support for the merger from farmer representatives on
both sides signals confidence in the strategy and readiness to
jointly drive growth and consumer trust.
In addition, both companies pursue a robust sustainability
agenda, anchored in science-based targets with reduction
ambitions across scope 1, 2 and 3 emissions.
If approved by the regulatory authorities, the merged entity will
carry the Arla name and be headquartered in Viby, Denmark. Jan
Toft Nørgaard will be chair, Peder Tuborgh will be CEO, and Ingo
Müller will join the Arla Executive Management Team (EMT) as
EVP of Post-merger Integration.
ARLA AND DMK GROUP
ARLA FOODS
Arla is owned by farmers across seven
European countries and is the world’s
largest producer of organic dairy
products, with strategic brands including
Arla®, Lurpak®, Castello®, Puck® and
Starbucks® chilled coffee.
DMK GROUP
DMK is Germany's largest dairy
cooperative, producing a wide range of
dairy and food products under brands
such as MILRAM, Oldenburger, Uniekaas,
Alete bewusst and Humana.
REVENUE
EUR BILLION
MILK VOLUME
BILLION KG
DMK Group 2024
DMK Group 2024
DMK Group 2024
Arla 2025
Arla 2025
Arla 2025
15.1
5.1
7,265
4,600
22,052
6,800
9,427
1,526
3,766
442
14.3
5.3
OWNERS
NUMBERS
EMPLOYEES (FTE)
NUMBERS
TOTAL ASSETS
EUR MILLION
NET INTEREST-BEARING DEBT
EUR MILLION
Calculations are prepared under different accounting frameworks: Arla applies International Financial Reporting Standards (IFRS)
while DMK follows Handelsgesetzbuch (HGB), the German financial standards.
In April 2025, Arla Foods and DMK Group announced their plan
to merge, aiming to form a joint cooperative and shape the fu-
ture of dairy. This was reaffirmed mid‑year when the BoR of the
three cooperative units: Arla Foods, DMK Group and DOC Kaas
(together forming the DMK cooperative) voted in favour of the
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HIGHLIGHTS
Celebrating 25 years as Arla Foods
In 2025, we marked 25 years as a cross-border, farmer-owned
cooperative, built on democratic values and a collective ambition
that can be traced back to the 1880s. Over the past quarter-centu-
ry, we have grown into one of the world's leading dairy companies,
delivering essential nutrition, advancing sustainability and creating
long-term value for our farmer owners, colleagues, customers and
consumers.
Throughout this journey, we have consistently invested in
innovation, expanded our global footprint and strengthened our
brands, foodservice and whey business in close collaboration with
our partners. We remain committed to creating the future of dairy
and to bringing health and inspiration to the world, naturally.
2000
Swedish Arla and Danish
MD Foods merge,
becoming the world's
first cross-border dairy
cooperative, owned by
farmers in both countries
2003
Launch of the
Arlagården®, a shared
set of principles to
ensure milk quality, animal
welfare and care for the
climate, the environment
and the people working
on Arla farms
2006
Acquire of Tholstrup
Cheese, adding the
Castello® brand to Arla,
and Finnish dairy Ingman
Foods Oy Ab
2007
Acquire Express Dairies
in the UK, creating the
UK's leading dairy supplier
under Arla Foods UK plc
2008
Join the UN Global
Compact and publish
our first Corporate Social
Responsibility report
2009
Acquire Friesland
Fresh Food in Nijkerk,
Netherlands, giving access
to a new market in Europe
2011
Merge with German
cooperative Hansa-Milch
eG. Acquire Allgäuland-
Käsereien, Southern
Germany and Swedish
Milko, Sweden
2012
Merge with German
Milch-Union Hocheifel
and British Milk Link,
expanding cooperative
ownership to six countries
2014
Open the Aylesbury dairy,
the United Kingdom (UK)
and begin production
in Falkenberg, Sweden.
Approximately 1,300
British AMCo members
join as owners, establish a
joint venture with DMK for
whey processing
2017
Open Arla's Global
Innovation Centre in
Aarhus, Denmark. Merge
with Swedish Gefleortens
cooperative
2018
Acquire Mondeléz
International's Middle
East and Africa branded
cheese business,
including full ownership
of its cheese production
site in Manama, Bahrain
2019
Announce the climate
ambition of reducing
scope 1 and 2 emissions
in our own value chain
by 63% and scope 3
emissions by 30% per kg
of milk and whey by 2030
2020
Introduce Climate Checks
(now FarmAhead™ Check)
to calculate farm-specific
climate and environmental
impact. More on page 42
2022
Major expansion at
Pronsfeld dairy in
Germany, a key driver
in meeting the growing
international demand for
sustainable, affordable
and nutritious dairy
products
2023
Launch of FarmAhead™
Incentive to incentivise
farmers' sustainability
initiatives and FarmAhead™
Customer Partnership
programme to enable
customers to partner in
climate reduction projects
on our owners' farms
2024
Acquire Volac's Whey
Nutrition business and
its production facility in
Felinfach, Wales
2025
BoR in Arla and DMK
Group vote in favour of the
intended merger (pending
regulatory approval). Launch
of our new corporate brand
Feed Life™ to build one
strong brand position for
company and consumers
Our cooperative milestones: 25 years of growth
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High CapEx investments
for tomorrow's growth
Reaffirming our long‑term vision, we made strategic
investment decisions in 2025 to advance transformative
projects and secure future growth. In February, we
decided to invest in creating a UHT Centre of Excellence
at Lockerbie, Scotland, to increase UHT and lactofree milk
capacity. Mid-year, we committed to advancing Holstebro
Dairy in Denmark, boosting cream cheese production
by an additional 16,000 tonnes annually, following a
27,000-tonne increase earlier in the year, while Linköping
Dairy in Sweden set plans for a new skyr line launching
in 2028 to broaden our Nordic portfolio. In August, we
initiated a strategic expansion of the Puck® jar line in
Bahrain, reinforcing our ambitions in the Middle East.
HIGHLIGHTS
Scope 3 target update
In 2025, we strengthened our scope 3 ambition and
aligned it with the Science Based Targets initiative (SBTi)
Forest, Land and Agriculture (FLAG) guideline and the
1.5°C pathway under the Paris Agreement, adopting
absolute emission reductions. At the same time, we set
a target for our suppliers and partners across the value
chain to be aligned with SBTi by 2029. Read more on
page 44.
More green choices
To promote healthier lifestyles,
we launched a recipe book in
Denmark to inspire people to
cook easy-to-make everyday
meals with more vegetables.
A new health strategy to
enable good food choices
We believe that good food choices make life better.
Yet many lack access, knowledge or inspiration to
make them.
A desire to help change this has driven us to create a
new global health strategy, which was developed and
launched internally in 2025.
As one of the world's largest food and beverage
manufacturers, Arla has been benchmarked by the
independent Access to Nutrition Initiative (ATNi) in its
Global Health Index. In 2024, we moved up from #14
in 2016 to #3. We also use the Health Star Rating (HSR)
system to assess our branded portfolio, aiming for 80%
of products to meet the health standard of 3.5 stars or
above.
With the new health strategy, we aim to fuel our
product innovation, our food inspiration and our
engagement in co-solving societal challenges. The
strategy rests on three pillars:
• Nourish health through wholesome dairy
• Empower people to live well with life-long healthy
food habits
• Secure the future of sustainable diets and food
security with dairy
In the years to come, elements of the strategy will
be implemented at global level, such as in product
innovation, while other activities will be driven at
market level defined by the most culturally relevant
route and the maturity of our position and portfolio.
Recipe for Change won global awards
Recipe for Change from Puck® earned three Cannes
Lions in 2025 and other international awards. These
global recognitions celebrated a campaign rooted
in deep local insight and the spirit of generosity and
togetherness that defines the Ramadan season. It
brought six authentic home-cooked recipes, each
created by a resilient Lebanese woman, into some of
the most renowned Lebanese restaurants in Canada,
Australia and the United Arab Emirates (UAE), where
in the UAE, 50% of proceeds from each dish sold were
donated to support Lebanese families in need.
Meeting global protein demand through
strategic brands and integration
Consumer preference for protein continued to
deliver strong results. Arla® Protein achieved solid
volume‑driven revenue growth of 19.5%, including a
69.2% increase in our International segment. Similarly,
our Starbucks® Protein Drink with Coffee has been
very well received across markets, particularly in
Europe, and is showing strong early momentum.
Against this backdrop, AFI marked one year since
fully integrating AFI Felinfach, formerly referred to as
Volac's Whey Nutrition, into our whey business. This
integration has also contributed to an increase in AFI
sales by 43.1%. These results highlight our strategic
focus on high-protein nutrition to meet the evolving
needs of customers and consumers worldwide.
More details about our performance on page 23.
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ABOUT
ARLA
In this section
15 Business model
16 Strategy
17 Risk management
Innovating for chefs worldwide
Combining decades of dairy expertise with deep insight into foodservice and chefs' needs, Arla® Pro creates products
designed specifically for professional kitchens. The portfolio spans more than 300 products sold in over 100 countries,
and in 2026 a refreshed packaging look and feel will be unveiled. Building on strong momentum, Arla® Pro achieved 7.4%
volume-driven revenue growth in 2025.
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Business
model
At the heart of our cooperative is a clear
mission: to secure the highest value
for our farmers' milk while creating
opportunities for their growth.
Arla is more than a dairy company. It is a farmer-owned
cooperative built on shared purpose. Every kg of milk is
treated as an opportunity to create value. Through essential
nutrition, positive contributions to society and value creation
for all stakeholders, we strive to create the future of dairy.
As a cooperative, our focus is on maximising the value from
our milk. With our cooperative structure, all profits generated
from our products are distributed among the owners via the
milk payment system. They invest to drive growth and actively
engage in sustainability initiatives.
Sourcing raw materials 1 2
Our story begins on the farm
Our cooperative consists of 7,265 farmer owners who oversee
more than 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 actions are recognised through our farm management
Arlagården® programme and the FarmAhead™ Incentive. Read
more on page 42.
Other ingredients
Our value chain extends far beyond the farm. We source a
variety of ingredients, including whey, sugar, vegetable oil,
salt, fruits and essential packaging materials like plastic and
forest fibre from partners around the globe.
Milk collection 3
We collect approximately 14.3 billion kg of raw milk each
year, sourced mainly from our owners across seven countries:
Denmark, Sweden, the United Kingdom (the UK), Germany,
Belgium, the Netherlands and Luxembourg.
Innovation, production and packaging 4
Together with our 22,052 employees worldwide, we are
committed to continuous improvement, combining efforts
to reduce our climate impact with developing products that
support a nutritious and sustainable diet.
Innovation
Guided by our vision, we strive to innovate products that
are nutritious and natural, adding value to our owners' milk
through strong branding and marketing, enabling good food
choices that make life better.
Production and packaging
Through our 58 production and packaging sites and 50
distribution centres, we bring our products to life and connect
them with the people we serve globally. Each year, these
facilities enable us to deliver 6.4 billion kg of nutritious dairy
products. They also provide employment across multiple
countries, where we remain committed to ensuring fair wages
and benefits for all employees. More on page 64.
Customers 5
We serve 166 countries, partnering with supermarket chains,
foodservice providers, business-to-business clients and
e-commerce platforms. Our success is built on collaboration,
anticipating market shifts and responding with agility. We work
together with our customers to reduce the environmental
footprint across the value chain. More on page 44.
Consumers 6
We help people eat well by providing inspiration and sharing
the benefits of dairy with millions of individuals. Through
innovative solutions, promoting good food choices and making
nutrition accessible to all, we Feed Life™. More on page 62.
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ARLA FOODS ANNUAL REPORT 2025
2025 in focus About Arla Performance review Sustainability statements Our governance
INVESTMENTS
600 – 800 mEUR
ANNUALLY
We invest to support owners
and value creation
EFFICIENCIES
70 – 100 mEUR ANNUALLY
We fund our future by having an end-to-end
focus on becoming both more efficient and
more effective in the way we work
PEER GROUP INDEX
103 – 107
We aspire to have a
competitive milk price
compared to our peers
BRANDED VOLUME GROWTH
1 – 4%
We aim to create brands and
products that bring value to
our costumers' life through
health and nutrition
CO2E REDUCTION
SCOPE 1+2: -63%
SCOPE 3 FLAG: -30.3%
We are committed to the 1.5°C
ambition and the FLAG sector
pathway
FUTURE26 STRATEGY
VISION
Creating the future of dairy to bring health
and inspiration to the world, naturally
STRATEGIC
FOCUS
Lead
sustainable
dairy
Scale
to grow
Build
growth
platforms
Collaborate for
efficiencies
STRATEGY
ASPIRATION
A leader in value creation
and sustainability
DIGITAL & INNOVATION
AS ACCELERATORS
WIN WITH OUR
OWNERS & PEOPLE
1
2
3
4
Strategy
As Future26 enters its final phase, we
remain committed to our aspiration
of leading in value creation and
sustainability, shaping the future of
dairy through health and inspiration.
Future26: our long-term growth strategy
Future26 strategy sets out how we secure healthy, sustainable
growth and long‑term stability in a rapidly changing world.
Since its launch in 2022, the strategy has guided us through
geopolitical tensions, inflationary pressures and fluctuating
commodity markets. Despite these challenges, we continue
to deliver competitive milk prices for our farmer owners and
strengthen our position. F26 is built upon four strategic pillars:
Lead sustainable dairy 1
We are working towards our 2030 goals and continue to
reduce emissions across the value chain. Our belief in the
FarmAhead™ programme is steadfast and close collaboration
with our farmer owners is fundamental, though we recognise
the need to intensify our efforts. The FarmAhead™ Customer
Partnership programme now covers up to 4.5 billion kg of
milk. Going forward, our agenda will be guided by Feed Life™.
More about our sustainability strategy on page 35.
Scale to grow 2
Our branded portfolio has delivered solid volume‑driven
revenue growth across the strategy period to date. Recovery
in 2024 marked a turning point following cost‑of‑living
pressures, and while 2025 reflected softer market conditions,
the overall trajectory remains robust, reflecting continued
consumer trust in our brands. Innovation has continued to
support this momentum, with Arla® Protein and Starbucks®
chilled coffee successfully capturing demand for convenient,
high‑protein options, while Lurpak®, Puck® and Castello®
sustained their leadership.
We have also strengthened our market presence across
key regions. Strong commercial execution has supported
volume‑driven revenue growth in the UK and Germany.
The Netherlands, Belgium and France have continued their
upward trajectory, delivering double‑digit growth in 2025.
Beyond Europe, South-East Asia has shown strong progress
and the Middle East and North Africa have delivered consist-
ent year‑on‑year gains. To support future growth at scale, we
continued to invest across a range of initiatives, including the
expansion of mozzarella production at Taw Valley in the UK
and Puck® jar production in Bahrain.
Build growth platforms 3
We continue to build the platforms that support long‑term
growth. Arla® Pro has strengthened its position as the
preferred brand in foodservice, while enhanced e‑commerce
offerings have expanded our reach to both consumers
and customers. The successful integration of AFI Felinfach
has strengthened AFI as one of our key growth platforms,
supported by strong demand for protein ingredients and
favourable market conditions.
Over 2022–2025, we invested EUR 2.9 billion across a broad
range of initiatives, from capital expenditure to mergers and
acquisitions.
Collaborate for efficiencies 4
Efficiencies have been a consistent source of value creation
throughout Future26. From 2022 to 2025, our initiatives
delivered cumulative savings of EUR 504 million, with savings
surpassing EUR 100 million in every year of the period. This
performance exceeded annual savings targets and enabled
reinvestment in growth, innovation and operational resilience.
Strengthening efficiency through digitalisation and agile
operating models has remained central to our competitive-
ness and to delivering our strategic ambition.
Sharpening focus for 2026
As the strategy nears its conclusion, we aim to sharpen our
focus on securing an attractive milk price for our owners, to
continue driving brand momentum and to advance the shift
towards more sustainable farming. We will leverage and follow
through on the many investments made, while maintaining
efficiency. The potential merger with DMK Group has also
represented a bold step towards creating Europe's strongest
dairy cooperative. We remain alert and adaptable; if the
intended merger materialises, we will update our strategic
direction to ensure continued relevance and growth.
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Risk management
1. Regulatory and agricultural risks 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 supply, quality and safety issues
8. Supply of raw materials
9. Currency volatility
10. M&A integration
PERIPHERAL
RISKS
MARKET-
SPECIFIC
RISKS
ARLA-
SPECIFIC
RISKS
We take a proactive approach to risk
management, prioritising what matters
most whilst adapting our methods to
ensure resilience, clarity and value
creation across the business.
Approach to risk management
Arla takes a holistic and proactive approach to risk
management, integrated into our business planning and
decision-making processes. We aim to identify and mitigate
risks that could impact our business while also recognising
opportunities that could enhance our value creation.
Dedicated risk owners in each business area continuously
monitor emerging trends and key risk exposures. We evaluate
these risks using a structured methodology to quantify
potential financial impact and likelihood over short (less than
a year), medium (one to five years) and long (more than five
years) term. This consistent framework allows us to prioritise
the most significant risks and develop effective responses. We
continually refine our risk management tools and practices to
adapt to changes in our environment and to ensure clarity and
transparency in how risks are communicated and managed
across the company.
Governance and oversight
Oversight of risk management is embedded in Arla's govern-
ance structure. The Board of Directors (BoD) holds ultimate
responsibility for risk oversight and ensures that robust risk
management, compliance and internal control systems are in
place. The Executive Management Team (EMT) is accountable
for implementing the risk management framework and man-
aging the enterprise risks on a day-to-day basis. Management
regularly reviews the consolidated risk profile of the business
and discusses material risks along with mitigation actions,
with the BoD.
To strengthen accountability, each risk has a clearly designat-
ed owner within the EMT. The BoD monitors the effectiveness
of our risk management processes and controls by regularly
reviewing key risks, mitigation activities and by engaging in
dialogue with the EMT on emerging exposures. This govern-
ance setup fosters close collaboration between the BoD and
EMT in identifying, evaluating and addressing risks in a timely
manner, while preserving the flexibility to respond quickly to
emerging issues or changing conditions.
Possible
Moderate
LIKELIHOOD
PROFIT IMPACT
Likely
Major
Very likely
Critical
1.
3.
7.
10.
2.
4.
8.
5.
9.
6.
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RISK MANAGEMENT
Category
Risk description
Impact
development
Timeframe
Potential impact
Mitigating actions
PERIPHERAL
RISKS
1.
Regulatory and agricultural risks
impacting milk production
More about climate-related risks
on page 36.
European government proposals on sustainability financial levers,
such as the international emissions trading system and climate taxes,
could increase costs for both farmers and processors. Denmark's
government nitrate agreement, along with the EU's implementation
of nature legislation, could drive land-use changes and reduce
milk production. The EU's Common Market Organisation proposal
and other market-focused legislation could raise the cost of doing
business and further erode the EU's single market
Stable
Short,
medium and
long
• Higher production costs on farms
• Lower milk volumes
• Increased investment in farm barn infrastructure
• Reduced flexibility of operations
• Continuously implement on-farm activities that reduce emissions
• Incentivise farmers to lower their emissions and minimise their impact on
land use change
• Actively reduce emissions in our own operations and remain alert to
changes in milk intake
• Play various roles in addressing disease impacts and act in line with our
continuity plan to stay resilient
2. Geopolitical instability and
economic turmoil
Global political and economic instability, including trade barriers and
regional conflicts, may disrupt supply chains and affect demand in
key markets
Stable
Short and
medium
• 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
• Strengthen supply chain resilence and contingency planning
MARKET-
SPECIFIC
RISKS
3. Transformation of
consumer behaviour
Consumer preferences in the food industry are always evolving. The
increasing speed and unpredictability of these changes could pose a
risk that significantly impacts our business
Stable
Medium
• Loss of market share and sales volumes if our sustainable transformation
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
• Highlight nutritional and health benefits, backed by our new health
strategy
4. Loss of competitiveness
in branded portfolio
Due to the uncertainty of consumer spending 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 develop-
ment 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
Dependence on IT systems and rising cyber threats expose Arla to
operational disruptions and data security risks
Stable
Short
• Interruptions in production and distribution
• Financial and reputational damage from data breaches
• A dedicated cybersecurity team and incident response plans
• Regular penetration testing and employee training
7.
Major product supply, quality
and safety issues
Maintaining high standards of product quality and food safety is
essential to protect consumer trust and brand reputation
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. Supply of raw materials
Given that milk and whey are essential raw materials in our
production, our supply chain is exposed to risks related to availability
and timing of deliveries
New
Short
• Disruptions in production planning and fulfilment
• Increased operational costs due to supply volatility
• Potential delay in delivery
• Close collaboration with farmer owners and suppliers
• Scenario planning for supply fluctuations
• Flexible production setups to manage timing variability
9.
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 125.
10. M&A integration
The intended merger with DMK Group represents one of the largest
structural transformations in Arla's recent history. The intended
merger requires many resources and management attention,
potentially affecting the pace of other strategic initiatives and
day-to-day operations
New
Short,
medium and
long
• Increased organisational complexity during the transition
• Pressure on day-to-day operations and key functions
• Slower execution of strategic initiatives
• A dedicated integration team with clear governance anchored at BoD level
• Focus on cultural alignment and process harmonisation
• Proactive stakeholder communication and structured execution planning
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ARLA FOODS ANNUAL REPORT 2025
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PERFORMANCE
REVIEW
In this section
20 Executive summary
21 External market overview
23 Performance overview
33 2026 outlook
When data meets taste
As part of the product development journey, we run panel and consumer tests to guide us towards the tastes
consumers love the most. At Arla® Skyr, we are now leveraging machine learning and data to anticipate
consumer preferences. If successful, this approach will minimise repeated testing, accelerate decision-making
and focus research where it delivers the greatest impact, making innovation faster, smarter and tastier.
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EXECUTIVE SUMMARY
Robust performance amid
global market dynamics
Arla delivered a robust performance in a year impacted by
strong market forces. Tight supply and firm demand kept
commodity prices elevated in the first half of the year.
However, prices fell significally in the second half, particularly
in the fourth quarter, following an unanticipated increase in
milk availability globally, including Europe. This broader shift
in market conditions had a direct effect on our performance.
In the wider context, dairy demand remained strong and we
achieved robust results across markets and channels.
Overall, our performance price increased by 10.8% to
56.4 EUR‑cent/kg (2024: 50.9 EUR‑cent/kg), reflecting the
higher value created from our owners' milk through strong
market and brand positions as well as profitable growth in the
TORBEN DAHL NYHOLM
CFO of Arla
protein and sports nutrition segment. However, the rise in milk
availability put pressure on global commodity prices and this
fed through to our pre‑paid milk price, contributing to a lower
performance price for the second half of the year.
Elevated commodity prices in the first half also had a clear
impact on our brand performance as well. Market movements
shaped the trajectory of our brand volume‑driven revenue
growth, with high price levels constraining growth before
momentum strengthened in the second half. Even so, our
branded portfolio held a solid position, supported by stable
retail volumes and a strong foodservice performance. Our total
revenue rose by 9.4% to EUR 15.1 billion. Arla Food Ingredients
(AFI) was a major contributor, delivering EUR 1.5 billion in
revenue on the back of the successful integration of AFI Felinfach
and the robust global demand for value‑added protein.
Our efficiency programme delivered EUR 158 million, the
highest outcome achieved to date, driven by broad-based
efficiencies across our supply chain, commercial areas and
central functions.
In sustainability, we achieved a 5.6%p year‑on‑year reduction
in scope 1 and 2 emissions, down 43.6% from 2015, reflecting
continued energy‑efficiency gains and our transition to
low‑carbon operations. Arla farmer owners reduced emissions
intensity per kg of milk by 0.4%p and emissions on farms have
decreased by 9.9% compared to the 2020 baseline. However,
the increased milk supply drove our farm‑related emissions,
which increased by 4.4%p year on year. We continued to scale
actions under the FarmAhead™ framework and supported
our farmer owners in adopting proven practices, such as feed
optimisation, herd management and manure handling.
2015
2024 2025
Baseline
-4.0%p -5.6%p
-43.6%
2020
2024 2025
Baseline
-2.7%p 4.4%p
-3.7%
2020
2024 2025
Baseline
-1.1%p -0.4%p
-9.9%
1 Emissions related to forest, land and agriculture activities.
-5.6%p
SCOPE 1+2 EMISSIONS
DEVELOPMENT IN 2025
F26
4.4%p
SCOPE 3 FLAG EMISSIONS1
DEVELOPMENT IN 2025
F26
F26
-0.4%p
SCOPE 3 OWNER MILK
EMISSIONS PER KG OF MILK
DEVELOPMENT IN 2025
Supplementary payment
56.4
PERFORMANCE PRICE
EUR-CENT/KG
47.0
2.1
55.1
2.2
39.7
1.7
50.9
2.2
56.4
2.2
F26
2023
2022
2021
2024 2025
0.2%
STRATEGIC BRANDED
VOLUME-DRIVEN
REVENUE GROWTH
-0.7%
-3.2%
4.5%
3.7%
0.2%
F26
2023
2022
2021
2024 2025
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ARLA FOODS ANNUAL REPORT 2025
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External
market
overview
Strong wage sustained demand
Normalising inflation combined with wage growth of 3.2%2 in
2025 increased purchasing power for European consumers1.
Dairy sales volumes rose by 0.7%, led by the milk, yoghurt
and cooking (MYC) category, which recorded volume growth
of 0.9% and cheese, which grew by 0.8%. In contrast, butter,
spreads and margarine (BSM) volumes declined by 2.1%,
caused by the generally high price level of BSM products1.
Global commodity prices reacted to
surging milk supply
The year 2025 stood out for its global market dynamics,
driven by the forces of supply and demand. Tight milk supply
and continued strong demand in the first half of the year
Despite geopolitical turmoil and trade uncertainties, the
global economy broadly held firm, with real gross domestic
product (GDP) growth of 3.2%, only 0.1%p below 2024. In the
EU, growth improved to 1.4%, up from 1.1% in 20241.
Inflation returned to pre-COVID levels
Since peaking in 2022, inflation has steadily declined, a trend
that continued through 2025 as supply chains normalised.
European inflation settled at 2.1% in 2025, down from 2.4%
in 2024. Projections for 2026 point to 1.9%1, though these
remain highly sensitive to tariff implementation. Outside
Europe, inflationary pressures persisted. Africa and the Middle
East recorded rates of 13.6% and 10.4% respectively, pushing
global inflation to 4.2% in 2025 (2024: 5.8%)1.
Average prices1
2024
2025
Butter
55.1
51.9
SMP
49.6
46.4
Gouda
47.4
44.8
COMMODITY PRICES1
EUR-CENT/KG,
MILK UTILISATION EQUIVALENT
Source: GDT, Trigona Dairy Trade, CLAL
1 A change in methodology has been applied to the calculations. The figures for 2024 differ from those published in Annual Report 2024.
Source: CLAL
1 Sweden, Denmark, the UK, Germany, Belgium, the Netherlands, Finland.
COW'S MILK DELIVERIES ON
COMPARABLE COUNTRIES IN EUROPE1
MILLION TONNES
DECREASE
FROM AUGUST
TO DECEMBER
2025
MILK DELIVERY GROWTH:
THE SECOND HALF OF
THE YEAR
Geopolitical turmoil persisted,
yet global growth held firm
The war in Ukraine and the Israel–Hamas conflict continued to
shape the global outlook, contributing to a persistently fragile
environment.
Frequent tariff announcements in early 2025 raised expec-
tations of softer global output and trade. From a European
perspective, concerns over the potential impact of US import
tariffs eased after the European Union (EU) and the US agreed
in August to set a 15% tariff rate. Although not favourable, it
provided a degree of clarity, even if the broader policy outlook
remained uncertain.
A rapid surge in milk supply in the
second half of the year reshaped
global commodity prices, set against a
backdrop of geopolitical uncertainty and
normalising inflation throughout 2025.
7,500
7,000
6,500
6,000
90
70
50
30
Jan
Feb
Mar
Apr
May
Jun
2021
Jul
Aug
2022
2023
2024
2025
Sep
SMP
35%
2024
Gouda
36%
2025
Butter
44%
2023
Nov
Oct
Dec
5.5%
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supported firm commodity prices. In the second half, especial-
ly in the fourth quarter, market conditions changed drastically.
A season of exceptionally good weather resulted in a strong
feed harvest globally. With better feed availability, farms were
able to increase milk production within their existing capacity.
As milk supply rose while demand remained broadly stable, a
clear supply–demand imbalance emerged, driving commodity
prices down. The decline began in August and accelerated
into the fourth quarter. From August to December, butter
prices fell by 44%, gouda by 36% and skimmed milk powder
(SMP) fell by 35%. However, because these declines occurred
late in the year, their impact on the 2025 annual averages was
limited, with effects likely to continue into 2026.
Farmgate milk prices remained high
before softening late in the year
The dynamics in commodity markets were reflected in the
farmgate milk prices in Europe. Prices were at a stable and
relatively high level throughout the first half of the year before
declining in the second half. With dropping commodity prices,
EU farmgate milk prices started declining 5% to 10% from
August to December3.
The total milk supply to Arla reached 14.3 billion kg this year,
compared with 13.7 billion kg last year, an increase of 4.3%.
Related to our owners' milk, supply increased in every owner
country. The UK (7.7%) and Denmark (3.6%) delivered the
strongest uplift, supported by additional growth from Sweden,
Germany and the Benelux markets.
Average prices1
2024
2025
USD
112.8
108.3
GBP
105.7
104.6
SEK
88.6
91.6
Average prices
2024
2025
Fat
7.9
7.8
Protein
6.2
5.8
DEVELOPMENT IN FOREIGN
EXCHANGE RATES
INDEX, JAN 2021 = 100
FAT AND PROTEIN COMMODITY PRICES
EUR/KG
Source: Danmark Nationalbank
1 The 2024 figures presented this year differ from those reported in Annual Report 2024, as the index year has been updated against EUR.
Source: ZMB
Mixed currency movements in 2025
Foreign exchange developments also shaped the year, with
notable shifts across major currencies. We saw unfavourable
currency movements in GBP and USD, which were mitigated
by an improvement in SEK. On average, SEK increased by
3.4%, while GBP and USD decreased by 1.2% and 4.1%,
respectively. The movement in year was even more pro-
nounced. From December 2024 to December 2025, we saw
a 6.2% increase in SEK, while GBP and USD declined by 4.9%
and 11.4%.
Sustainability regulation is changing
In 2025, key markets experienced substantial shifts in sustain-
ability regulation. In the EU, regulations such as the Corporate
Sustainability Due Diligence Directive (CSDDD) and the EU
Deforestration Regulation (EUDR) were postponed. Whereas
China and emerging markets accelerated their transition
from voluntary to mandatory sustainability reporting, several
Asian countries introduced or expanded Emission Trading
Systems (ETS). This highlights a growing divergence in global
regulatory momentum, with emerging economies taking a
more assertive stance on sustainability.
1 Source: IMF, World Economic Outlook, October 2025
2 Source: ECB
3 Source: CLAL
DECREASE
FROM AUGUST
TO DECEMBER
2025
Fat
42%
Protein
17%
12
10
8
6
4
140
120
100
80
2021
2022
2023
2024
2025
2021
2022
2023
2024
2025
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Performance price 2025:
56.4
Performance
overview
Amid volatility and shifting market
dynamics, we delivered a robust
performance, reflecting solid global
dairy demand supported by continued
investment, innovation and progress in
sustainability.
Milk prices remained firm before declining
in the second part of the year
The milk price developments of 2025 offered a clear reflection
of the year's shifting market dynamics. Arla's average pre-paid
milk price increased by 11.6% to 53.4 EUR‑cent/kg (2024: 47.8
EUR‑cent/kg). The performance price, which reflects the value
Arla generates per kg of owners' milk, rose by 10.8% to 56.4
EUR‑cent/kg (2024: 50.9 EUR‑cent/kg). The uplift was driven
by high dairy commodity prices through the first half of the year,
supported by strong market and brand positions, profitable
growth in the protein and sport nutrition segment and continued
efficiency gains. However, in line with market movements, the
increased milk availability in the second half of the year drove
commodity prices down.
Growth highlight
Arla® Skyr recorded
solid volume‑driven
revenue growth of
17.8%, making it one
of the strongest-
performing Arla®
sub‑brands in 2025.
PERFORMANCE PRICE
EUR-CENT/KG
Average
performance
price for the
5-year period:
49.8
H1
2021
H1
2022
H1
2023
H1
2024
H1
2025
H2
2021
H2
2022
H2
2023
H2
2024
H2
2025
38.6
49.6
49.7
47.5
57.5
41.3
60.6
44.3
54.3
55.3
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Robust financial position
This year, we maintained our robust financial position in the
volatile market. Our leverage ratio settled at 3.3 compared to
3.2 last year. The ratio was impacted by increased net inter-
est-bearing debt due to a continued high level of investments
in production facilities supporting our strategic ambitions. The
reported leverage level was within our target range of 2.8-3.4.
Improved operating cash flow
Cash flow from operating activities was EUR 862 million
(2024: EUR 652 million), representing an improvement of
EUR 210 million compared to last year. EBITDA improved EUR
47 million, while net working capital and other adjustments
to the operational cash flow improved by EUR 163 million
FINANCIAL LEVERAGE DEVELOPMENT
TARGET RANGE: 2.8-3.4
compared to last year. EBITDA landed at EUR 1,156 million
compared to EUR 1,109 million in 2024.
Investing for future growth
We have continued to invest in significant projects to support
future growth within our strategic business areas. This year,
our total investments, including intangibles, property, plant
and equipment as well as right-of-use assets, totalled EUR 731
million, compared to EUR 763 million in 2024.
Key investments related to the cheddar production facilities in
Taw Valley Dairy, UK and investments in AFI to support growth
in the value-add segment.
Net profit within target range
We recorded a net profit of EUR 415 million in 2025, equal
to 2.8% of revenue, which was within the target range of
2.8-3.2%. Together with our robust financial position, the
Board of Directors (BoD) proposes a supplementary payment
to our owners of 2.2 EUR‑cent/kg of milk.
Other comprehensive income
Other comprehensive income of EUR -196 million (2024: EUR
-11 million) was driven by value adjustments of investments in
associates and joint ventures of EUR -107 million and by EUR
-103 million exchange differences from translation of foreign
operations.
Revenue growth supported by commercial
prices and higher trading volumes
Our revenue grew by 9.4% to EUR 15.1 billion in 2025,
compared to EUR 13.8 billion in 2024. The increase was driven
mainly by higher average price levels in our retail, foodservice
and whey businesses, including new business from AFI
Felinfach. Global Industry Sales (GIS) recorded higher revenue
as additional milk became available even as sales prices eased
in the second half of the year.
Branded volume‑driven revenue
followed the market dynamics
Our branded volume‑driven revenue landed at 0.2% in 2025.
Although growth was modest, it indicated strong underlying
consumer purchasing power and firm demand, as high price
levels present in the first half of the year constrained growth,
of the BSM category in particular. As such and expectedly,
branded volume-driven revenue decreased by 1.5% in the
first half of the year before growth momentum returned in the
second half of the year at 1.8%.
Performance varied across regions and channels as well.
Branded volume-driven revenue declined by 0.8% in Europe,
whereas it increased by 2.4% in the International segment.
Retail was more exposed to market pressures, resulting in
a 1.7% decline in branded volume‑driven revenue, while
foodservice maintained growth and achieved a 2.7% increase.
Substantial savings from our
efficiency programme
Our Fund our Future programme delivered efficiencies of
EUR 158 million, which is the highest outcome achieved
under the initiative to date. This was driven by many initiatives
across the value chain, such as AFI's continued work on
value-add products, recipe refinements, smarter distribution
choices and assortment optimisations.
STRATEGIC BRANDED VOLUME-
DRIVEN REVENUE GROWTH
STRATEGIC BRANDED VOLUME-
DRIVEN REVENUE GROWTH
HALF-YEAR VIEW (2024-2025)
2021
2.6
3.0
2022
2.6
2023
3.2
2024
3.3
2025
-0.7%
2023
-3.2%
2022
2021
4.5%
3.7%
2024
0.2%
2025
4.1%
H1
2024
3.4%
H2
2024
-1.5%
H1
2025
1.8%
H2
2025
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Updated Double Materiality Assessment
The reporting scope on sustainability is in line with the
Corporate Sustainability Reporting Directive (CSRD) guided
by a double materiality assessment (DMA). In 2025, we
updated our DMA to align with new regulatory guidance
and Arla’s Enterprise Risk Management (ERM) process. Our
previous DMA was carried out before regulatory standards and
guidance were finalised. Thus, the revision refined our scope
of reporting, while aligning with CSRD requirements. Read
more on page 36.
New emission reduction targets
We updated our scope 3 emission reduction targets to
align with the new FLAG emissions guideline from the
Science-Based Targets initiative (SBTi). Going forward, we are
committed to reducing absolute scope 3 FLAG emissions with
30.3% by 2030 from a 2020 baseline year. We also introduced
a new scope 3 supplier and partner engagement target
for scope 3 non-FLAG emissions, where 82.6% of suppliers
across key categories, measured by emissions, should have
science-based targets in place by 2029. We remain committed
to reducing scope 1 and 2 emissions by 63% by 2030 from a
2015 baseline year. All three targets are validated by SBTi.
Reducing emissions in our value chain
In 2025, we achieved a 5.6 %p reduction in scope 1 and 2
emissions, totalling a 43.6% decrease from 2015 levels. The
continued reduction was accomplished by further optimisa-
tions, investment in heat pumps, e-boilers and increased use
of renewable energy. From December 2025, we exclusively
rely on electricity generated from renewable sources for our
production sites in Europe.
Arla farmer owners reduced emissions intensity per kg of
milk by 0.4%p in 2025, but due to a significant increase in
deliveries of owner milk to Arla in the second half of 2025,
emissions under the scope 3 FLAG target increased by 4.4%p
in 2025. Nevertheless, this still marks an absolute reduction of
-3.7% compared to our 2020 baseline.
FarmAhead™ is on track
The FarmAhead™ Incentive points increased from an average
of 53 in 2024 to 55 in 2025, demonstrating that it is a
valuable tool for reducing emissions on farms. In 2025, we laid
the groundwork for broadening the impact of FarmAhead™
starting in 2026. Going forward, the expanded scope will
include ammonia emissions, carbon sequestration, semi-natu-
ral grassland and multi-species swards.
We have continued to advance towards our target of achieving
fully deforestation and conversion free (DCF) sourcing for soy,
palm and forest fibre. In 2025, 82% of soy used as feed at farm
level was DCF, and our FarmAhead™ Incentive continued to
play a central role in driving change, rewarding farmers for
reducing soy use or sourcing DCF soy.
New health strategy and safety metrics
In 2025, we expanded our internal accident reporting system,
ensuring that it now covers all facilities, and introduced new
health and safety metrics like, for example, total recordable
accidents. During the year, we recorded a lost-time accident
(LTA) rate of 2.9. This is an improvement compared to last year
on a like-for-like scope, which was driven by strong progress
within Danish logistics.
Our employee head count declined primarily due to the
outsourcing of transport activities in the UK. However, our
Full-Time Equivalents (FTEs) increased slightly, from 21,895 in
2024 to 22,052 in 2025. The increase was due to the full-year
effect of the AFI Felinfach acquisition in November 2024.
In 2025, we also launched a new health strategy focused on
improving the health profile of our product portfolio. To track
progress, we introduced a new KPI based on the Health Star
Rating methodology. We have an ongoing target of 80% of our
branded products qualifying as being healthy, and in 2025 we
achieved 79.6%.
Renewable
sources electricity
Starting in
December 2025,
our dairies in Europe
use electricity
generated from
renewable energy.
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PERFORMANCE OVERVIEW
Global brands
Our business is built around strategic
global brands that power a significant
part of Arla’s value creation.
OUR BRANDS
STRATEGIC BRANDED
VOLUME-DRIVEN
REVENUE GROWTH
STRATEGIC
BRANDED NET
REVENUE GROWTH
2024: 3.7%
2024: 3.1%
Global brands
Total branded revenue reached EUR 7,029 million (2024:
EUR 6,589 million), marking a 6.9% increase driven by higher
average price levels, while our strategic branded volume‑driv-
en revenue growth was a modest 0.2% (2024: 3.7%). As
expected, the high price levels during the first half of the
year weighed on overall growth, with branded volume‑driven
revenue declining by 1.5% in the first half. Growth momentum
returned in the second half as price levels eased and category
consumption improved, with a growth of 1.8%.
Arla® brand
The Arla® brand spans multiple categories such as milk,
yoghurt and cheese, supported by various sub‑brands.
Higher price levels lifted total brand revenue by 7.7% to
EUR 4,027 million (2024: EUR 3,737 million). The higher price
levels helped offset the decline in branded volume‑driven
revenue, which decreased in the first half of the year and was
partially balanced by growth in the second half, resulting in a
full‑year decrease of 1.0% (2024: 3.9%). Among sub-brands,
Arla® Protein and Arla® Skyr delivered impressive volume-driv-
en revenue growth of 19.5% and 17.8%, as did our foodservice
brand Arla® Pro, which saw growth of 7.5%. At market level,
branded volume-driven revenue growth continued to be
prominent in the Netherlands, Belgium and France cluster,
reaching 5.2%.
Lurpak®
Lurpak® delivered revenue growth of 7.8% to EUR 903 million
(2024: EUR 837 million), despite a 3.3% decline in branded
volume-driven revenue (2024: 5.6%). Elevated butter retail
prices throughout the year weighed on performance.
In Europe, branded volume-driven revenue fell by 7.6%, driven
mainly by the UK. International markets showed growth,
with branded volume-driven revenue up 4.5%, led by a 9.9%
demand increase in the Middle East and North Africa (MENA).
In key markets, such as Denmark, UAE and Greece, the strong
Lurpak® brand grew volumes steadily and remained in leading
position. The new plant-based range strengthened the brand
by attracting younger consumers and widening its reach.
Castello®
Our specialty cheese brand Castello® delivered a revenue
increase of 1.2%, reaching EUR 248 million (2024: EUR
245 million). Branded volume-driven revenue for the whole
year increased by 0.3% (2024: -1.1%), following strong
volume-driven revenue growth in the second half of the year. In
Europe, volume-driven revenue edged up 0.1%, however with
underlying strong consumer demand for aged havarti products,
while mould and cream cheeses declined. International volume-
driven revenue grew by 0.5%, mainly influenced by strong
performance in the US in the second half of the year. Category
trends were mixed, with an increase in yellow cheese volumes
being partly offset by a decline in mould cheese volumes amid
intensified price competition in certain markets.
Puck®
Puck® delivered strong growth in 2025 with revenue rising
2.6% to EUR 528 million (2024: EUR 514 million). Revenue
growth was positive in both halves of the year, with a strong
second half of 10.7%. Being a leading dairy brand in the
Middle East, volume-driven growth in the MENA region of
6.3% ensured overall volume-driven growth of 6.7% (2024:
3.4%). A key contributor was the strong demand in the
cooking category, particularly for creams and shredded
cheese, with further support from the spreadable segment,
including processed cream cheese and labneh.
Starbucks® chilled coffee
Our Starbucks® chilled coffee assortment, available in more
than 50 countries across Europe, the Middle East and Africa, de-
livered branded volume-driven revenue growth of 13.9% (2024:
0.8%), driven by Starbucks® chilled classics and the launch of
Starbucks® Protein Drink with Coffee. Europe led the perfor-
mance, with volume-driven revenue up by 15.7%, supported
by efficient distribution and channel execution, particularly in
France and Belgium where Arla has taken over distribution from
Starbucks™. International segment volume-driven revenue
grew 9.1%, lifted by strong results in the Rest of the World
(RoW), which grew by 12.8%, offsetting a decline of 11.8% in
MENA amid continued regional disruptions.
F26
F26
0.2%
6.9%
2025: -1.0%
2024: 3.9%
2025: 7.7%
2024: 3.1%
2025: -3.3%
2024: 5.6%
2025: 7.8%
2024: 8.4%
2025: 0.3%
2024: -1.1%
2025: 1.2%
2024: -0.2%
2025: 6.7%
2024: 3.4%
2025: 2.6%
2024: -2.7%
2025: 13.9%
2024: 0.8%
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PERFORMANCE OVERVIEW
Europe
Our European commercial segment spans eight countries
across Northern and Western Europe, creating value for our
farmer owners by bringing trusted brands such as Arla®,
Lurpak® and Starbucks® chilled coffee to millions of consumers.
-0.8%
STRATEGIC BRANDED
VOLUME-DRIVEN
REVENUE GROWTH
8,704
REVENUE
EUR MILLION
2024: 8,066
2024: 4.1%
7.9%
REVENUE GROWTH
2024: 1.0%
57.8%
SHARE OF TOTAL
ARLA REVENUE
2024: 58.6%
IIn 2025, revenue in Europe increased by 7.9% to EUR 8,704
million (2024: EUR 8,066 million), driven primarily by higher
average price levels. While this pricing environment weighed
on branded volume-driven growth, which declined by 0.8%,
performance followed a varied trajectory. Early headwinds
from elevated prices eased over the year, and momentum
strengthened towards year-end, with branded volume-driven
revenue growing by 0.6% in the second half of the year as
market conditions normalised.
Bringing health through the gut
Arla® Cultura offers natural, fermented dairy products
with unique bacteria mixes. Long established in
Denmark, the brand broadened its presence in 2025
to include Sweden, the Netherlands and the UK. In
the Europe segment, Arla® Cultura delivered 7.4%
volume‑driven revenue growth.
The decline in branded volume-driven revenue growth was
driven primarily by Lurpak®, pressured by high retail butter
prices, leading to a volume-driven revenue decrease of 7.6%.
Arla® saw a modest drop of 1.0%, also pressured by higher
price levels. This was partly offset by volume-driven revenue
growth for Starbucks® chilled coffee at 15.7%, as we took over
distribution for France and Belgium while capturing category
growth.
From a market perspective, Sweden and the UK experienced
headwinds, while the Netherlands, Belgium and France cluster
delivered robust growth.
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Market
Revenue growth
Strategic branded
volume-driven
revenue growth
Share of
Europe revenue
Description
THE UNITED KINGDOM
5.0%
2024: -0.2%
-3.2%
2024: 7.6%
EUR 3,207 million
2024: EUR 3,055 million
Our UK business' revenue increased by 5.0% to EUR 3,207 million (2024: EUR 3,055 million). This increase
reflected broader dynamics in the EU region, where elevated pricing lifted revenue despite a 3.2% decline in
branded volume-driven revenue and a negative currency impact from a weaker GBP. Lurpak® volume-driven
revenue fell by 11.5%, while Arla® Pro and Starbucks® chilled coffee grew 19.4% and 4.4% respectively, partly
offsetting the decline.
SWEDEN
16.2%
2024: 3.6%
-2.9%
2024: 2.0%
EUR 1,849 million
2024: EUR 1,592 million
Revenue in Sweden climbed 16.2% to EUR 1,849 million (2024: EUR 1,592 million), supported by a strong
SEK and the increased price levels. Strategic branded volume-driven revenue declined by 2.9% (2024: 2.0%),
pressured by high price levels and increased competition from imports in cheese and butter. The yellow cheese
category saw a volume decrease of 5.7%, whereas the decline in the butter category was driven mainly by Arla®
Svenskt Smör, which fell by 13.7%, while Arla® Protein and Arla® Kvarg recorded positive volume growth of
51.9% and 35.9%, respectively.
DENMARK
7.7%
2024: -1.3%
1.8%
2024: 0.5%
EUR 1,336 million
2024: EUR 1,241 million
Arla Denmark's revenue grew to EUR 1,336 million, up 7.7% (2024: EUR 1,241 million), driven by pricing and
a 1.8% increase in branded volume-driven revenue (2024: 0.5%), which was offset by lower private-label
volumes. Castello® delivered a substantial 21.8% increase in volume-driven revenue, accompanied by solid
growth from Cheasy® at 11.9% and Lurpak® at 4.0%.
GERMANY
4.8%
2024: 1.5%
-0.3%
2024: 7.0%
EUR 1,333 million
2024: EUR 1,272 million
Revenue in Germany increased by 4.8% to EUR 1,333 million (2024: EUR 1,272 million). This result reflected
higher prices, accompanied by a minor branded volume‑driven revenue decline of 0.3% (2024: 7.0%). Arla®
Skyr and Arla® Buko delivered volume‑driven revenue growth of 35.4% and 11.9%, respectively, largely offset
by declines in Arla® Finello and Arla® Kærgården of 27.1% and 8.9%, respectively.
THE NETHERLANDS,
BELGIUM AND FRANCE
11.5%
2024: 4.1%
10.9%
2024: 7.4%
EUR 568 million
2024: EUR 509 million
Our business in the Netherlands, Belgium and France increased its revenue to EUR 568 million, up 11.5%
(2024: EUR 509 million). Our Starbucks® chilled coffee and Arla® Pro brand delivered volume-driven revenue
growth of 84.4% and 11.4%, respectively. The exceptional performance of Starbucks® chilled coffee
reflected, in part, Arla’s new role as distributor of Starbucks™ in this region, contributing to an overall branded
volume-driven revenue growth of 10.9%.
FINLAND
3.4%
2024: 2.4%
-1.1%
2024: 6.9%
EUR 411 million
2024: EUR 397 million
In Finland, revenue landed at EUR 411 million (2024: EUR 397 million), which was an increase of 3.4%. Arla®
Protein and Arla® Luonto+ contributed volume-driven revenue growth of 24.9% and 13.7%, respectively,
whereas overall, Arla® saw a branded volume-driven revenue decrease of 3.7%. This resulted in a branded
volume-driven revenue decrease of 1.1%.
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PERFORMANCE OVERVIEW
International
Our international segment spans to more than 140 countries across six
continents, reflecting the global reach of our business. Leading brands
include Arla®, Puck®, Lurpak®, Castello® and Starbucks® chilled coffee.
2.4%
STRATEGIC BRANDED
VOLUME-DRIVEN
REVENUE GROWTH
2,460
REVENUE
EUR MILLION
2024: 2,435
2024: 2.9%
1.0%
REVENUE GROWTH
2024: -1.5%
16.3%
SHARE OF TOTAL
ARLA REVENUE
2024: 17.7%
In 2025, revenue from the International segment returned to
growth, achieving a 1.0% increase to EUR 2,460 million (2024:
EUR 2,435 million). A resilient performance despite headwinds
from escalating geopolitical tensions, trade barriers, supply
chain constraints and negative currency impacts.
Our strategic branded portfolio delivered volume‑driven
revenue growth of 2.4%. Despite limited growth in the first
half of the year, the International segment accelerated and
sustained growth through to year‑end, achieving a robust
result against a backdrop of high price levels, particularly in
the first half of the year.
Geographically, branded volume-driven growth was achieved
across all sub-segments except China. The largest increase
came from our biggest region, MENA, with growth of 4.8%.
More presence in
International
Lurpak®, available in 107 markets, continues
to expand its footprint across our international
markets. With a legacy rooted in quality and
taste, Lurpak® brings the joy of cooking,
spreading and baking to more consumers
around the world.
From a brand perspective, Arla® Protein delivered excep-
tional volume-driven revenue growth of 69.2%, followed by
Starbucks® chilled coffee at 9.1%, Puck® at 6.5% and Lurpak®
at 4.5%.
Changes to zones
Adjustments have been made to the International organisa-
tional structure. West Africa has been dissolved and integrated
to the RoW region, with the RoW name retained. Australia and
New Zealand have been moved from RoW to the South-East
Asia (SEA) region. Canada, the US and China have been
clustered together for financial reporting purposes. These
changes have been incorporated into the 2024 and 2025
figures presented in this annual report.
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Sub-segments
Revenue growth
Strategic branded
volume-driven
revenue growth
Share of
International revenue
Description
MIDDLE EAST AND
NORTH AFRICA (MENA)
2.1%
2024: -2.4%
4.9%
2024: 2.7%
EUR 992 million
2024: EUR 972 million
Revenue in MENA increased by 2.1% to EUR 992 million (2024: EUR 972 million), driven by higher prices and
volume growth. Branded volume-driven revenue grew 4.9% (2024: 2.7%), led by the strong performance of
Lurpak® and Puck®, which grew by 9.9% and 6.3%, respectively, while our Dano® brand saw a volume decrease
of 41.5%. The region also faced adverse effects from foreign exchange movements, as local currencies pegged
to the USD weakened following its depreciation in 2025.
REST OF THE WORLD (ROW)
5.9%
2024: 8.0%
2.1%
2024: 3.9%
EUR 679 million
2024: EUR 641 million1
Covering more than 80 countries, the RoW cluster delivered revenue of EUR 679 million, up 5.9% (2024:
EUR 641 million1), supported by branded volume-driven growth of 2.1% and higher price levels. Growth was
led by Starbucks® chilled coffee with an increase of 12.8% and Lurpak® with a rise of 1.9%, while the Arla®
brand portfolio saw a decline of 1.5%. The newly launched Milka® chocolate also perfomed well with a high
volume-driven growth rate. From a country perspective, it was driven by Spain (11.4%) and Nigeria (3.8%).
SOUTH-EAST ASIA (SEA)
2.5%
2024: 1.6%
1.6%
2024: 3.1%
EUR 378 million
2024: EUR 369 million1
Revenue in SEA increased by 2.5% to EUR 378 million (2024: EUR 369 million) despite currency headwinds
from the Bangladeshi taka (BDT) and the Australian dollar (AUD). Branded volume‑driven growth reached 1.6%,
driven mainly by Arla® Pro, which achieved 9.9% growth. Across SEA distributor sales, branded volume‑driven
revenue rose by 23.1%. From a country perspective, the Philippines delivered a solid performance with a 5.9%
increase in volume‑driven revenue.
SINGLE MARKETS
(CANADA, THE US AND CHINA)
-9.2%
2024: -6.1%
-3.3%
2024: 3.8%
EUR 411 million
2024: EUR 453 million
Both Canada and the US faced headwinds from currency movements. However, excluding currency effects, both
markets recorded positive developments in revenue and branded volume growth. In Canada, the launch of the
Puck® brand was a key contributor, while in the US, growth was driven by the Arla® and Castello® brands. China saw
a revenue decline, mainly due to lower volumes resulting from a challenging competitive environment and the
discontinuation of two of our three early‑life nutrition brands.
1 The Annual Report 2024 reported RoW revenue of
EUR 649 million, which at the time included Australia
and New Zealand. In contrast, the SEA figure of
EUR 261 million excluded these markets.
Bringing joy to the kitchen
Puck® originated as a spreadable cream cheese in Germany
and was introduced to the Middle East in 1983 with a selection
of processed dairy products, primarily cheese. As our leading
brand in MENA, Puck® delivered 6.5% growth in 2025,
supported by strong demand in the cooking category and
continued momentum in cream and processed cheese.
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PERFORMANCE OVERVIEW
Arla Foods Ingredients
(AFI)
AFI plays a key role in whey-based solutions
globally, serving categories from infant, clinical and
sports nutrition to dairy, confectionery and bakery.
29.3%
1
GROWTH OF THE
VALUE-ADD SEGMENT
1,452
REVENUE
EUR MILLION
2024: 1,015
2024: 5.6%2
79.8%
VALUE-ADD
SHARE
2024: 79.5%2
9.6%
SHARE OF TOTAL
ARLA REVENUE
2024: 7.4%
Revenue in AFI climbed 43.1% to EUR 1,452 million (2024: EUR
1,015 million). The growth was driven by a strong global demand
for protein ingredients, leading to favourable market conditions,
and the successful integration of AFI Felinfach (previously referred
to as Volac's Whey Nutrition), which was acquired at the end of
2024. Sales of value-added whey protein ingredients rose 29.3%,
bringing the value-add share to 79.8%. This continued shift to-
wards specialty ingredients strengthened margins and reinforced
AFI’s position as a global leader in advanced whey solutions.
In 2025, AFI advanced several strategic initiatives, sharpening
its R&D focus on casein proteins. It made significant progress
in developing a pipeline of innovative casein-based ingredients
through targeted projects and close customer collaborations.
Protein‑enriched soft drink
Answering emerging market needs, AFI launched the
Protein Soda concept in 2025. As a formulation, the
concept is designed for AFI’s customers to adapt and
commercialise under their own end‑user brands. It
offers the speciality whey protein Lacprodan® BLG‑100
and provides a high‑quality, clear‑label alternative
to traditional soft drinks. The concept consists of a
zero‑sugar formulation with 10g of protein per serving,
supporting demand for healthier beverage options.
To develop its global manufacturing footprint, AFI entered a
contract manufacturing agreement with Valley Queen Cheese,
a leading US dairy processor, to produce Nutrilac® ProteinBoost,
our patented microparticulated whey protein concentrate. The
partnership boosted capacity in North America and positions us
to meet surging demand for protein-enriched dairy products in
the US.
Overall, 2025 was a milestone year. AFI combined strong
financial results with strategic expansion, capturing booming
demand for high-protein nutrition while investing in innovation
and partnerships.
1 Growth excluding effects from M&A was 12.8%.
2 With AFI Felinfach now fully integrated, the 2024 figures have been restated to reflect the new setup. In the Annual Report 2024, we reported a value‑add share of 80.1% and value‑add segment growth of 2.5%.
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PERFORMANCE OVERVIEW
Global Industry Sales
(GIS)
GIS is Arla's global trading business that sells milk-based
ingredients and products to industry customers which are fit
for purpose. The trading business further allows us to balance
milk supply and demand throughout the year.
30.6%
MILK SOLIDS SOLD
THROUGH GIS
2,450
REVENUE
EUR MILLION
2024: 2,254
2024: 24.8%
8.7%
REVENUE GROWTH
2024: -0.1%
16.3%
SHARE OF TOTAL
ARLA REVENUE
2024: 16.3%
Through GIS, we supply a broad portfolio including milk
powder, caseinate, mozzarella, yellow cheese and bulk
butter to more than 60 countries, either directly or via dairy
platforms. This business allows us to balance our milk supply
and demand throughout the year.
Firm commodity prices in the first half reflected tight milk
supply and strong demand. In the second half of the year, a
strong feed harvest boosted feed availability, allowing farms to
increase milk production rapidly and triggering price declines
across several categories. Butter, gouda and skimmed-milk
powder saw sharp corrections, down 44%, 36% and 35% from
August to December 2025, with average prices slightly below
last year's level.
With more milk available later in the year, a larger share of milk
solids was channeled to GIS, lifting the share to 30.6% (2024:
24.8%). This growth in supply of 604 million kg of owners
milk occurred mainly in the second half of the year and came
from Denmark and the UK. Along with the higher share of milk
solids, the increased supply lifted revenue to EUR 2,450 mil-
lion, a 8.7% rise from EUR 2,254 million in 2024.
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2026 outlook
Uncertainties deepen as the global environment continues to
shift. We must stay alert to navigate persistent volatility with
a disciplined strategy and global adaptability.
Looking into 2026, geopolitical uncertainty is set to linger,
demanding sharp strategic focus and business agility.
Macroeconomic indicators are stable, with European inflation
easing and GDP growth expected to remain steady, supporting
consumer purchasing power and demand. We therefore
expect consumer demand for Arla’s nutritious and natural
products to remain firm.
The supply surge seen in the second half of 2025, particularly
in the fourth quarter, is expected to persist into 2026, putting
pressure on dairy price levels. The supply pressure from late
2025 will continue to affect the first half of the new year.
However, lower price levels are expected to support volume
growth for our brands, and we are well‑positioned to capture
this momentum.
Overall, lower price levels expected in 2026, combined with
persisting firm demand, are expected to continue the growth
momentum from the second half of 2025 into 2026. We
therefore expext branded volume growth in the range of 1.0%
to 3.0%, depending on how prices evolve during the year.
Revenue is expected to be below 2025 levels, at approximate-
ly EUR 13.3 million to EUR 14.1 billion, driven by the lower
price levels. Profit share is expected to remain within our
target range of 2.8-3.2%. Our efficiency programme, Fund our
Future, is expected to deliver estimated net savings of EUR 90
million to EUR 110 million, supported by a solid pipeline and
disciplined execution.
We remain committed to reducing our climate impact across
the value chain. We work towards our 2030 scope 1, 2 and
scope 3 emission reduction targets and anticipate reductions
in 2026, supported by our FarmAhead™ Incentive and
Customer Partnership.
Our full-year 2026 guidance does not include the potential
merger of DMK Group, which is expected to be completed in
the first half of 2026. If the merger is approved, we will provide
updated guidance for the combined business.
1 As announced in the half-year report 2025.
2025
outlook1
2025
results
2026
outlook
F26
STRATEGIC BRANDED
VOLUME-DRIVEN
REVENUE GROWTH
-0.5~0.5%
0.2%
1.0-3.0%
REVENUE
EUR BILLION
14.7-15.2
15.1
13.3-14.1
PROFIT SHARE
2.8-3.2%
2.8%
2.8-3.2%
EFFICIENCIES
EUR MILLION
100-120
158
90-110
LEVERAGE
2.9-3.3
3.3
3.0-3.4
F26
SCOPE 1+2 EMISSIONS
PERCENTAGE POINTS
REDUCTION
-5.6%P
REDUCTION
F26
SCOPE 3 FLAG EMISSIONS
PERCENTAGE POINTS
REDUCTION
4.4%P
REDUCTION
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SUSTAINABILITY
STATEMENTS
In this section
35 Sustainability strategy
36 Double materiality assessment
39 Basis of preparation
Environment
41 Climate
52 Biodiversity
57 Circular
The story behind each glass of our organic milk
We are the largest producer of organic dairy products, and there is a story behind
every glass of Arla® Organic product. In organic milk production, cows are fed a 100%
organic diet and allowed to roam on lush green fields during the grazing season. Our
organic farmers are also constantly working to learn more about soil health.
The sustainability statements cover our Environmental,
Social and Governance (ESG) reporting and reflect our
strategic priorities. The statements are inspired by but not
yet compliant with the Corporate Sustainability Reporting
Directive (CSRD), which we are obliged to comply with from
2027. Our report is guided by our material impacts, risks
and opportunities.
Social
62 Consumers and end-users
64 Employees
71 Workers in the value chain
Governance
74 Animal welfare
76 Political engagement, corruption
and bribery
Sustainability appendix
3
2
ARLA FOODS ANNUAL REPORT 2025
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2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
SUSTAINABILITY STRATEGY (continued)
ARLA FOODS ANNUAL REPORT 2025
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Sustainability in Arla
Our vision is to shape the future of dairy to bring health and in-
spiration to the world, naturally. Alongside ensuring long-term
growth and business resilience, we have in the past two dec-
ades worked strategically to increase our contributions to a
healthy and sustainable future for people and planet. Our
group strategy Future26 positions sustainability as one of four
strategic pillars and a core driver of growth and long-term
value creation. During 2025, our sustainability strategy was
strengthened further with our new health strategy and up-
dated scope 3 targets.
Stronger People – Leading healthy food
With our new ambition to Lead Healthy Food, we want to
make a lasting positive impact on people's health by enabling
good food choices. Too many people lack the access,
knowledge and inspiration to make good food choices, and
we want to help change that.
Securing good food habits in society, not least amongst chil-
dren and young people, require a strong collaboration across
multiple stakeholders. We will leverage our presence in many
markets and our strong customer relationships to increase
the scale and reach of our activities. We also aim to increase
science-based knowledge about food habits and the role of
dairy in healthy, sustainable diets.
Stronger Planet – Leading sustainable dairy
We recognise our role in ensuring a healthier planet. Our cli-
mate and nature initiatives are designed not only to reduce
emissions but to future-proof dairy farming and secure supply
chain stability. Our commitment includes lowering carbon
emissions through improved dairy farming practices, with the
goal of leaving farms in a better condition for future genera-
tions. Our initiatives focus on biodiversity, reducing emissions
and using resources responsibly. We prioritise circularity and
renewable energy to limit environmental impact and are com-
mitted to reducing food waste.
Developing the strategy and sustainability governance
The Board of Directors (BoD) owns our strategy, which is
shaped in close partnership with our farmer owners, ensuring
shared ownership of our future. This inclusive approach em-
beds sustainability priorities, such as climate resilience and bi-
odiversity, into decisions that drive Arla's long-term growth
and impact. When creating Future26 and its sustainability pil-
lar, we actively engaged farmer owners through meetings and
forums, fostering collaboration and trust. Our Executive Man-
agement Team (EMT) and our BoD ensured major stakeholder
views were considered.
The CEO holds overall responsibility for sustainability within
the EMT, which sets and approves company-wide targets for
material sustainability topics, with progress on climate goals
reported monthly to both the EMT and the BoD. Functional
heads are responsible for meeting goals in their areas and pro-
vide regular updates on other objectives, reinforcing account-
ability across the organisation. Company-wide policies trans-
late strategy into clear rules. Materiality assessment out-
comes are integrated into strategy updates, including into
major transactions subject to due diligence. This governance
model positions sustainability as a lever for innovation and
market leadership, enabling us to seize opportunities while
managing risks.
For details on risks and opportunities see pages 36-38, for
governance see page 81 and for remuneration related to sus-
tainability see page 88.
Sustainability strategy
2
1
3
4
5
7
8
9
6
10
11
12
13
3
6
13
6
12
Double Materiality Assessment
Sustainability-related impacts, risks and opportunities (IROs) exist across
Arla's entire value chain. Through our double materiality assessment (DMA),
we took a structured approach to identifying and prioritising these factors,
considering both financial materiality and impact materiality. Our reporting
scope is guided by the results of the DMA. Read more about the material IROs
in the respective chapters.
ENVIRONMENTAL IMPACTS, RISKS AND OPPORTUNITIES
Topics
Type
Value chain
CLIMATE
1
Scope 1+2 GHG emissions from production and logistics
ANI
Own operations
2
Scope 3 GHG emissions from our value chain
ANI
Farm
3
Regulations to reduce emissions in the dairy sector
R
Farm,
own operations
4
FarmAheadTM Customer Partnership
O
Customers
5
Consumers turning away from dairy due to climate impact
R
Consumers
BIODIVERSITY
6
Biodiversity loss from climate change
ANI
Suppliers, farm,
own operations
7
Water pollution from nutrient runoff
ANI
Farm
8
Nitrogen regulation on farms
R
Farm
9
Acidification from ammonia emissions
ANI
Farm
10
Soil degradation from farming practices
ANI
Farm
11
Land use change and biodiversity, natural capital and carbon loss
PNI
Farm
CIRCULAR
12
Use of packaging material
ANI
Own operations,
consumers
13
Generation of food waste
ANI
Own operations,
consumers
Upstream
Downstream
Own operations
PPI
Potential Positive Impact
R
Risk
ANI
Actual Negative Impact
O
Opportunity
PNI
Potential Negative Impact
API
Actual Positive Impact
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16
17
18
19
20
21
23
24
14
15
22
25
27
26
28
29
30
21
22
SOCIAL IMPACTS, RISKS AND OPPORTUNITIES
GOVERNANCE IMPACTS, RISKS AND OPPORTUNITIES
Topics
Type
Value chain
CONSUMERS
AND END-USERS
14
Health benefits due to consumption of our healthy products
API
Consumers
15
Potential harm to health due to food safety
PNI
Consumers
OUR
EMPLOYEES
16
Fair and good working conditions
API
Own operations
17
Inability to recruit or retain skilled employees
R
Own operations
18
Potential discrimination or harassment
PNI
Own operations
19
Occupational accidents or ill-health
PNI
Own operations
20
Human and labour rights outside of the EU
PNI
Own operations
WORKERS IN
THE VALUE
CHAIN
21
Potential inadequate working conditions
PNI
Suppliers, farm
22
Occupational accidents or ill-health
PNI
Suppliers, farm
23
Potential violence or harassment
PNI
Suppliers
24
Human and labour rights outside of the EU
PNI
Suppliers
Topics
Type
Value chain
ANIMAL
WELFARE
25
Inadequate management of animal welfare
PNI
Farm
26
New regulations on stable size
R
Farm
27
Consumers shifting away from dairy driven by animal welfare concerns
R
Consumers
28
Loss of milk due to animal diseases
R
Farm
POLITICAL
ENGAGEMENT
29
Accusations of unethical conduct or lobbying by consumers
R
Own operations
CORRUPTION
AND BRIBERY
30
Non-compliance with corruption and bribery regulation
R
Own operations
Upstream
Downstream
Own operations
PPI
Potential Positive Impact
R
Risk
ANI
Actual Negative Impact
O
Opportunity
PNI
Potential Negative Impact
API
Actual Positive Impact
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ARLA FOODS ANNUAL REPORT 2025
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2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
DOUBLE MATERIALITY ASSESSMENT (continued)
ARLA FOODS ANNUAL REPORT 2025
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Methodology
Our 2025 double materiality assessment (DMA) builds on the
2023 assessment and reflects updated European Financial
Reporting Advisory Group (EFRAG) guidance. Key improve-
ments include a refined scope, with some previously identified
material impacts, risks and opportunities now deemed imma-
terial, while others have been merged or reworded for clarity.
Financial impact scales are further aligned with Arla's process
(see page 17), and ERM results will inform future updates.
Linking materiality outcomes to Future26 priorities ensures
strategic decisions are guided by sustainability risks and
opportunities.
Stakeholder engagement
We engage continuously with key affected stakeholders and
experts. Key stakeholder groups include:
• Farmer owners: Represented through the Board of Repre-
sentatives (BoR), which for example, discusses concerns
about climate change and biodiversity risks.
• NGOs and academia: We collaborate with local NGOs, uni-
versities and external experts to understand our impacts on
nature, climate and communities.
• Customers: Our commercial and sustainability teams main-
tain regular dialogue with customers through initiatives like
the FarmAhead™ Customer Partnership programme.
• Consumers: Feedback is gathered to shape commercial
strategies and sustainability priorities.
• Employees and value chain workers: Engagement occurs
via daily interactions, union discussions and our annual ba-
rometer survey. Human rights due diligence includes direct
interviews.
• Suppliers: We engage in ongoing collaboration with our
suppliers to address environmental and social issues
throughout the entire supply chain. Our procurement teams
ensure regular communication, fostering strong and trans-
parent relationships.
• Financial institutions: Dialogue focuses on climate transi-
tion strategies and low-carbon economy financing.
• Government and regulators: We engage through industry
associations to address sector challenges and regulatory de-
velopments.
These engagements are not only ongoing but also systemati-
cally integrated into our DMA process.
Process
We mapped Arla's value chain across five stages: suppliers,
farm, production, customers, consumers. While our 2023 as-
sessment included direct interviews with external stakehold-
ers, the 2025 update used internal proxies with stakeholder
expertise, supported by human rights due diligence, risk as-
sessments and climate data, while building on extensive exter-
nal input from 2023. Proxies were selected based on their
roles and knowledge, and most stakeholder groups were rep-
resented by multiple proxies to ensure diverse perspectives. A
comprehensive list of impacts, risks and opportunities was
compiled using proxy input, ERM results and sector guidance.
Scoring and validation involved interviews and workshops as
well as EMT and BoD approval.
Results
In 2025, reporting was triggered where material impacts, risks
and opportunities were identified. Water pollution in our own
operations and affected communities did not meet the mate-
riality threshold for standalone reporting, though pollution in
our value chain is addressed under biodiversity. For animal
welfare, food safety and packaging, we use entity-specific
metrics, while the remaining impacts, risks and opportunities
are covered by ESRS disclosure requirements. None of the
material risks are expected to cause adjustments to liabilities
in the next reporting period. Find our material impacts, risks
and opportunities with further explanations on the previous
pages and in the topic-specific chapters.
Climate-related risks
Identifying and assessing Arla's key climate risks is essential
for executing our climate strategy. We conducted a scenario
analysis following the Task Force on Climate-Related Financial
Disclosures (TCFD) recommendations, which has informed our
DMA. This is not only compliance-driven but critical for safe-
guarding Arla's long-term competitiveness and supply secu-
rity, and thus our assessment involved both the EMT and the
BoD. The climate-related risk assessment for the consolidated
financial statements uses the same scenario as the sustaina-
bility statements. Find more information in the introduction to
the notes on page 102.
Transitional climate risks
In line with ESRS E1, we consider a strict regulatory scenario in
line with the UN Paris Agreement's 1.5°C target throughout
Europe.
In the transitional risk assessment we consider our dependen-
cies. We are still transitioning from fossil fuels to renewables
and thus are at present still reliant on fossil-based energy re-
lated to our production and packaging materials. We further
depend on our farmer owners' milk production, which is a ma-
jor driver of our climate emissions. The risk assessment is up-
dated twice a year. Find results of identified material transi-
tional risks on page 41.
Physical climate risks
When assessing physical climate risks for our double material-
ity assessment, we used the scenarios with highest
temperature increase SSP5 (or RCP 8.5), where the climate
would warm by over 2°C by 2050. The assessment was con-
ducted at the level of biogeographical regions. For back-
ground on methodology and assessment, see Guzmán-Luna,
P.M., 2023. Evaluation of the spatio-temporal future effects of
climate change on the European dairy sector. See also Guz-
mán-Luna, P.M. et al., 2021. Analyzing the interaction be-
tween the dairy sector and climate change from a life cycle
perspective: A review.
The time horizon chosen is 2050, which is considered to be a
long-term period, since the impacts of climate change are ex-
pected to become significant then. Short-term and medium-
term assessments lack scientific evidence, therefore our fo-
cus is long-term.
Milk is our most important raw material, with dairy farming be-
ing the most vulnerable part of our value chain, while our pro-
duction is more resilient to climate change. Thus, we have not
assessed physical climate risks for our own operations, focus-
ing instead on key raw material impacts.
Major physical hazards identified through a literature review
are water stress, floods, crop pests, climate variability, cow
heat stress and cow diseases, causing milk and crop losses.
None of these hazards met the threshold for materiality in our
2025 DMA. The physical risk assessment is updated when sci-
entific evidence suggests changes.
Uncertainties and limitations
Due to the uncertainty of future legislation, we have not quan-
tified financial impacts. Therefore, we use a qualitative scale
(moderate to critical) to illustrate the expected profit impact.
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
BASIS OF PREPARATION (continued)
ARLA FOODS ANNUAL REPORT 2025
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General accounting policies
The sustainability statements follow the financial control ap-
proach and the same financial year as the consolidated finan-
cial statements, unless otherwise specified in accounting poli-
cies for specific KPIs. Entities such as joint ventures and asso-
ciates without controlling influence are excluded. For a list of
subsidiaries, please refer to the group chart on page 153. The
metrics are based on regular monthly and annual reporting
procedures and prepared on a consolidated basis. Definitions
of applied time horizons, including for climate risks, can be
found on pages 18 and 38.
We obtain reasonable assurance from our group auditors for
key metrics (energy, climate, food safety, animal welfare, lost-
time accidents and certain employee metrics) and limited as-
surance for the remaining content of the sustainability state-
ments. Read more on page 161 in the auditor's assurance re-
port.
Reporting scope
Our environmental KPIs cover all production and logistics
sites. In line with our consolidation methodology, only entities
acquired more than six months before year-end are included.
In 2025, data from two 2024 acquisitions – the Götene pow-
der tower (Sweden) and the production site Arla Food Ingredi-
ents (AFI) Felinfach (UK) – were added. Social KPIs cover all
employees, including employees from entities acquired dur-
ing the year, unless otherwise specified.
We also report ESG data for significant value chain activities
such as farm activities, purchased whey, ingredients, packag-
ing, waste handling and transport, reflecting our ambition to
manage impacts across the entire value chain.
All revenue, EUR 15.1 billion, comes from the food and bever-
age manufacturing sector, with value chain impacts linked to
agriculture and farming.
Uncertainties and estimates
We prioritise the use of primary measured data in our report-
ing, sourcing information on our operations from meter read-
ings or invoices and direct data from our suppliers, including
supplier-specific emission factors. For specific ESG KPIs, we
rely on estimates or extrapolations. These and any other
measurement uncertainties are outlined in the accounting
practices of the corresponding metric. Metrics further along
the value chain carry higher error risks. We have implemented
the necessary controls to mitigate these risks to an accepta-
ble level.
Restatement principles
Our Restatement Policy, updated in 2025, covers all ESG KPIs
and sets out guidelines for adjusting baselines and historical
figures. Restatements occur when changes exceed materiality
thresholds due to data errors, methodology updates,
inorganic scope changes like acquisitions etc. Each KPI has a
specific threshold (e.g. 2% for GHG emissions). The policy is
reviewed annually to update thresholds for new and existing
KPIs. Find more information on page 80.
In 2025, we restated historical figures for scope 1, 2 and 3
climate emissions, total energy and food waste. The primary
reasons were methodology updates and the alignment of
reporting scope for entities acquired after the original
reporting years. Where restatements were made, we disclose
the differences and underlying reasons. For details, see the
relevant chapters on pages 48-51 and 59.
ESG reporting risk management
Managing ESG data quality is essential to protecting reputa-
tion and stakeholder trust. We ensure accuracy through an in-
ternal ESG accounting manual, defined processes and KPI-
specific controls. Risk mitigation is guided by the materiality of
each KPI and identified data risks. Annual reviews and auditor
findings inform action plans, which are reported to the BoD,
and we maintain ongoing dialogue with KPI owners on risks
and control needs.
ESG reporting is covered by our risk-based compliance review
of reporting processes, though it was not selected for exami-
nation in 2025. Results of compliance reviews are reported to
the EMT and the BoD.
Other reporting standards
The sustainability statements include statutory reporting on
Corporate Social Responsibility (CSR) under section 99a of the
Danish Financial Statements Act. See page 15 for business
model, pages 36-38 for materiality assessment and pages 40-
80 for policies, actions, management systems and key ESG
metrics.
Climate-related risks and opportunities follow TCFD's recom-
mendations and are disclosed in the double materiality as-
sessment and climate chapters (pages 36-51). Progress to-
wards the UN Sustainable Development Goals (SDGs) is out-
lined on page 79.
Basis of preparation
ENVIRONMENT
Climate
Biodiversity
Circularity
Concrete action to reduce emissions
Pronsfeld dairy, Arla's largest production site, processes milk from around
1,500 farmers and employs more than 850 people. Supporting our goal of
reducing scope 1 and 2 emissions by 63% by 2030, the site installed two
electric heat pumps this year to recycle waste heat from cooling processes.
This EUR 14 million initiative is expected to cut around 5,000 tonnes of
CO₂e emissions annually.
In picture: Pronsfeld dairy, located at Rhineland-Palatinate, Western
Germany.
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HOW OUR IMPACTS, RISKS
AND OPPORTUNITIES LINK
TO OUR VALUE CHAIN
FARM
OWN OPERATIONS
CUSTOMERS
CONSUMERS
Material impacts, risks and opportunities
As a dairy company, we contribute to greenhouse gas emis-
sions, primarily through scope 3 emissions like methane (CH4)
from cow digestion and nitrous oxide (N₂O) from crop produc-
tion, alongside scope 1and 2 emissions from fossil fuel use in
production and logistics. At the same time, our business relies
on favourable climate conditions for growing feed. This dual
reality creates both an imperative and an opportunity for us to
lead the transition towards more sustainable dairy practices.
Strategy and policies
Our Future26 strategy places sustainability at the heart of our
business, addressing both challenges and opportunities
across the value chain. As one of the world's largest dairy
companies, we have the scale and influence to drive meaning-
ful progress in sustainability. Therefore, tackling climate
change and aligning our goals with the Paris Agreement is a
top priority.
To achieve this, we are committed to the 1.5˚C climate ambi-
tion. In 2025, we strengthened our approach to measuring
scope 3 emissions by integrating the latest Forest, Land and
Agriculture guidance (FLAG) from the Science Based Targets
initiative (SBTi) and included this in our external reporting. Our
scope 3 emission targets were updated accordingly. Find
more details on pages 43-44.
From 2025 onwards, we report on our soil carbon sequestra-
tion and will include it in Arla's FarmAhead™ Check towards
farmers in 2026.
Our approach acknowledges potential regulatory and reputa-
tional risks, such as consumer concerns about dairy's climate
impact, and seeks to mitigate them through clear commit-
ments and continuous action. Our climate ambition is also re-
flected in our Environmental Policy, which aims to reduce en-
vironmental impact and combat climate change across the
value chain. This policy focuses on key areas such as climate
change, energy and resource efficiency, waste reduction, bio-
diversity, water stewardship and sustainable sourcing.
Read more about our policies on page 80.
The climate change mitigation targets (see page 17) and strat-
egy have been formally approved by the BoD.
Climate
Impact, risk and opportunity
Type
Description
Scope 1 and 2 GHG emissions from
production and logistics
Actual
negative
impact
We contribute directly and indirectly to greenhouse gas emissions through
the production and distribution of our products, which require energy. The
combustion of this energy results in greenhouse gas emissions.
Scope 3 GHG emissions from our
value chain
Actual
negative
impact
As a dairy producer, our operations result in greenhouse gas emissions
across our value chain, particularly in the upstream stages. Methane
emissions from cows and nitrous oxide from crop production are the main
contributors to our overall carbon footprint.
Regulations to reduce emissions in
the dairy sector
Transitional
risk
Regulatory measures may raise production costs and reduce milk output
while sourcing milk elsewhere could increase local prices and
transportation costs.
FarmAhead™ Customer Partnership
Opportunity
Through the FarmAhead™ Customer Partnership initiative, we provide
detailed carbon footprint data to customers for transparency, and
customers co-finance climate and nature projects on farms, reducing
emissions in their own value chains.
Consumers turning away from dairy
due to climate impact
Transitional
risk
Consumers may turn away from dairy products due to concerns about
climate impact, which would impact sales.
3
2
3
1
4
5
1
2
3
4
5
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Actions
Reduction in scope 1 and 2 emissions
Our production sites
We continue to advance our sustainability agenda by imple-
menting innovative energy solutions across our operations,
targeting significant reductions in scope 1 and 2 greenhouse
gas emissions. These efforts are in line with Arla's ambition.
Our production site Pronsfeld Dairy in Germany has taken a
major step towards reducing emissions in production in 2025
by installing two large electric heat pumps to replace natural
gas boilers for milk heating. The heat pumps are expected to
cut CO₂e emissions by about 5,000 tonnes per year from
2026. Our production site Sipoo in Finland replaced their gas
boiler with an electric boiler, delivering high efficiency at all
load levels and ensuring stable costs regardless of capacity.
This translates into lower energy consumption and operating
costs, expected to save approximately 6,300 tonnes of CO₂e
and with projected annual savings of EUR 700,000, when fully
operational. Looking ahead, the project provides the infra-
structure needed to meet growing steam and energy de-
mands. In the UK, the Oswestry cheese packing site is transi-
tioning to fossil-free operations. The site replaced liquefied
petroleum gas (LPG)-fuelled hot water boilers with electric
boilers and now utilises a solar array to maintain hot water
during daylight hours. Together with further planned en-
hancements in 2026, these upgrades are expected to reduce
CO₂e emissions significantly.
Starting December 2025, all our production sites in Europe
will operate on 100% renewable electricity, via contractual in-
struments or self-generation, marking a major milestone on
our sustainability journey. To ensure the availability of renewa-
ble electricity, we actively support the development of new
solar and wind farms by purchasing electricity directly or
through energy attribute certificates and the continuous sign-
ing of Power Purchase Agreements (PPAs). Read more about
PPAs on page 103.
Logistics and fuel efficiency
In recent years, we have steadily expanded our fleet of electric
and gas-powered vehicles, a development that continued in
2025. In Denmark, parts of the fleet were converted from die-
sel to battery electric vehicles. The UK introduced liquefied bi-
omethane vehicles, while Finland began replacing some die-
sel trucks with compressed biogas models. Sweden also
added new biogas and electric trucks to its fleet. Additionally,
all inbound and outbound vehicles in Germany are fully run-
ning on hydrotreated vegetable oil since April 2025, now sav-
ing 3,600 tonnes of fossil CO₂e annually.
Climate actions scope 3 emissions on farms
FarmAhead™
In 2025, we continued to strengthen our commitment to sus-
tainable dairy farming through FarmAhead™ Technology, a
data-driven toolbox supporting our farmer owners in their sus-
tainability transition. It includes three components: FarmA-
head™ Check, Incentive and Innovation. In addition, FarmA-
head™ covers our Customer Partnership programme. To-
gether, they enable measurement, action and collaboration
on farm-level climate and nature goals.
FarmAhead™ Check helps farmers understand their carbon
footprint by collecting over 200 data points per farm, verified
by third-party advisors. In 2025, it covered 99% of our milk
pool, offering insights across seven Northern European coun-
tries. Farmers submitting data receive 1 EUR-cent/kg of milk.
Through the FarmAhead™ Incentive, farmers earn up to 81
points across 6 categories containing 20 levers like efficient
feeding, manure handling and renewable electricity use. Each
point increases payment by 0.03 EUR-cent/kg. We allocate up
to EUR 500 million of total milk payments annually to reward
these efforts (see page 108 for details on total milk cost). In
2025, we introduced a new climate lever regarding the depos-
iting of nitrogen on grassland during grazing to close gaps in
the existing manure handling category.
Our FarmAhead™ Innovation programme continued to explore
new solutions, including a four-year regenerative farming pilot
with the animal behavioural science and technology partner
FAI Farms involving Arla farmers across Europe.
The FarmAhead™ Customer Partnership programme was ex-
panded in 2025, enabling customers to invest in on-farm cli-
mate and nature projects across Denmark, the UK and Swe-
den, including business-to-business customers. Additional Eu-
ropean markets are expected to join the programme in early
2026. Current agreements cover more than 4.5 billion kg of
milk. In 2025, the FarmAhead™ Customer Partnership pro-
gramme achieved limited assurance for the system and pro-
cess used to generate customer reports from the programme.
The first assurance statement is not available for Danish cus-
tomers.
Climate impact of our investments
In Arla, we use a carbon pricing scheme to incorporate the
carbon impact into investment decisions for all investments
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 decision-
making board, we aim to make investments with a positive
carbon impact more attractive.
Total GHG emissions
25,075
TOTAL EMISSIONS
mkg CO2e
SCOPE 1+2
2%
OF TOTAL
EMISSIONS
SCOPE 3
SCOPE 3
FLAG
SCOPE 3
NON-FLAG
98%
90%
8%
OF TOTAL
EMISSIONS
OF TOTAL
EMISSIONS
OF TOTAL
EMISSIONS
WITHIN SCOPE 1+2
TARGET
Scope 1
456
mkg CO2e
112
mkg CO2e
Scope 2
2%
<1%
WITHIN SCOPE 3
FLAG TARGET
3,253
mkg CO2e
Raw milk
Sourced whey
13%
16,434
mkg CO2e
66%
OUTSIDE
TARGETS
2,928
mkg CO2e
12%
WITHIN SCOPE 3
ENGAGEMENT TARGET
445
mkg CO2e
448
mkg CO2e
512
mkg CO2e
86
mkg CO2e
69
mkg CO2e
21
mkg CO2e
Packaging1
Capital goods
Upstream
transportation
and distribution
Downstream
transportation
and distribution2
Waste
generated in
operation
Investments3
2%
2%
2%
<1%
<1%
<1%
OUTSIDE
TARGETS
311
mkg CO2e
1%
1 Includes only Non-FLAG emissions from packaging 2 Includes only emissions from distribution centres and retail 3 Includes only Non-FLAG emissions from investments
84% of scope 3 NON-FLAG emissions
87% of scope 3 FLAG emissions
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43
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Metrics and targets
In 2025, we set two new scope 3 targets aligned with the
SBTi-based target FLAG pathway, shifting from our previous
milk and whey intensity target to one absolute scope 3 FLAG
emissions reductions target and one scope 3 supplier and
partner engagement target. 2024 was the final year reported
against the former target, achieving a 13% reduction from the
2015 baseline, nearly halfway to the original 2030 goal of
30%. The new targets replace the previous scope 3 target, and
future reporting will focus exclusively on these.
We now have two emission reduction targets and one scope 3
supplier and partner engagement target, supported by de-
tailed roadmaps outlining specific levers, expected impact and
individual contributions.
Scope 1 and 2
The scope 1 and 2 target intends to reduce 63% of absolute
emissions by 2030. The target follows the 'Absolute Contrac-
tion' approach and is aligned with limiting global warming to
1.5°C with a baseline year of 2015. It is calculated using a mar-
ket-based approach. The target boundary includes land-re-
lated emissions and removals from bioenergy feedstocks.
Scope 3 FLAG emissions
In order to align with the new FLAG guidance (published in
2022), we updated our scope 3 target in 2025 and moved from
an intensity target to an absolute one. With the new near-term
target, we commit to reducing absolute scope 3 FLAG GHG
emissions by 30.3% by 2030 from a 2020 baseline year. It
covers emissions from farm and externally sourced whey and is
aligned
with limiting global warming to 1.5°C and the FLAG sector path-
way. In addition, it includes a commitment to no deforestation
across our primary deforestation-linked commodities, with a
commitment date of 2025 (read more on page 54).
Scope 3 supplier and partner engagement
In 2025, we introduced a new target for scope 3 supplier and
partner engagement. By the end of 2029, 82.6% of suppliers
and partners measured by emissions, covering purchased
goods and services, capital goods, upstream and downstream
transportation and distribution, waste generated in opera-
tions, and investments, should have science-based targets in
place. The target boundary includes land-related emissions
and removals from bioenergy feedstocks.
All three targets are validated and approved by SBTi.
Renewable electricity
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 production
sites in Europe. Therefore, by 2025, our target was to secure
100% renewable electricity across our European sites.
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Progress towards carbon reduction targets
We continued to deliver solid scope 1 and 2 reductions,
achieving an additional 5.6%p decrease compared to last year.
This brings our total reduction to 43.6% compared to our
2015 baseline, driven by optimisations, investments in heat
pumps and increased use of renewable energy (read more on
page 47).
In 2025, Arla farmer owners reduced emissions intensity per
kg of owner milk by 0.4%p, achieved through a continued in-
crease in the use of renewable electricity, improvements in
emissions from digestion, increased biogas utilisation and
lower peatland emissions – all supported by FarmAhead™
Technology and the continued dedication of our farmers. Av-
erage GHG emissions from Arla farmer owners, including soil
carbon sequestration, were 1.07 kg CO₂e per kg of owner milk,
representing a 9.9% decrease from the 2020 baseline.
Arla is developing customer-specific product carbon foot-
prints through our FarmAhead™ Customer Partnership pro-
gramme for use in customers' emissions reporting. It would be
incorrect for customers to use Arla's average CO₂e per kg of
owner milk as this reflects only on-farm emissions and not
cradle-to-gate life-cycle emissions. In addition, the CO₂e per
kg of owner milk is an average across all markets and cannot
be used for market-specific product carbon footprints.
The average FarmAhead™ points increased to 55 in 2025, up
from 53 in 2024 and 50 in 2023, driven by improvements in
manure management and renewable electricity use. A new
point introduced in 2025 rewards grazing practices that re-
duce methane emissions. Points and climate emissions do not
align perfectly because some incentive points are based on
prior-year data (e.g. 2025 points use 2024 checks reflecting
2023 production). Some actions are rewarded immediately,
Progress against scope 1 and 2 emissions target¹
Thousand tonnes (mkg) CO₂e
2025
2024
2023
2015
Scope 1 and 2 market-based
568
624
665
1,007
Reduction scope 1 and 2 (baseline: 2015)
-43.6%
-38.0%
-34.0%
¹ The historical figures have been restated, read more on page 48.
Progress against scope 3 FLAG and non-FLAG emissions targets
Thousand tonnes (mkg) CO₂e
2025
2024
2023
2020
Scope 3 total FLAG emissions
22,615
21,565
22,341
22,301
Scope 3 FLAG emissions from raw milk and sourced whey
19,687
18,785
19,448
20,259
Scope 3 FLAG emissions in scope of FLAG target¹
18,993
18,128
18,662
19,733
Reduction scope 3 FLAG emissions in scope of FLAG target (baseline: 2020) (%)²
-3.7%
-8.1%
-5.4%
Scope 3 supplier and partner engagement (%)
42.5%
¹ Includes scope 3 FLAG emissions from raw milk and whey less total sequestration in the upstream and downstream value chain.
² Total reduction is calculated based on the development from the baseline year 2020 of scope 3 FLAG emissions in scope of FLAG target (net).
* Share of emissions does not include carbon sequestration
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while formal reductions in CO₂e per kg milk appear only after
the next annual FarmAhead™ Check, creating a temporary
timing gap. In total, EUR 354 million was paid out through the
FarmAhead™ Incentive, including an additional 1 EUR-cent/kg
of milk for submitting FarmAhead™ Check data.
In the second half of 2025, we saw a significant increase in de-
livery of owner milk to Arla in line with market developments.
This volume growth outweighed the per-kg reductions, result-
ing in a 4.4%p increase in absolute emissions under the scope
3 FLAG emissions from raw milk and whey target. Neverthe-
less, this still marks an accumulated reduction of 3.7% com-
pared to our 2020 baseline. We continuously assess options
to accelerate progress towards our scope 3 FLAG emissions
target.
In 2025, 42.5% of our suppliers and partners measured in
emissions had science-based targets.
While we saw strong reductions in emissions from Arla's own
operations and continued to improve scope 3 emissions per
kg of owner milk, the increase in owner milk volumes resulted
in a total scope 1-3 emissions increase of 3.5%p compared to
2024.
Greenhouse gas emissions (scope 1, 2 and 3)¹
Thousand tonnes (mkg) CO₂e
2025
2024
2023
Scope 1²
456
479
503
Production
380
397
418
Transport
76
82
85
Scope 2 – market-based
112
145
162
Scope 2 – location-based
196
174
199
Scope 3
24,507
23,589
24,323
1 Purchased goods and services
22,003
21,001
21,870
Raw milk
16,434
15,860
16,441
Sourced whey
3,253
2,925
3,007
Milk-based raw material and other ingredients
1,564
1,422
1,626
Packaging
502
544
550
Contract manufacturing
214
205
203
Other Services and IT
36
45
43
2 Capital goods
448
470
407
3 Fuel and energy-related activities
144
153
149
4 Upstream transportation and distribution
512
553
586
5 Waste generated in operations
21
20
21
6 Business travel
5
5
4
7 Employee commuting
36
36
35
9 Downstream transportation
106
107
108
10 Processing of sold products
1
1
1
12 End-of-life treatment of sold products
37
38
40
15 Investments
1,194
1,205
1,102
Total scope 1, 2 and 3 emissions - market-based
25,075
24,213
24,988
Total scope 1, 2 and 3 emissions - market-based (historically reported)
18,710
18,801
Total scope 1, 2 and 3 emissions - location-based
25,159
24,242
25,025
¹ The historical figures have been restated. Read more on pages 48-51. For comparison, total emissions up to 2024 are shown as reported last year.
² The scope 1 emission factor for biogas is close to 0 which includes biogas purchased under different gas certification schemes like Grexel in Denmark or the Green Gas
Certification Scheme in the UK.
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Soil carbon sequestration
In 2025, we started reporting on soil carbon sequestration,
which is a carbon removal mechanism whereby carbon is
stored in organic matter in the soil. Soil carbon sequestration
fluctuates across years due to various factors (see page 49). In
2025, 694 thousand tonnes of CO2 were stored in the soil.
Biogenic emissions
As per the GHG Protocol, biogenic CO2 is not reported as part
of the GHG inventory, but reported separately. Biogenic CO2
emissions increased mainly due to higher consumption of
compressed biogas (CBG) as an alternative fuel for trucks
within logistics.
Progress towards renewable electricity target
The renewable electricity share at our European production
sites increased to 82% in 2025 compared to 72% the year be-
fore. The increase was attributable to new power purchase
agreements and investments in on-site solar plants. To a small
degree this was also explained by the purchase of renewable
electricity certificates. Read more about the accounting treat-
ment of PPAs on page 103.
From December onwards, all European production sites have
been operating exclusively on renewable electricity, reaching
the level we aimed for. However, we have a one-year delay on
reaching the target.
Energy consumption¹
Thousand MWh
2025
2024
2023
Coal and coal products
-
-
-
Crude oil and petroleum products
306
348
467
Natural gas
1,833
1,897
1,855
Other fossil sources
-
-
-
Purchased or acquired electricity, heat, steam, or cooling from fossil sources
206
265
323
Total energy consumption from fossil sources
2,345
2,510
2,646
Total energy consumption from nuclear sources
20
44
57
Renewable sources including biomass, biofuels, biogas, hydrogen from renewable
sources, etc.
674
658
575
Purchased or acquired electricity, heat, steam, and cooling from renewable sources
1,276
1,109
1,017
Self-generated non-fuel renewable energy
6
5
4
Total energy consumption from renewable sources
1,956
1,773
1,596
Total energy consumption
4,322
4,326
4,299
Renewable sources in total energy consumption share (%)
45.3%
41.0%
37.1%
¹ The historical figures have been restated. Read more on page 55.
Electricity consumption in Europe¹
Thousand MWh
2025
2024
2023
Non-renewable sources
211
320
376
Renewable sources
975
808
731
Total electricity consumed
1,186
1,128
1,107
Renewable electricity share (%)
82.2%
71.6%
66.0%
¹ The historical figures have been restated. Read more on page 55.
Soil carbon sequestration
Thousand tonnes (mkg) CO₂
2025
2024
2023
Total sequestration from own operations
0
0
0
Total sequestration in the upstream and downstream value chain
694
657
786
Biogenic emissions¹
2025
2024
2023
Thousand tonnes (mkg)
Emissions
Removals
Emissions
Removals
Emissions
Removals
Biogenic CO₂ emissions scope 1
551
551
463
463
Biogenic CO₂ emissions scope 2 - mar-
ket-based
117
117
109
109
Biogenic CO₂e emissions scope 3²
44
39
44
39
Total biogenic CO₂e emissions
712
707
616
611
¹ Not included in greenhouse gas emissions (scope 1, 2 and 3) table.
² As per SBTi requirements, biogenic emissions within scope 3 categories that are not included in Arla's target boundary must be excluded from the reported biogenic
emissions. Since cat. 3 is not included in Arla’s scope 3 non-FLAG target boundary, the biogenic emissions from this category shall be excluded from this table. These
emissions are, however, still quantified and tracked internally in Arla.
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§ Accounting policies
Greenhouse gas emissions (CO₂e)
We apply the Greenhouse Gas Protocol Corporate Standard
(GHG Protocol) to account for emissions across our value
chain. The emissions are categorised into three scopes based
on control and location in our value chain. In dairy production,
the main greenhouse gases are carbon dioxide (CO₂), methane
(CH₄) from digestion and manure storage and nitrous oxide
(N₂O) from fertiliser and manure production and use as well as
crop production. All gases are converted to carbon dioxide
equivalents (CO₂e) using global warming potentials from the
IPCC Sixth Assessment Report (2021). These factors were up-
dated in 2025 from the previous IPCC assessment, which
mainly affects methane-intensive farm emissions. Historical
farm emission factors were adjusted, while other categories
remain unchanged due to insignificant impact.
1 kg carbon dioxide (CO₂ )= 1 kg CO₂e
1 kg methane (CH₄) = 27 kg CO₂e
1 kg nitrous oxide (N₂O) = 273 kg CO₂e
Data is essential for guiding our emission-reduction efforts. As
science evolves, we apply the best available data, technology
and methodologies, and reflect updates in our reported fig-
ures.
In 2025, we restated emissions in line with our Restatement
Policy to align with best-practice methodology updates and
revised operational boundaries. All significant changes to op-
erational boundaries have been adjusted back to the baseline.
The historical figures for scope 1, 2 and 3 are restated for all
historical years shown in the tables all the way back to the
baseline year.
We do not purchase carbon credits, and in line with our sci-
ence-based targets, Arla does not reduce its greenhouse gas
emissions with carbon credits. Additionally, we do not make
carbon neutrality claims for commercial use dependent on
carbon credits.
Scope 1 – All direct emissions
Scope 1 emissions relate to activities in Arla's own operations.
This includes transport using our own vehicles and direct
emissions from our production sites. Only primary consump-
tion data is used for both. Of the total scope 1 emissions, 32%
were covered by the EU Emissions Trading System in 2025.
Emission factors are received from the UK Department for En-
vironment, Food & Rural Affairs (DEFRA).
The scope 1 emission factor for biogas is close to 0, which in-
cludes biogas purchased under different gas certification
schemes.
In 2025, scope 1 figures for historical years were restated. The
2015 baseline increased by 4%, mainly due to the addition of
the UK AFI Felinfach production site, the correction of energy
data at specific sites and the inclusion of business travel by
leased cars previously omitted as immaterial. These factors
were partly offset by lower natural gas emissions after aligning
calorific values across markets. For 2023 and 2024, scope 1
emissions decreased by 1% on average as the natural gas re-
duction outweighed increases from the new production site
and leased cars.
Scope 2 – Indirect emissions
Scope 2 emissions relate to the indirect emissions caused by
our purchase of energy, i.e. electricity and heat. We report
scope 2 emissions using the market-based methodology,
which reflects our energy purchasing choices. In line with the
GHG Protocol, we also disclose emissions using the location-
based method. We use only primary consumption data, with
emission factors sourced from ecoinvent v3.11 and the Asso-
ciation of Issuing Bodies (AIB).
Out of the renewable electricity, heat, steam and cooling vol-
umes, 0.5% are self-generated and 99.5% are accounted for
through contractual instruments. Of these, 64% come from
bundled renewable energy instruments, such as power pur-
chase agreements, where the electricity and its renewable
certificate are purchased together. The remaining 36% come
from unbundled instruments, where certificates are bought
separately from the physical electricity.
In 2025, scope 2 figures for historical years have been re-
stated. The 2015 baseline increased by 0.2%. While the in-
crease was driven by the inclusion of the new production sites
AFI Felinfach in the UK and Götene in Sweden, it was nearly
fully offset by corrections to previously overstated energy
data. In 2023 and 2024, only minor corrections to historical
data were made, and thus the average increase is 7%, driven
by the inclusion of the two new sites.
Scope 3 – Emissions in the value chain
Scope 3 relates to emissions in our value chain, i.e. emissions
from sources that we do not directly own or control. In 2025,
we updated our scope 3 climate accounting to include 11 out
of the total 15 categories introduced by the GHG Protocol. In
previous years, only four emission categories were reported.
This aligns with our continuous goal of increasing the trans-
parency and accuracy of our climate reporting. We are report-
ing GHG emissions as per the minimum boundaries defined in
the GHG Protocol. Following these minimum boundaries, we
have no emissions to report in categories 11 (use of sold prod-
ucts), 13 (downstream leased assets) and 14 (franchises) as
these are outside the scope of our inventory boundary. In ad-
dition, we have no emissions to report under category 8 (up-
stream leased assets) as leased cars are reported in scope 1.
In 2025, scope 3 figures for historical years and the baseline
year have been restated and are, on average, 31% higher per
year than previously reported. The new scope 3 categories ac-
count for an average 18% increase in annual emissions. The
remaining increase stems mainly from methodology and
scope changes for the reporting of farm and whey emissions.
Please see detailed descriptions under sections 'Scope 3 –
Emissions from raw milk' and 'Scope 3 – Emissions from
sourced whey'.
Scope 3 – Emissions from raw milk
In 2025, we updated our methodology for calculating scope 3
emissions from raw milk to reflect the latest guidance and
best practice. We now follow the International Dairy Federa-
tion's Carbon Footprint of Dairy Products guidelines (IDF
2022), replacing the previous IDF 2015 approach.
The tool used for calculating the carbon footprint of milk is
based on an attributional life-cycle assessment (LCA) that was
developed during the last decade in collaboration with 2-0
LCA, a Danish consultancy firm formed by academics. A de-
tailed methodology is available in Erjavec, A. et al., 2026 Meth-
odology report for Arla Foods FarmAheardTM Check on the 2-
ARLA FOODS ANNUAL REPORT 2025
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0 LCA website. Farm-level emission factors are sourced from
2-0 LCA consultants.
Emissions from raw milk include both on-farm and off-farm
activities, linked to cow digestion, feed production and pur-
chases, 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. Emissions
vary depending on how manure is covered or stored, and
whether it is used for biogas production. Peat soils are wet-
lands with a high carbon content. When soils are drained and
used for crop production, CO₂ and N₂O are released.
In this report, scope 3 emissions for raw milk are a weighted
average of greenhouse gas emissions per kg of milk. They are
calculated based on primary data from the farmers' latest fi-
nancial year – generally a year prior to the reporting year – val-
idated by external environmental experts, multiplied by the
fat- and protein-adjusted milk intake from the reporting year.
Farm data validated by external climate experts is statistically
representative of all Arla farms.
As a result of the methodology update, historical figures were
restated back to the 2020 baseline. For 2025, the restate-
ment led to an average uplift of 7% in milk emissions for the
years 2020, 2023 and 2024, contributing to an average 6% in-
crease in scope 3 emissions. The main driver of this change,
accounting for roughly half of it, was the adoption of the up-
dated allocation factor between milk and meat introduced by
the new IDF standard (IDF 2022). This revised factor allocates
a greater proportion of joint emissions to milk relative to
meat. The effect is most noticeable on farms with lower an-
nual milk volumes, where the updated allocation method
shifts more emissions to milk. Another key factor was a cor-
rection in feed energy content data, which had previously un-
derestimated feed intake and related emissions. This adjust-
ment increased reported feed-related emissions. A minor ad-
ditional increase came from updated emission factors.
These increases were partially offset by several methodologi-
cal improvements that reduced emissions. First, global warm-
ing potentials were updated to align with the latest IPCC sub-
mission. Second, lower milk loss assumptions reduced emis-
sions associated with milk not going to market. Third, a
revised methodology for calculating enteric methane led to a
modest decrease in reported methane emissions compared
with the previous approach.
We also refined total on-farm emissions by adopting a more
prudent approach to milk swaps with competitors, applying a
higher emission factor to this milk. For contract milk, we re-
placed static 2015 emission factors for non-owner milk with
annual emission factors from the World Food LCA Database to
reflect national milk emissions trends. Figures were recalcu-
lated back to the 2020 baseline.
Scope 3 – Soil carbon sequestration
In 2025, we began reporting on soil carbon sequestration for
the first time. Aligned with the SBTi FLAG guidance, soil carbon
sequestration is included as a net effect in our scope 3 FLAG
emissions target. Soil carbon sequestration, a key carbon re-
moval mechanism, stores carbon in soil organic matter, im-
proving soil health, water retention and resilience. The level of
sequestration is influenced by soil properties, local weather
conditions and land management practices such as choice of
cover crops, manure application and grazing.
To calculate the sequestration on Arla owner farms, farm loca-
tions are first mapped via GPS, and a GIS smart mapping tool is
used to layer soil and data for each location. Soil properties for
the specific land area are derived from EU open-access da-
tasets (ESDAC/LUCAS). Using established empirical equations
for soil (pedotransfer functions), we establish a baseline for
soil organic carbon (SOC) stocks down to a depth of 1 metre,
where direct measurements are not available. Farm manage-
ment data (grazing, crop types and yields, cover crops and ma-
nure application) is collected through Arla's FarmAhead™
Check, which is also the data used for the carbon footprint.
The farm management data is then converted into an esti-
mate of yearly carbon input to soil using the Bolinder/bze
method (Bolinder et al., 2007, Jacobs et al., 2018), which sums
carbon inputs from plants and manure.
With data from the farm's carbon input and local climate
(monthly temperatures and annual rainfall) from Copernicus
datasets (ERA5/EOBS), the Yasso20 model (Yasso, FMI), a
peer-reviewed model developed by the Finnish Meteorologi-
cal Institute and used in several national inventories, is used to
calculate the annual change in carbon. This includes simula-
tions of how soil carbon changes over time, meaning how
much is stored (sequestered), how much is lost in the form of
emissions from decomposition, and thus how stocks change
year by year. After this, each farm's annual absolute change in
carbon stocks is expressed as sequestration per kg of milk,
then multiplied by the farm's total milk volume for the Climate
Check period in the FarmAhead™ tool to obtain total seques-
tered carbon. This approach aligns with the GHG Protocol
Land Sector and Removals Guidance as well as SBTi FLAG, and
applies IDF (2022) allocation for dairy.
When a farmer leaves Arla, previously reported removals are
reversed since permanence cannot be guaranteed. As precise
measurement of reversals is not yet possible, we apply a con-
servative buffer meaning that 7% of reported removals are de-
ducted annually to account for potential reversals.
Please read more about methodology used here in Arla Foods,
2026, Nielsen, C., 2026. Arla's Soil Organic Carbon Sequestra-
tion Methodology.
Scope 3 – Emissions from sourced whey
Emissions from sourced whey relate to externally purchased
whey for Arla Foods Ingredients.
In 2025, we updated the methodology for external whey and
restated historical data. For the baseline year 2020, whey
emissions more than doubled, mainly due to the addition of
historical whey volumes for the new UK AFI Felinfach produc-
tion site and direct sales activities. Emissions from sourced
whey in Argentina also increased following a methodology up-
date for calculating whey dry matter and a revision to the
emission factor, which is significantly higher than in European
markets. The increase was only slightly offset by Arla's new
whey methodology, which standardises volumes to dry matter
to reflect differences in quality and fractions purchased, and
more fairly allocates emissions to waste products in the value
chain. Arla also moved from a single emission factor across all
markets to country-specific factors from the World Food LCA
Database (WFLDB) for milk.
For 2023 and 2024, the increases were smaller, 50% and 25%
respectively, mainly because revised allocation of waste prod-
ucts had a larger offsetting effect given the whey types pur-
chased and the suppliers used in these years. In addition for
2024 a reduction in Argentina's emission factor was applied
compared with the previously stagnant factor.
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Scope 3 – Emissions from other categories
We prioritise primary data wherever feasible and apply spend-
based methods only where activity data is not available. Emis-
sions from milk-based raw material and other ingredients (cat-
egory 1), contract manufacturing (category 1) and waste gen-
eration in operations (category 5) are calculated using primary
volume data combined with emission factors from WFLDB,
ecoinvent and DEFRA. Business travel (category 6) is based on
activity data using the U.S. Environmental Protection Agency's
(EPA) factors, while employee commuting (category 7) is esti-
mated from average commuting distances (Eurostat) assum-
ing employees commute by either passenger car (90%) or
public transport (10%), and Full-Time Equivalents (FTEs) multi-
plied with DEFRA emission factor. Downstream transportation
(category 9), processing of sold products (category 10) and
end-of-life treatment of sold products (category 12) are calcu-
lated from product and packaging volumes with relevant
emission factors from ecoinvent and PEF scenarios. Category
10 emissions are calculated based on an average electricity
consumption assumption, while category 12 emissions are
calculated based on assumptions regarding waste treatment
from Quantis and Eurostat. Investments (category 15) include
proportional scope 1, 2 and 3 emissions for holdings above
1%. Scope 1 and 2 emissions are based on reporting from in-
vestee, while scope 3 emissions are estimated based on inves-
tee's production using average emission intensity for China.
For other services and IT within category 1 (such as marketing
and professional services), capital goods (category 2) and up-
stream transportation and distribution (category 4), emissions
are calculated spend-based using emission factors from the
EXIOBASE database.
In 2025, upstream transportation and distribution (category 4)
shifted from supplier activity data to a spend-based method to
improve alignment and coverage, while scope 3 supplier and
partner engagement continues to enhance future data qual-
ity. As a result of the methodology shift, historical transport
emissions increased by approximately 60%. Packaging (cate-
gory 1) methodology was also updated, moving from supplier
activity data to Arla's own procured volumes and detailed
packaging specifications, improving accuracy and reporting
efficiency. In addition, plastic packaging emission factors were
revised, still using the same sources as previous years (ecoin-
vent). As a result, historical packaging emissions were restated
back to the baseline, leading to an average historical increase
of 24%. Energy consumption was restated (read more below),
leading to a restatement in fuel- and energy-related emissions
(category 3), while the methodology for calculating emissions
from waste in operations was updated. The total effect of re-
stating these two categories contributes to a change in total
emissions by less than 0.1%.
Uncertainties and limitations
In 2025, 96% of Arla's active farmer owners, covering 99% of
Arla's owner milk volume, submitted a detailed FarmAhead™
Check questionnaire. Their responses were validated by exter-
nal environmental experts.
Farmer owners complete the FarmAhead™ Check annually us-
ing data from their latest financial year. This varies from farm
to farm, some have financial years running from January to De-
cember, 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 2024 to 31 December
2024, while 9% relates to earlier periods.
An uncertainty analysis was carried out to understand the big-
gest areas of uncertainty related to self-reported farm emis-
sion data. The analysis was centred around the four key levers
herd, feed, crops and manure handling, and addressed the pa-
rameters 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.
We have a robust control process in place to reduce uncer-
tainties and improve data quality. The control process is two-
fold, including the validation by external environmental ex-
perts and an internal control performed by Arla to catch statis-
tical outliers or abnormalities in data. All outliers are flagged
and need to be investigated before the result of the FarmA-
head™ Check is available for reporting. Numbers are only re-
leased for reporting after thorough investigation.
Small farms and farmer owners using extensive grazing sys-
tems do not always measure the amount of feed eaten by
their cows or the dry matter content of the grass on their
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 impact on the carbon footprint, uncertainties related to
peat soils could have a significant impact on the total reported
greenhouse gas figure. The risk of errors is minimised by ex-
ternal environmental experts validating the data, supported by
detective analytical controls, and we will continue to refine
this area in future reporting.
Carbon sequestration was first reported in 2025. As this is new
for Arla and corporate reporting, methods will evolve with sci-
ence and practice. Soil carbon accounting is not fully stand-
ardised, and choices like reporting period, data bases, seques-
tration model and responsibility window affect results. A
20-year window, as used by Arla (guided by IDF 2022), can
make annual sequestration levels appear up to ten times
higher than with a 100-year amortisation, which smooths vari-
ability and generally shows lower annual values. Over the full
period, both methods yield the same total sequestration. Se-
questration is not calculated for non-owner milk, and milk
swaps with competitors are not accounted for.
Scope 3 supplier and partner engagement
The scope 3 supplier and partner engagement metric
measures the share of suppliers with SBTi-aligned targets
measured by emissions. The target includes non-FLAG scope
3 emissions related to non-FLAG emissions from purchase of
packaging materials (category 1), capital goods (category 2),
upstream transportation (category 4), waste generated in op-
erations (category 5), downstream transportation (category 9)
and non-FLAG emissions from investments (category 15). For
downstream transportation, we include emissions from distri-
bution centres and retail, while excluding emissions from re-
tail to consumer. The scope 3 supplier and partner engage-
ment target covers 84% of our total non-FLAG scope 3 emis-
sions.
Biogenic emissions and removals
We report biogenic CO2 emissions and removals separately
from fossil-based CO2 emissions and biogenic CH4 and N2O.
Biogenic emissions include emissions from combustion of
biofuels or biobased material for electricity or heating. Bio-
genic emissions are generated from the release of carbon
compounds by living organisms as part of natural life cycles.
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Following an estimate by SBTi, we assume biogenic CO2 emis-
sions equal biogenic removals. Additionally, following SBTi, we
also include biogenic CH4, N2O and any fossil CO2 associated
with the production of biofuels (both transport and processing
emissions). Because these non-biogenic CO2 elements are in-
cluded, the biogenic emissions and removals do not fully net
to zero. Emission factors for biogenic emissions are retrieved
from DEFRA, AIB and Our World in Data.
Energy consumption and mix
Energy used at Arla's production sites and warehouses origi-
nates from different sources, including biomass, biogas, natu-
ral gas, district heating and grid electricity. Electricity from re-
newable 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 in-
voice information and automated meter readings at each site,
and therefore there is little uncertainty associated with these
figures.
In 2025, energy figures for historical years have been restated
for the baseline year, 2023 and 2024 and are, on average, 5%
higher per year than previously reported. The increase is
mainly driven by the inclusion of our new production sites, AFI
Felinfach and Götene Powder. The overall increase is partially
offset by a reduction in MWh of natural gas following an up-
date to harmonise caloric values across markets.
Renewable sources in total energy consumption share
To calculate the share of renewables, renewable energy use is
divided by the group's total energy use. We do not account for
energy losses, therefore all energy purchased is included in
the figures. The energy sold was not deducted in the calcula-
tion of the renewable energy share.
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 elec-
tricity certificates. The renewable electricity share follows the
Renewable Energy 100% (RE100) guidelines. Some Arla pro-
duction sites produce and sell excess electricity. The electric-
ity sold was deducted from the calculation of the renewable
electricity share. Renewable electricity in the grid mix not cov-
ered by contractual instruments is not counted as renewable.
In 2025, the renewable electricity share was restated, due to
the restatement of energy figures, and are, on average, 5%
lower.
EU Taxonomy disclosures
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 Tax-
onomy-eligible and aligned revenue, OpEx and CapEx, with eli-
gibility 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 rev-
enue for Arla.
CapEx and OpEx
The analysis of CapEx and OpEx has been initiated, however,
we do not plan to pre-implement the elements before 2027
when reporting will become mandatory as part of the EU's
Corporate Sustainability Reporting Directive (CSRD).
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 la-
bour laws, human rights conventions, and anti-corruption
measures to ensure sustainability and social responsibility.
The framework references international labour laws, such as
the International Labour Organisation's (ILO) core conven-
tions, covering rights like the abolition of child labour, elimina-
tion of forced labour, non-discrimination and freedom of asso-
ciation. It also aligns with human rights conventions like the
Universal Declaration of Human Rights and the UN Guiding
Principles on Business and Human Rights.
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HOW OUR IMPACTS, RISKS
AND OPPORTUNITIES LINK
TO OUR VALUE CHAIN
SUPPLIERS
FARM
OWN OPERATIONS
Material impacts, risks and opportunities
We depend on biodiversity and healthy ecosystems. For Arla,
biodiversity refers to the variety of plants, animals and micro-
organisms near our production and logistics sites, on dairy
farms and throughout our value chain.
These ecosystems sustain the natural cycles that provide our
raw materials. Healthy and resilient biodiversity is therefore
essential to our holistic approach to sustainability.
Strategy and policies
Milk and dairy products have been essential to human diets
for thousands of years. Six of nine planetary boundaries are ex-
ceeded globally, with climate change being one of the most
critical.
In Arla, we focus on addressing the key pressures on biodiver-
sity most relevant to our operations through our Green Ambi-
tion: Climate (Better Climate), pollution (Clean Air and Water)
and habitat loss (Healthy land and soil). Through FarmAhead™,
we encourage our farmer owners to adopt practices that re-
duce emissions, enhance carbon sequestration and promote
sustainable farming methods, including optimising fertiliser
use, sourcing conversion-free soy and implementing soil
health measures such as grazing and perennial crops. We en-
courage our farmers to nurture ecosystems like grasslands
and peatlands to create resilient agricultural landscapes, and
we source responsible ingredients from global supply chains.
Biodiversity
Impact, risk and opportunity
Type
Description
Biodiversity loss from climate
change
Actual
negative
impact
Through our contribution to the emission of greenhouse gases, we
indirectly affect ecosystems and species resilience since climate change is
a major driver of biodiversity loss.
Water pollution from nutrient
runoff
Actual
negative
impact
Our milk production requires the use of fertilisers in feed production and
handling of manure from the cows. The use of fertilisers results in nutrient
runoff, and manure handling can lead to eutrophication. Both harm aquatic
ecosystems and reduce water quality.
Nitrogen regulation on farms
Risk
Stricter requirements for improving surface and groundwater quality across
the EU may affect how nutrients are managed on farms. While these
changes could influence milk production volumes and potentially increase
sourcing from other regions (with related transportation emissions and
costs), our main approach is to work within the regulation by supporting
farmers in implementing compliant nutrient management practices.
Acidification from ammonia
emissions
Actual
negative
impact
Our milk production requires manure handling and the use of fertilisers,
which leads to ammonia emissions that can acidify soils, harm plant
growth, and degrade biodiversity. They also contribute to air pollution and
freshwater acidification.
Soil degradation from farming
practices
Actual
negative
impact
Arla farmers' cows require feed production, and intensive farming can
degrade soil through compaction, erosion and loss of organic matter.
Land use change and biodiversity,
natural capital and carbon loss
Potential
negative
impact
Our sourcing of soy, palm oil for feed and ingredients as well as forest fibre
for packaging has a risk of being linked to global land-use change, driven by
agriculture, causing habitat loss and biodiversity decline, particularly in
regions with high deforestation and conversion pressures.
11
6
11
10
9
8
7
6
6
6
7
8
9
10
11
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We are committed to ensuring that our direct and indirect use
of primary risk commodities (palm oil, soy and forest fibre) is
deforestation- and conversion-free. This commitment covers
both the raw materials we source and embedded soy and
palm in animal feed used on farms, with an extended timeline
for palm in feed.
Producing dairy can impact nature if not managed responsi-
bly. We recognise our dependence on environmental cycles
and diverse species for essential resources. We set science-
based targets on climate through the Science Based Targets
initiative (SBTi), developed roadmaps and created the
FarmAhead™ Technology, including the FarmAhead™
Incentive, which incentivises on-farm actions to drive not
onlycarbon reductions but also support biodiversity through
improvements in soil, water and air quality.
Data is crucial for our sustainability transition. While we initially
aimed to introduce a new biodiversity strategy and targets by
2025, this has not been possible due to the lack of robust and
widely accepted methods for measuring relevant biodiversity
indicators. The science and methodologies in this area are still
evolving, making it challenging to set meaningful and credible
global targets at this stage. As a first step, we are collaborating
with science-based targets for nature and have completed
their first two steps to understand materiality and identify im-
provement areas.
Biodiversity is inherently local, which is why we focus on driv-
ing several local projects that reflect the unique ecological
contexts of the areas where we operate. Our priority remains
to establish a solid measurement framework and reliable data
foundation before committing to specific targets and actions.
In the meantime, we continue to engage with local NGOs, aca-
demic partners and industry experts to build knowledge and
ensure that future targets are based on sound science and
practical feasibility. Examples of these local initiatives can be
found under 'Projects and collaborations'.
Our biodiversity aspirations are anchored in our Environmen-
tal Policy, our Code of Conduct for Suppliers and Business
Partners (CoCS) and Arla's Responsible Sourcing Policies.
Read more about our policies on page 80.
Actions
FarmAhead™: Driving sustainable feed and biodiversity
Deforestation- and conversion-free (DCF) sourcing
In 2025, we continued advancing towards our commitment to
deforestation- and conversion-free sourcing of soy, palm and
forest fibre, even as regulatory timelines shifted beyond our
influence. The EU Deforestation Regulation (EUDR) was post-
poned to the end of 2026, but we upheld our original ambi-
tion and intensified efforts to secure robust documentation
and traceability across our supply chain.
This year, we focused on improving verification for soy in feed,
particularly in Denmark and the UK, our largest soy markets.
The FarmAhead™ Incentive remained central to driving
change, rewarding farmers for reducing soy use or sourcing
deforestation- and conversion-free soy. In this model, a total
of 11 points are available for sustainable feed actions, equat-
ing to 0.33 EUR-cent/kg of milk paid to Arla farmer owners
sourcing deforestation-free soy. Payments to farmers for sus-
tainable feed improvements increased slightly in 2025, total-
ling EUR 41.5 million.
Collaboration was essential. We strengthened engagement
with various stakeholders, including local feed associations,
suppliers, traders and industry platforms to address systemic
challenges in soy traceability and leverage for upcoming regu-
latory requirements. Persistent challenges remain, including
limited availability of segregated palm oil and the complexity
of traceability within soy supply chains. To address these, we
leveraged partnerships and internal task forces to improve
transparency and data quality.
Expanding biodiversity impact
Originally developed to incentivise farm-level actions that pri-
marily reduce carbon emissions, FarmAhead™ also supports
biodiversity, soil health, water quality and air quality through
incentivising biodiversity-enhancing practices. Both semi-nat-
ural grasslands and multi-species swards foster functional di-
versity, supporting ecosystems that reduce the environmental
footprint of livestock production. Payments to farmers for bio-
diversity and carbon farming remained stable in 2025, total-
ling EUR 19.8 million.
In 2025, we laid the groundwork to broaden its impact start-
ing in 2026, introducing new measurement criteria and incen-
tive points to deepen the connection between climate action
and nature-positive outcomes. The expanded scope will in-
clude:
• Ammonia emissions: Monitoring NH₃ released from sta-
bles, manure storage and fertiliser application.
• Carbon sequestration: Measuring carbon captured and
stored in soil.
• Semi-natural grassland: Tracking habitats such as mead-
ows, heathlands and diverse grasslands.
• Multi-species swards: Quantifying perennial crops seeded
with at least five species, including grasses, legumes and
herbs/wildflowers.
Read more on FarmAhead™ in our Climate chapter on
page 42.
Projects and collaborations
To deepen our understanding of how biodiversity interacts
with soil, water and climate, we accelerate efforts through the
Innovative Farm Network, where farmers test and share re-
generative practices that improve soil health, boost carbon se-
questration and create wildlife habitats, fostering resilient
ecosystems.
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On a global scale, we collaborate through the SAI Platform, a
coalition of leading companies committed to defining and
measuring regenerative agriculture principles and driving
their adoption across industries. This initiative advances farm-
ing systems that protect natural resources and habitats while
reducing emissions and strengthening biodiversity.
In Denmark, the Nature Check (Naturtjek) project with Arla®
Øko enables all organic farmers in Denmark to assess their bi-
odiversity baseline and receive recommendations to preserve
or restore natural areas, ensuring long-term tracking and inte-
gration into dairy production. The project covers 143 farms,
with a total of around 55,000 ha. The initial assessment con-
cluded that Arla® Øko farmers dedicate 8% of their land to
natural areas. The Nature Connect project brings farmers and
local partners together to protect and expand cohesive nature
areas by taking land out of production and applying sustaina-
ble practices on farms, including those from Naturtjek and re-
generative practices, to enhance biodiversity, water quality
and soil health.
In the UK, we partner with the Royal Society for the Protection
of Birds (RSPB), Senus and Arla Organic Farmers to establish
biodiversity baselines and farm action plans. Bird surveys and
satellite mapping identify threatened species and habitats, en-
abling farmers to work on targeted improvements and gain in-
sights for future projects.
Our farmers manage about one fifth of semi-natural pastures
in Sweden, which rely on grazing animals for preservation. In
2025, we launched a programme to support members in re-
storing overgrown grasslands and keeping existing pasture
open through grazing. This protects habitats and strengthens
soil health, in line with national and international sustainability
goals.
Metrics and targets
We aim to avoid negative biodiversity impacts, and our target
was for our primary risk commodities (palm, soy and forest fi-
bre) to be deforestation- and conversion-free 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 deforestation was
set for end of 2025, while no-conversion extends to the end of
2028 due to high uncertainty in the availability of appropriate
documentation.
Progress towards DCF target
In 2025, 100% of soy, 77% of palm and 98% of forest fibre di-
rectly purchased by Arla achieved deforestation- and conver-
sion-free status. Our focused sourcing made us achieve our
target for soy and brought us very close to our target for forest
fibre, though we narrowly missed this target. The DCF share
for directly sourced palm decreased by 19%p versus last year
due to business resilience needs in the Middle East, where lo-
cal suppliers were unable to meet DCF requirements. We will
continue striving for full DCF coverage.
Soy in feed accounts for 98% of Arla's total direct and indirect
soy volumes, and palm in feed for 57%. The share of indirect
deforestation- and conversion-free soy rose to 82% compared
to 48% last year, driven mainly by increased DCF sourcing
transparency in Denmark. The relatively low performance in
historical years is partially due to lack of transparency in the
soy supply chain in Denmark. Despite strong progress, we did
not reach 100% DCF soy by 2025. This additionally means we
Indirect purchase of deforestation and conversion-free feed by our farmers
2025
2024
2023
Tonnes
Indirect soy
Indirect palm
Indirect soy
Indirect palm
Indirect soy
Indirect palm
Total volumes¹
226,144
59,857
183,212
34,545
178,060
34,223
Certified, segregated
15,332
113
10,136
71
7,355
Not available
Verified
42,905
Not available
914
Not available
6,813
Not available
Low-risk origin
112,372
Not available
66,663
Not available
29,022
Not available
Organic²
14,765
Not available
10,388
Not available
5,462
Not available
DCF share (%)
82.0%
0.2%
48.1%
0.2%
27.3%
0.0%
Non-DCF volumes
40,769
59,744
95,111
34,474
129,407
34,223
¹ Data related to feed volumes covers the 2024 calendar year
² Organic certification as a criteria of deforestation- and conversion-free only applied to soy
Direct purchase of deforestation and conversion-free ingredients and forest fibre
2025
2024
2023
Tonnes
Direct soy
Direct palm
Direct
forest fibre
Direct soy
Direct palm
Direct
forest fibre
Direct soy
Direct palm
Direct
forest fibre
Total volumes
693
45,308
122,479
916
37,071
152,430
695
40,033
198,812
Certified, segregated
669
34,930
118,061
855
35,540
139,136
-
31,715
189,322
Verified
-
-
-
-
-
-
477
-
-
Low-risk origin
24
-
1,422
6
-
7,325
-
-
1,509
DCF share (%)
100.0%
77.1%
97.6%
94.0%
95.9%
96.1%
69.0%
79.0%
96.0%
Non-DCF volumes
-
10,378
2,995
55
1,531
5,969
218
8,318
7,981
2025 in focus
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Performance review
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ARLA FOODS ANNUAL REPORT 2025
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did not fulfil our SBTi FLAG commitment on no deforestation
across our primary deforestation-linked commodities, with a
target date of 2025. The 2025 soy volume is not directly com-
parable to 2024 due to an updated internal estimate for soy in
compound feed. We report higher soy volumes in 2025 due to
this change in methodology, but the total deforestation- and
conversion-free percentage is not affected for prior years, so
no restatement was required.
For palm in feed, there are ongoing transparency challenges
for deforestation- and conversion-free data from the feed in-
dustry, so the table shows "Not available" with the exception
of minor certified volumes, and we report close to 0% meet-
ing the criteria, meaning the target was not reached.
Regulatory delays and ongoing uncertainty around deforesta-
tion-free rules have slowed market transition, making this an
industry-wide challenge. We continue to advance the agenda
through industry initiatives (e.g. roundtables, manifestos) as
well as our FarmAhead™ Incentive, and we keep working with
stakeholders to achieve the targets.
§ Accounting policies
Deforestation is defined as the loss of natural forest as a result
of conversion to agriculture or other non-forest land use, con-
version 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. We use the definitions of
the Accountability Framework Initiative, which is recom-
mended by SBTi.
Commitment scope
We focus on the most relevant risk commodities to make the
greatest impact: Palm, soy and forest fibre.
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 de-
rivatives. Embedded soy and palm associated with externally
sourced whey or milk powder and soy and palm products
used in milk replacers are not included. Forest fibre includes
all wood and forest fibre-based materials that we purchase
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 production sites. Manufac-
turing of Arla products at the site of third-party companies is
not included. 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 our DCF commitment.
Direct suppliers are those from whom we source ingredients
and forest fibre for our operations. Indirect suppliers include
upstream third-party suppliers as well as providers of feed
products to the farms that supply our milk. The latest cut-off
date at the group level is 31 December 2020. This is in line
with the European Union Deforestation Regulation (EUDR).
Some commodities may be subject to earlier cut-off dates de-
pending on the sourcing region, national legislation or certifi-
cations. These are outlined in our Responsible Sourcing Poli-
cies for Palm, Soy and Forest Fibre.
Definition of DCF
As per the Accountability Framework Initiative, we consider
soy, palm and forest fibre as DCF when they are physically seg-
regated and certified or verified DCF, organically produced (for
soy) or originate from areas that are not high-risk according to
the World Wildlife Fund (Deforestation Fronts 2021). This
means that we report only segregated chain of custody mod-
els 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. We only accept certification bod-
ies that have high enough standards that meet DCF criteria
from the SBTi and the Accountability Framework Initiative:
Round Table on Responsible Soy Association (RTRS), ProTerra,
ISCC Plus, Europe Soya and Donau Soja for soy, Round Table of
Sustainable Palm Oil (RSPO) and ISCC Plus for palm products,
and Forest Stewardship Council (FSC), Programme for the En-
dorsement of Forest Certification (PEFC) and Sustainable For-
estry Initiative (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 or-
igins of organic soy supply chains. As we don't have volumes
for directly purchased organic soy, this is not reported.
Although credits/book and claim models do not count to-
wards DCF claims, we purchase RTRS and RSPO credits to
cover soy and palm volumes with an unknown risk of defor-
estation and conversion to support the development of more
responsible production. No biodiversity offsets are used in re-
lation to the DCF target.
Feed
Volumes of soy and palm used in feed are estimated based on
input to the FarmAhead™ Check and relate to the farmer own-
ers' use of feed during their 2024 financial year. Our DCF com-
mitment scope also includes contract milk (non-farmer owner
milk), however, associated feed volume data is not collected
directly. 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 av-
erage FarmAhead™ Check data for each market, or industry
averages for other markets supplying Arla milk.
To determine the proportion of DCF soy and palm in feed in
each market, we collect aggregated industry information for
each market, as it is not currently possible to trace feed pur-
chased on farms back to the supplier company and beyond.
Therefore, for soy in feed, 2025 data is sourced from:
• Denmark: Dansk Korn og Foder (DAKOFO), based industry
agreement with DAKOFO securing FEFAC-certified soy
means all high-risk origin, non-GMO soy is certified/verified
and segregated
• 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 (2025 report unavailable at re-
porting time, therefore 2024 report used).
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ARLA FOODS ANNUAL REPORT 2025
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These industry factors are applied to the physical volumes of
soy. No industry data for soy is included for Luxembourg. For
the US and Canada, soy is assumed to be sourced domesti-
cally and classified as low-risk origin.
For palm, the only data available is received form the Dutch Al-
liance for Sustainable Palm Oil.
Ingredients and forest fibre
Soy, palm and forest fibre volumes sourced directly by Arla re-
flect consumption during the 2025 financial year and are col-
lected in our internal procurement systems. We determine
the level of DCF for these commodities through a combina-
tion of supplier surveys and direct requests for documentation
of origin and/or certification. Volumes from non-respondent
suppliers are considered to have an 'unknown' DCF risk. Forest
fibre volumes embedded in office material are only collected
from Arla's main offices.
Cocoa
Cocoa is outside the reporting scope of our DCF commitment,
however, our policy is to use 100% UTZ/Rainforest Alliance-
certified cocoa for our branded products, and we continue to
comply with this goal. During the coming year, cocoa will be
reconsidered for potential inclusion in Arla's DCF ambition.
Uncertainties and limitations
Feed volumes vary from farm to farm. Soy and palm volumes
from the small number of farmer owners who do not submit
data to FarmAhead™ Check are not considered.
Reporting on DCF commodities is a developing field and is
subject to a degree of uncertainty. We are making progress to
improve the transparency of supply chains, for example
through the FarmAhead™ Incentive. However, 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.
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 infor-
mation directly from suppliers gathered through our
FarmAhead™ Check as soon as we deem data quality to be
adequate.
To determine the level of DCF achievement for forest fibre, we
rely on certification information submitted from suppliers of
such materials. We have limited ability to verify such data.
2025 in focus
About Arla
Performance review
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Our governance
CIRCULAR (continued)
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HOW OUR IMPACTS, RISKS
AND OPPORTUNITIES LINK
TO OUR VALUE CHAIN
OWN OPERATIONS
CONSUMERS
Material impacts, risks and opportunities
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. We identified
impacts from our activities and risks related to our transition
to a circular economy.
Strategy and policy
'Towards fully circular packaging' reflects our commitment of
utilising resources effectively to minimise our climate and en-
vironmental impact. This ambition encompasses enhancing
the recyclability of our packaging and decreasing the reliance
on virgin fossil-based plastic. We utilise around 300 thousand
tonnes of packaging materials annually. Our packaging solu-
tions 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 require-
ments concerning food safety and hygiene. Additionally, it
must protect our products during distribution, both in stores
and at home. It is also crucial for ensuring global access to our
nutritious offerings. We supply our products worldwide, reach-
ing 166 countries with varying collection and recycling
systems, and in some markets, certain materials are not yet
recyclable yet.
Food waste is often seen as discarded finished products, how-
ever, our main goal is prevention. We continuously strive to re-
duce waste at our production sites by optimising processes,
driving innovation and utilising waste streams. Most food
waste comes from cleaning equipment to maintain the high-
est quality or from side streams that today go to biogas. We
support the UN Sustainable Development Goal (SDG) of halv-
ing food waste in our production sites by 2030. When preven-
tion is not possible, we redirect food waste to animal feed or
donate it to charity before using it in biogas plants for energy
production. In our dairies, we optimise processes through ad-
vanced technology and close collaboration with customers
and suppliers, ensuring alignment with the waste hierarchy.
Our circularity ambition is anchored in Arla's Environmental
Policy. The policy addresses minimising the use of virgin fossil-
based plastic in our packaging and aims for it to be recyclable
in markets where our products are sold. It describes our ambi-
tion of preventing food waste within our operations and of pri-
oritising disposal at the highest level possible within the food
waste hierarchy. Additionally, it encourages a circular ap-
proach to waste management, treating waste as a resource to
be reused, recovered or recycled.
Read more about our policies on page 80.
Actions
Reducing the use of packaging materials
In 2025, we advanced our commitment to reducing non-recy-
clable packaging by introducing mono-material solutions de-
signed for recycling. In Sweden, selected shredded cheese
products transitioned from traditional multi-material packag-
ing to a recyclable mono-material foil. This change represents
a significant step towards improving packaging recyclability
and supporting a circular economy.
In 2025, we implemented measures to reduce the use of vir-
gin plastic and increase recycled content in packaging. For our
Yeo Valley 2-litre milk bottles, plastic weight was reduced by
2g per bottle.
For our 500ml fresh drinking yoghurt bottles, recycled poly-
ethylene terephthalate (rPET) content – excluding cap and
sleeve – was raised from 50% to 100%. These actions contrib-
ute to lowering reliance on non-renewable resources and sup-
port our ambition for more sustainable packaging solutions.
Circular
Impact, risk and opportunity
Type
Description
Use of packaging material
Actual
negative
impact
We rely on our packaging to protect our products from contamination,
preserve freshness and quality, and extend shelf life during storage and
transport. Our packaging material often requires materials that are not
always recyclable across all markets and, in the case of materials such as
virgin fossil-based plastic, lead to the depletion of natural resources. Arla
will continue to improve the recyclability of our packaging materials
where possible and explore alternatives to virgin fossil materials but
availability of legally approved, food-grade options remain limited.
Generation of food waste
Actual
negative
impact
Our production of dairy products results in food waste both during
processing and transport, retail and at the consumer level. Food waste
contributes to greenhouse gas emissions, resource loss and biodiversity
impacts.
13
12
13
12
12
13
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Reducing food waste in our production through Chemical
Oxygen Demand (COD) monitoring
We are committed to halving food waste at our production
sites by 2030. To achieve this, we focus on measuring COD as
an indicator of product loss during production and cleaning
processes. COD measures the amount of organic material in
wastewater with high COD levels meaning more milk or food
residues going to drain instead of being used. By monitoring
and reducing COD, we not only minimise food waste but also
reduce environmental impact, as lower COD levels lead to
cleaner wastewater and less strain on treatment systems. Cur-
rently, 17 sites covering around 50% of our milk pool have im-
plemented the Operational Mass Balance COD solution fully or
partially across production lines, including cleaning processes,
with more sites being added in 2026. The solution is a perfor-
mance report-based tool for identifying and analysing the root
cause of material lost to drains from tanks and pipelines, and
measures effects from mitigating actions made by the site
teams. The implementation progress has been possible
through already existing or newly installed sensors detecting
solids going to drain. Through this initiative, approximately
1.6 thousand tonnes of raw milk equivalents are expected to
be saved.
Recently, our Hobro production site in Denmark installed in-
line sensors to identify patterns in product losses, enabling
software improvements that increased the recovery of reusa-
ble products. Aylesbury in the UK similarly used advanced digi-
talisation and sensor data to eliminate multiple minor loss
sources. Together, these data-driven optimisations helped the
sites achieve a total reduction in COD milk equivalents of
more than 2,000 tonnes.
Metrics and targets
Target on reducing the use of packaging
Our goal is to achieve 100% recyclability across our opera-
tions. As an initial step, our target for 2025 was to ensure that
all packaging used for Arla's branded products is designed for
recycling. Considering the various conditions, particularly in
our international markets, we assess our progress towards
packaging recyclability based on two criteria:
• Designed for recycling: This criterion ensures that a pack-
aging or specific material component can be recycled in at
least one of Arla's European core markets.
• 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.
The two packaging-related metrics are framed by Arla due to
the lack of agreed global standards.
Progress on packaging target
In 2025, 297 thousand tonnes of total packaging materials
were purchased by Arla, of which 92 thousand tonnes, so 31%,
were recycled packaging materials.
As in 2024, over 94% of the packaging used for our branded
products was designed for recycling this year, which was be-
low our 2025 target of 100% recyclability. Some packaging
solutions require longer development timelines, which is a
challenge faced across the industry.
It is important to note that recyclability is defined differently in
different markets. For example, in our markets outside Europe,
some materials that are widely recyclable in Europe, such as
glass or metal, are not collected for recycling. For this reason,
even though a high percentage of Arla's branded packaging
sold in markets outside Europe was designed for recycling, in
2025 none of it was recorded as recyclable in the market
where sold.
The upcoming PPWR will introduce a harmonised framework
for assessing recyclability, requiring all packaging in all mar-
kets to be recyclable by 2030. We welcome this development
as it will drive transparency and innovation across the industry
and push all companies to find better solutions. We are com-
mitted to aligning our methodology and future KPIs with this
new framework, ensuring that our progress is measured con-
sistently and credibly. This shift will also boost further devel-
opments and help us focus on the most impactful solutions.
In the meantime, we remain transparent about our methodol-
ogy for assessing recyclability and are working towards setting
new KPIs that reflect the harmonised approach once it is in
place.
Plastic remains an important packaging material for our prod-
ucts. However, our current virgin fossil-based plastic reduction
target is no longer feasible due to technological and market
availability constraints. We will therefore discontinue reporting
against the existing virgin fossil-based plastic target. As plas-
tics continue to play a key role in packaging, we will reassess
our options and set a new target supported by a clear action
plan.
Designed for recycling, branded products
%
2025
2024
2023
Europe
96%
95%
96%
International
92%
91%
95%
Total
94%
94%
95%
Recyclable in market where sold, branded products
%
2025
2024
2023
Europe
82%
85%
83%
International
0%
0%
0%
Total
52%
54%
45%
2025 in focus
About Arla
Performance review
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Progress towards food waste target
We continuously strive to find ways of reducing food waste
within our own productions through optimising processes,
innovations or utilising the waste streams. Our ambition is to
reduce our own food waste by 50% by 2030 compared to our
baseline year 2023, but in 2025 food waste increased by
12%p.
Food waste increased significantly to 887 thousand tonnes in
milk equivalents, mainly due to higher whey intake at our in-
gredients sites in the UK and Argentina, as well as challenges
concerning the continued reuse of food waste for insect feed
in Denmark.
In Argentina, substantially higher milk volumes in 2025 led to
increased whey processing, and with drying capacity and feed
outlets fully utilised, surplus permeate had to be disposed of
on agricultural soil. A drying tower currently under construc-
tion will enable most of this permeate to be used for food and
feed going forward.
A similar situation occurred in the UK, where an increased
whey intake resulted in surplus permeate being sent to bio-
gas, as feed outlets and powder capacity were fully utilised. A
new liquid-feed collaboration is expected to increase UK feed
allocation towards 2030.
§ Accounting policies
Generation of non-recyclable 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. We split the recycling
KPIs according to our commercial segments Europe and Inter-
national. Please see description of our commercial segments
on pages 27-30.
Recyclability of branded products
These measures are applied to packaging used for our
branded products. A material is recyclable when there is a
proper infrastructure for packaging waste collection and sort-
ing and a market for the recycled material. The share of pack-
aging material made from recycled material is reported sepa-
rately.
Designed for recycling, branded products
Packaging is designed for recycling if the packaging is recycla-
ble in at least one of our core markets in Europe. The assess-
ment 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 material share thereof is recy-
clable in the market where the product is sold. A comprehen-
sive 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 in-
clude the 'Mindeststandard' issued by Zentrale Stelle
Verpackungsregister in Germany, the 'Plastic Packaging Recy-
cling Manual' published by the Swedish Näringslivets
Producentansvar (NPA), the 'Recycle Checks' developed by
Verpact in the Netherlands and the UK RAM scheme. Each as-
sessed product packaging unit is converted into weights of
different components used and multiplied by sales volumes.
The consolidated number is calculated as the weight of recy-
clable packaging material sold compared to the total weight
of packaging materials sold. Due to materiality, product units
that make up less than 0.25% of finished product sales vol-
umes within the subcategory of that product are excluded. By
subcategory we mean butter blends, yellow cheese, milk etc.
The coverage in 2025 was 89.4%.
Uncertainties and limitations
In 2025, the assessment was performed based on the recycla-
bility status in December. There is a risk that a certain material
combination was not recyclable earlier in 2025 but became
recyclable in December. In this case, the material combination
was counted as recyclable for the full year.
Generation of food waste
Food waste includes all material waste along the value chain
that was originally intended for human consumption, exclud-
ing inedible parts. This definition aligns with the recommenda-
tions provided by the UK-based NGO Waste and Resources Ac-
tion 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.
In 2025, food waste for historical years has been restated and
is, on average, 44% higher per year than previously reported.
The increase is driven mainly by the inclusion of our new whey
processing site, AFI Felinfach. This type of site generally pro-
duces significant food waste volumes in the form of permeate
that is not sold.
Food waste
Milk equivalents in thousand tonnes (mkg)
2025
2024
2023
Food waste directed to disposal
45
18
34
Food waste directed from disposal
842
769
771
Liquid waste for biogas
547
479
488
Hard waste for biogas
36
39
38
Sludge before COD measurement for biogas
16
12
10
Waste water COD for biogas
243
239
235
Total
887
787
805
Reduction food waste (baseline: 2023)
10.2%
-2.2%
RESTATEMENT
2025 in focus
About Arla
Performance review
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CIRCULAR (continued)
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We report only food waste from our own operations, as con-
sumer-level waste cannot be reliably measured. Household
waste accounts for ~55% of EU food waste (Eurostat 2024),
but we focus on what we can influence. Tracked categories
are:
• 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 contamina-
tion), which is considered part of the liquid waste at the dairy
responsible for managing its disposal.
• Solid food waste: Includes waste from finished and semifin-
ished goods, which refers to the disposal of products that
have completed the production process but are not consid-
ered solid waste.
• Sludge before COD measurement: Refers to the solid
waste material that is separated from wastewater before it
undergoes treatment. Examples of sludge include the quan-
tities 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 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 equiv-
alents, following the International Dairy Federation (IDF)
guidelines. 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 lead to 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 methods. 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.
SOCIAL
Consumers and end-users
Employees
Workers in the value chain
From employees to employees
We hosted the first Global Careers Fair, a three-day event created by
employees, for employees, to explore career paths, share experiences,
and gain practical tips for growing within Arla. At our headquarters, 35
departments showcased their work and 50 speakers shared insights with
more than 2,700 online attendees.
In picture: Employees gathered around the booth at the careers fair at Arla
headquarters, Viby, Denmark.
MANAGEMENT REVIEW
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2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
CONSUMERS AND END-USERS (continued)
ARLA FOODS ANNUAL REPORT 2025
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HOW OUR IMPACTS, RISKS
AND OPPORTUNITIES LINK
TO OUR VALUE CHAIN
CONSUMERS
Material impacts, risks and opportunities
Arla's ambition is to create the future of dairy to bring health
and inspiration to the world, naturally. The identified material
impacts for our consumers and end-users focus on our prod-
ucts' health benefits as well as food safety.
Strategy and policies
We believe dairy plays an important role in supporting a
healthy diet and enabling good food choices. Feed Life™, our
new Arla corporate platform, is designed to educate people on
balanced diets and healthy lifestyles, amplifying our ambition
to inspire healthier habits and empower informed food
choices. Balancing environmental protection with the need to
provide adequate nutrition for a growing global population is
one of the biggest challenges for the food industry. Through
Feed Life™, we address this challenge by integrating sustaina-
bility and health considerations to maintain impact in a chang-
ing market.
Arla wants all to live longer, healthier and happier lives. Sci-
ence shows that sharing healthy food fosters well-being. We
want to be part of the journey by providing healthy choices, in-
spiring healthy food preparation and making nutrition accessi-
ble. Therefore, we invested time and resources into preparing
a new Health Strategy that will focus on the healthiness of our
product portfolio, and further accelerate sugar and salt reduc-
tions in our products. To monitor the healthiness of our prod-
uct portfolio, we track the percentage of total branded sales
volume with a Health Star Rating (HSR) score of 3.5 stars or
more (see page 63).
Inspiring healthy food preparation is another key component
of our health agenda, particularly for future generations.
Through educational and inspirational programmes, partner-
ships and campaigns, we empower people to eat and live well.
Ensuring product safety remains our highest priority. Guided
by our Global Quality and Product Safety Policy and QEHS
Manual, we continually strengthen our quality culture and
food safety standards. We provide accurate labelling, espe-
cially for vulnerable groups, which is reflected in our Micronu-
trient Fortification Policy and Responsible Marketing Policy.
Arla's overall vision on health and nutrition is represented in
our Code of Conduct. Read more about our policies on
page 80.
Actions
Further increasing the healthiness of our products
To make products healthier and align indulgent items with
health criteria, we constantly work on finding solutions or in-
novations to increase our products' nutritional value without
compromising on taste or texture.
In line with our health share guidance, we aim to offer natural
ways to reduce added sugars while still meeting consumers'
taste and product expectations. We do this by understanding
our consumers' preferences, attitudes towards and usage of
free sugars (added sugars and those naturally present in
honey, syrups and juices) and sweeteners. We also identify, de-
velop and test new solutions and technologies, while building
knowledge about the health effect of sugars and sweeteners
in dairy.
As part of our commitment to healthier choices for consum-
ers, we improved the processed cheese Puck Blue Jar recipe in
2025 by enriching it with more calcium, initiating sodium re-
duction in line with World Health Organisation (WHO) recom-
mendations for processed cheese and enhancing its nutri-
tional profile to achieve a Health Star Rating above 3.5.
Launch of Feed Life™
In 2025, we launched Feed Life™ to strengthen engagement
with consumers and encourage balanced diets. The launch in-
cluded a nationwide campaign in Denmark showcasing our
full dairy portfolio under one unified brand, and initiatives ad-
dressing declining cooking skills among children and families.
Through partnerships with schools, chefs and community pro-
grammes, we delivered hands-on cooking education to im-
prove food literacy.
Engaging with consumers
Our mission is to inspire consumers by offering products that
meet diverse needs and encouraging engagement in activi-
ties that promote balanced eating and awareness of product
origins. We believe that inspiration and knowledge about
cooking are key to developing good food habits, which is why
we focus on supporting sustainable and healthy eating habits
among children, as early food skills are essential for lifelong
health and responsibility. Through the Arla Foundation (Arla
Fonden), we support initiatives that promote healthy eating
and food skills among young people. Programmes such as
Madlejr® food camps for Danish teenagers and Arla Foodmov-
ers X Madklubben, where professional chefs teach school clas-
ses in restaurant kitchens, aim to make healthy eating easier
and equip youth with essential food skills. In 2025, more than
Consumers and end-users
Impact, risk and opportunity
Type
Description
Health benefits due to
consumption of our healthy
products
Actual
positive
impact
Dairy is considered part of a healthy diet in European guidelines due to its
nutrient density and benefits from pre- or probiotics. By producing
nutrient-rich dairy products, we help increase the availability of healthy
options on the market, which, when consumed, can contribute to improved
health outcomes for consumers.
Potential harm to health due to
food safety
Potential
negative
impact
Although we care deeply about food safety in our products, we cannot
guarantee that food safety issues like contamination, allergens, foreign
objects or mislabelling that can harm consumer health never occurs.
15
14
14
15
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
CONSUMERS AND END-USERS (continued)
ARLA FOODS ANNUAL REPORT 2025
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114,000 Danish children participated in activities related to
cooking, food waste reduction and food education.
To stay connected with consumers, we conduct regular sur-
veys and set up focus groups to understand preferences,
monitor brand reputation and improve products. 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, en-
suring consumers know how to reach us. Consumer com-
plaints are managed by individual markets and tracked
through a centralised database.
Increasing our food safety through Artificial Intelligence
With the increasing availability of Artificial Intelligence (AI), we
continuously investigate how to utilise it for food safety pur-
poses. Arla's Science & Technology team is leveraging digital
innovation to set new standards in food safety. By integrating
advanced technologies, they optimise processes and improve
risk assessment through predictive modelling and AI tools. Re-
cent projects in 2025 include developing models to predict
Bacillus cereus growth in collaboration with the Technical Uni-
versity of Denmark (DTU) and Arla Foods Ingredients.
Metrics and targets
Healthiness of our products
We are assessing the nutritional quality and healthiness of our
portfolio through the Health Star Rating (HSR), which is also
used by the Access to Nutrition initiative (ATNi). In a bench-
marking of global food and beverage manufacturers and re-
tailers, ATNi uses the HSR to assign 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 number of points needed
for a certain rating depend on the product category. To be
considered healthy, a product must achieve at least 3.5 stars,
regardless of its category. We aim at upholding 3.5 stars or
more for 80% of our branded product portfolio.
In 2025, we reported for the first time the share of branded
products that qualify as healthy under the HSR, which was
79.5%. The products that mainly drive this good rating are
plain milks and yoghurts, family nutrition and some of our
milk-based beverages.
Food safety – 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.
In 2025, Arla had two public product recalls. The first one in-
volved complaints about mould in Protino Blueberry 250 ml,
affecting around 1,700 consumer units in the Danish market.
The second recall was initiated for Arla Protein Quark Blue-
berry 200 g for the Finnish market, after visible mould was de-
tected on the surface of the product making it unsuitable for
consumption. The recall affected approximately 10,000 con-
sumer units. Both incidents were handled promptly to protect
consumer health and maintain product quality standards.
§ Accounting policies
Healthiness of our products
The healthiness of our product portfolio is tracked using the
Health Star Rating (HSR) system, reporting the percentage of
total branded sales volume in tonnes that score 3.5 stars or
higher.
The KPI covers all Arla-owned brands and strategic partner-
ship brands. Excluded from scope are industry and bulk sales,
including Early Life Nutrition, Arla Foods Ingredients (AFI)
products and customer private label products. These exclu-
sions are due to limited control over final product composi-
tion or because the products fall outside the scope of the HSR
system. The HSR system assigns scores based on a nutrient
profiling method. Points are added for 'nutrients to limit' (en-
ergy, saturated fat, total sugars, sodium) and subtracted for
'nutrients to encourage' (protein, fibre, fruits, vegetables, nuts,
legumes), resulting in a star rating from 0.5 to 5 stars in Health
Star increments.
Powder nutritionals are adjusted for dilution to reflect actual
consumption following the methodology of the HSR guid-
ance.
Uncertainties and limitations
Powder nutritional data is only updated annually and is not in-
tegrated manually. Additionally, the exclusion of private label
and bulk sales limits the KPI's coverage to less than half of to-
tal revenue and sales tonnage, which should be considered
when interpreting results.
Out of branded products within scope, 95,5% is included in
the calculation of the share. Missing products are due to in-
complete data. The reliance on the HSR system, while widely
recognised, may also present limitations in applicability across
all markets and product categories.
Food safety – product recalls
All product incidents are handled promptly to safeguard con-
sumer safety as well as to ensure compliance with legal re-
quirements 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 available to the con-
sumer 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 com-
pleted 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.
Recalls for all Arla products in all markets are included.
Healthiness of our branded products
2025
2024
2023
Products that qualify as healthy under HSR share (%)
79.5%
Recalls
2025
2024
2023
Number of recalls
2
2
1
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
EMPLOYEES (continued)
ARLA FOODS ANNUAL REPORT 2025
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HOW OUR IMPACTS, RISKS
AND OPPORTUNITIES LINK
TO OUR VALUE CHAIN
OWN OPERATIONS
Material impacts, risks and opportunities
As an employer of around 20,000 people, we recognise our
impact on our employees' physical safety and psychological
well-being at the workplace.
Strategy and policies
Arla's strategic ambition is to ensure fair and favourable work-
ing conditions for all employees across our global operations.
We aim to provide a safe, healthy and inclusive work environ-
ment that supports personal growth and development. Our
approach is guided by our commitment to respect human
rights, promote diversity and inclusion, and uphold high
health and safety standards.
We are committed to respecting human rights throughout our
value chain, including our own operations and those of our
suppliers and business partners. Our approach is guided by the
UN Guiding Principles on Business and Human Rights (UNGP)
and the Organisation for Economic Cooperation and Develop-
ment (OECD) Guidelines for Multinational Enterprises. Our
work is anchored in Arla's Code of Conduct (CoC), Human
Rights Policy and our Code of Conduct for Suppliers and
Business Partners (CoCS).
Additionally, we support employees' rights to unionise and
freely form and join organisations of their choice and to en-
gage in collective bargaining, aligned with international hu-
man rights standards, as well as parental leave, remote work-
ing for more flexibility and adequate working hours. Our com-
mitment to these principles is embedded in our CoC, Human
Rights Policy, Parental Leave Policy, Remote Working Guide-
line and Working Hours Policy.
In 2025, we updated our CoC to better reflect current prac-
tices and ways of working. The code will be rolled out in 2026.
The revised CoC strengthens our commitments and provides
clearer guidance for employees. It also introduces new policy
content related to digital and data responsibility. The policies
described above cover all our own employees and other peo-
ple working on our premises and thus impact over 20,000
people. All policies are available to our employees on the in-
tranet and communicated as part of onboardings and the im-
plementation of new internal programmes.
Employees
Impact, risk and opportunity
Type
Description
Fair and good working conditions
Actual
positive
impact
In Arla, we support fair working conditions by providing contractual security
and upholding employees' rights. We promote well-being and high
motivation, creating positive value for our employees.
Inability to recruit or retain skilled
employees
Risk
Competition for skilled employees is intensifying, and if our employer
reputation declines, it may become harder to attract and retain talent,
leading to higher recruitment costs and reliance on premium wages or
consultants.
Potential discrimination or
harassment
Potential
negative
impact
Our business spans many different locations and markets, and we
acknowledge that it poses a risk of discrimination and harassment among
our employees based on gender, nationality or ethnicity, including uneven
gender representation and pay gaps.
Occupational accident or ill health
Potential
negative
impact
A significant portion of our workforce is employed in production,
warehouse or logistics roles, where the risk of occupational accidents or
work-related ill health is higher due to heavy machinery, transport vehicles
and physically demanding tasks.
Human and labour rights outside of
the EU
Potential
negative
impact
We operate in a number of countries outside Europe, where labour rights
are less strict. Thus, our employees in some countries are prone to an
increased risk of e.g. forced labour. It primarily concerns local contractors
and migrant workers engaged through third-party agencies, classified as
non-employees within our own workforce, which increases the risk of
issues like forced labour.
20
19
18
17
16
16
17
18
19
20
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
EMPLOYEES (continued)
ARLA FOODS ANNUAL REPORT 2025
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Through our due diligence, risk assessments and stakeholder
dialogue, we have identified the following salient human
rights issues:
• Right to enjoy just and favourable conditions of work
• Right to adequate standard of living
• Right to health
• Right to non-discrimination and privacy
• Right to not be subject to slavery, servitude, forced or
child labour, or restrictions on freedom of movement
These issues were reviewed in 2025, and as a result the right
to non-discrimination and privacy was included.
Arla's commitment to respecting human rights as well as di-
versity and inclusion is represented in our Code of Conduct,
Human Rights Policy, Working Hour Policy, QEHS Manual,
Recruitment Policy, Anti-Harassment Policy and our Diversity
Policy.
Read more about our policies on page 80.
Actions
'Barometer' – annual employee engagement survey
Our annual global engagement survey 'Barometer' is an im-
portant tool for gathering valuable feedback from employees
and ensuring that Arla remains a great place to work at. In
2025, over 18,000 employees participated in the survey,
achieving a response rate of 88% globally. We assess em-
ployee 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 2025, the index reached 87%, surpas-
sing the average engagement index for companies of our size.
Union collaboration
Our works councils operate at local, national and European
levels, serving as robust platforms for social dialogue on is-
sues related to employee well-being and safety as well as en-
suring 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 all 15,000+ employees in Eu-
rope. This council is the highest forum for collaboration be-
tween employees and Arla. Meeting minutes are published on
our intranet.
We also engage with international industry-specific union rep-
resentatives on topics aligned with our salient human rights.
The work is led by our Human Resource function.
Agency and third-party workers engaged by Arla
Agency and third-party workers operate at Arla production and
logistics sites and are exposed to similar risks as our own em-
ployees, particularly in production and logistics. They are in-
cluded in our health and safety management system and cov-
ered by our behavioural safety programme 'Cornerstones'. We
COMMUNICATION
ON FINDINGS
MONITORING
AND TRACKING
PREVENTIONS AND
MITIGATION PLAN
ASSESSMENTS:
• Strategic business
partners
• Arla-controlled sites
• Allegations/
high-risk issues
HUMAN RIGHTS
COUNTRY BRIEF
HIGH-LEVEL
RISK ASSESSMENT
HUMAN RIGHTS
DUE DILIGENCE
PROCESS
1
6
2
3
5
6
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
EMPLOYEES (continued)
ARLA FOODS ANNUAL REPORT 2025
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also work with manpower agencies to ensure compliance with
our Code of Conduct, including the prohibition of passport re-
tention and the provision of fair employment terms.
Employee development and talent recruitment
We acknowledge the strategic risk of not being able to recruit
or retain skilled employees amid shifting workforce de-
mographics and rising competition for talent. With declining
birth rates and Generation Z projected to comprise 30% of our
workforce by 2030, we took proactive steps to remain an at-
tractive, future-ready employer. Under the Arla Futures um-
brella, we launched initiatives supporting colleagues early in
their career, including a unified career universe, expanded
leadership development for managers and a two-year learning
journey combining formal learning, peer networking and per-
formance conversations.
We also continued supporting apprentices through the Euro-
pean Excellence in Dairy Learning project, spanning nine
countries and benefiting apprentices and students in dairy
technology.
Employee health and well-being
Our employees are crucial to Arla's success, and we are com-
mitted to providing safe and healthy working conditions for
everyone. Therefore, all Arla employees are covered by our in-
ternal accident reporting system.
In 2025, we continued our behavioural safety programme
'Cornerstones' at our production sites. Systematic reporting
enables trend analysis, sharing best practices and identifying
critical areas for improvement. We monitor our efforts, detect
hotspots and intervene early to ensure progress.
Health and safety also remained a priority in our international
business, with Environment, Health and Safety (EHS) reporting
procedures in place and near misses or accidents docu-
mented through Arla's internal system. Health and safety
committees for logistics and production were established,
supported by a dedicated email address for information shar-
ing. These actions aim to reduce potential negative impacts
such as occupational accidents or ill health and mitigate la-
bour rights concerns outside the EU.
Diversity and inclusion
Following Arla's 2024 'Barometer' survey, a key focus in 2025
was addressing unacceptable behaviour in line with our zero-
tolerance approach.
We continued offering workshops on diversity and inclusion
from different perspectives. 'Inclusion starts with I' focused on
the personal perspective – understanding individual biases
and leading oneself before leading others. 'Inclusive culture
starts with US' shifted to the team perspective – creating psy-
chological safety and belonging. These initiatives helped em-
bed inclusion in Arla’s everyday culture. In autumn 2025, we
introduced 'Inclusive Business means sustainable growth', a
global workshop linking inclusion to business performance,
addressing groupthink, unconscious bias and inclusive leader-
ship in practice.
We also uphold fair and equal pay for the same role regardless
of gender, supported by structured salary bands and regular
reviews to maintain balance across job levels and depart-
ments.
Human rights due diligence approach
We apply a risk-based human rights due diligence process to
identify and address the potential and actual impacts of our
business. This includes:
• Conducting human rights impact assessments in high-risk
regions, particularly non-European growth markets
• Performing due diligence prior to entering new strategic
partnerships or when allegations arise
• Maintaining and promoting access to our Ethics Line griev-
ance mechanism, available in 30 languages for employees,
suppliers and other stakeholders.
• In accordance with the guidance for our Ethics Line, we
make sure to provide remediation appropriate to the griev-
ance.
Our due diligence process is aligned with the UNGP and OECD
guidelines and is continuously updated to reflect emerging
risks and international best practices.
Human rights governance is overseen by Arla's EMT and gov-
erned by our human rights experts in the Sustainability Strat-
egy team, who are responsible for implementing our human
rights commitments across relevant business functions in-
cluding Human Resources, Legal, Procurement, Supplier As-
surance and QEHS. We engage with stakeholders such as un-
ions, NGOs and right-holders to ensure transparency and ac-
countability.
Strengthening international human rights
Throughout 2025, we continued to strengthen Arla's human
rights due diligence processes across international opera-
tions. We maintained regular follow-ups on action plans with a
focus on the Middle East and West Africa. During the year, our
business setup in Ghana and Senegal changed, and
production activities ceased. Consequently, our risk profile in
these markets shifted, and we completed the related follow-
up actions by year-end.
In Asia and Africa, we implemented targeted initiatives to ad-
dress salient human rights risks and build capacity within the
dairy value chain. We hosted a human rights workshop with
participants from government, business, academia and NGOs,
resulting in a three-year action plan to strengthen practices in
the dairy sector.
In the Middle East, we strengthened employee rights and well-
being by replacing employer-provided housing in Qatar with
housing allowances to ensure equal employment terms. In
Saudi Arabia, we maintained open dialogue with employees
and promoted our grievance mechanism, Ethics Line, via mul-
tiple channels. Our ongoing engagement with diverse stake-
holders helps prevent discrimination and harassment, rein-
forcing our commitment to respect human rights and create
positive impacts across our global value chain.
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
EMPLOYEES (continued)
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Metrics and targets
Number of employees development
The total number of employees, measured as headcount, de-
creased by 0.6% compared to the previous year. This can be
attributed to outsourcing of transport activities in the UK. FTEs
increased by 0.7% compared to the previous year.
In 2025, we report on the number of non-employees and non-
guaranteed hours for the first time, for which reason no com-
parative figures are provided.
Employee turnover development
Employee turnover reflects the fluctuation within our work-
force. Arla strives for a stable turnover rate, recognising that a
certain level of turnover is necessary for maintaining competi-
tiveness and fostering innovation.
The turnover rate increased to 13.6% compared to 12.1% last
year. Like for the decline in total number of employees and
decrease in UK collective agreement coverage, the increase in
involuntary leavers was caused by the fact that more than 360
FTEs from the UK warehouse Hatfield RDC were transferred to
an external employer during 2025, and these are counted as
involuntary leavers.
Employee headcounts
2025
2024
2023
Number
Women
Men
Total
Total
Total
Denmark
2,884
6,121
9,005
8,896
8,722
United Kingdom
695
2,927
3,622
4,037
3,810
Sweden
1,124
2,603
3,727
3,616
3,554
Germany
435
1,194
1,629
1,635
1,592
Saudi Arabia
71
870
941
934
941
Poland
584
371
955
932
805
North America
214
368
582
559
562
United Arab Emirates
83
383
466
453
441
Netherlands
130
300
430
422
422
Finland
192
228
420
426
374
Bahrain
51
308
359
330
330
Other countries¹
349
1,017
1,366
1,392
1,376
Total headcount
6,812
16,690
23,502
23,632
22,929
Total FTEs
22,052
21,895
21,307
¹ Other countries include, among others, Bangladesh, Argentina, Kuwait, Iraq, Oman, China and Nigeria.
Number of employees by contract type
2025
2024
2023
Number
Women
Men
Total
Total
Total
Permanent employees
6,019
15,595
21,614
21,833
21,243
Temporary employees
793
1,095
1,888
1,799
1,686
Full-time employees
5,567
14,783
20,350
20,632
20,088
Part-time employees
1,245
1,907
3,152
3,000
2,841
Non-employees
Number
2025
2024
2023
1,874
Non-guaranteed hours employees
Number
2025
2024
2023
1,296
Employee turnover
2025
2024
2023
Number of voluntary leavers
1,712
1,797
1,868
Number of involuntary leavers
1,305
846
901
Total employee turnover
3,017
2,643
2,769
Voluntary turnover share (%)
7.7%
8.2%
8.7%
Involuntary turnover share (%)
5.9%
3.9%
4.4%
Total employee turnover share (%)
13.6%
12.1%
13.1%
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
EMPLOYEES (continued)
ARLA FOODS ANNUAL REPORT 2025
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Employees' health and safety development
From 2025, we report new health and safety metrics aligned
with ESRS, alongside a lost-time accidents rate. Following the
rollout of our internal accident reporting system to all offices
last year, the system now covers all production and logistics
sites and offices. Consequently, only the 2025 health and
safety metrics are presented, as prior data is not comparable.
We are committed to reducing the number of workplace acci-
dents. Our target is zero lost-time accidents per million work-
ing hours each year. In 2025, we recorded 117 lost-time acci-
dents, resulting in a lost-time accident rate of 2.9. We have
seen the greatest improvements in lost-time accidents within
Danish logistics, an area that previously faced challenges. This
progress reflects special attention and ambitious reduction
targets. Production has also shown a notable decrease in lost-
time accidents.
Overall, improvements across Arla have been driven by the
rollout of clear targets and an updated safety programme,
supported by data-driven processes, additional tools and en-
hanced practices across all production sites and warehouses.
Gender diversity development
We aim to have at least 40% of the underrepresented gender
in management positions from director level and upwards by
2030. In 2025, this share increased by 1.4 percentage points
to 32.4%.
Collective agreement development
At the end of 2025, 59.8% of our workforce was covered by
collective agreements. All of our employees in the European
Economic Area are covered by employee representatives
through the European Works Council. Outside of the Euro-
pean 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 United Kingdom, the share of the workforce covered
decreased by 5.9% percentage points to 50.1%. This decrease
was caused by a transfer of more than 360 full-time equiva-
lents (FTEs) from the UK warehouse Hatfield RDC to an exter-
nal employer during 2025.
Employees covered by collective agreements per country
(EEA) share
%
2025
2024
2023
Denmark
73.3%
73.4%
United King-
dom
50.1%
55.5%
Sweden
100.0%
100.0%
Germany
72.8%
72.8%
Poland
0.0%
0.0%
Netherlands
90.5%
91.2%
Finland
80.2%
81.2%
Gender diversity for all employees
2025
2024
2023
Number of men
16,690
16,848
16,380
Number of women
6,812
6,784
6,549
Total share of women
29.0%
28.7%
28.6%
Gender diversity in management
2025
2024
2023
Number of men
248
253
260
Number of women
119
113
108
Share of women at or above director level (%)
32.4%
30.9%
29.3%
Gender diversity in top-management
2025
2024
2023
Number of men
6
7
7
Number of women
2
1
1
Share of women in the Executive Management Team (EMT) (%)
25.0%
12.5%
12.5%
Health and safety metrics
2025
Employees covered by health and safety manage-
ment system (%)
100%
Lost-time accidents
117
Lost time accidents rate
2.9
Recordable accidents
362
Recordable accidents rate
8.8
Days lost to work-related injuries and accidents
2,163
Fatalities
0
Distribution of employees by age group
2025
2024
2023
<30
Number
4,970
4,945
4,473
Share
21.1%
20.9%
19.5%
30-50
Number
11,557
11,619
11,753
Share
49.2%
49.2%
51.3%
>50
Number
6,975
7,068
6,703
Share
29.7%
29.9%
29.2%
Total
Number
23,502
23,632
22,929
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
EMPLOYEES (continued)
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Grievances on Ethics Line and human rights
In 2025, 117 reports were submitted to Ethics Line. Please
see the Grievance Policy for more information about Ethics
Line and the process of handling grievances.
In 2025, we did not receive any reports of severe human
rights incidents in Arla or in our value chain.
Gender pay gap and total remuneration development
The gender pay ratio was -3.1% in 2025. The gender pay ratio
is explained by the fact that male employees are more fre-
quently represented in frontline roles, while female employ-
ees are more frequently represented in office-based roles,
which typically are compensated at different rates.
§ Accounting policies
Employees
The number of employees by country, gender, contract type
and age distribution is based on the headcount as at 31 De-
cember for 2025 and all historical years. 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 em-
ployed by Arla is counted as 1.0 in the headcount numbers.
Additionally, we report on total full-time employees (FTE). FTE
is 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 average FTE figure is calculated as the average
value for each legal entity throughout the year. These aver-
ages are derived from quarterly measurements taken at the
end of each quarter.
The headcount and FTE figure include all employees, regard-
less of whether they are on permanent or temporary con-
tracts. However, employees on long-term leave, such as ma-
ternity leave or long-term sick leave, are excluded from the
calculation. This ensures that the figure accurately represents
the active workforce.
Employee data is managed centrally in compliance with the
General Data Protection Regulation (GDPR) guidelines. In our
current system, employees have the option to choose from
the gender categories man, woman or other. To safeguard an-
onymity in cases where category sizes are very small, and to
avoid skewing our gender KPIs, responses listed as 'other' gen-
der were grouped with the men category.
The FTE figure is reported internally on a monthly basis. To en-
hance the accuracy and reliability of the data, each legal entity
validates the information on a quarterly basis.
Non-employees
Non-employees include agency workers and IT consultants,
which are the most common categories at Arla. Prior to 2025,
only agency workers were in scope. Most non-employees are
agency workers and are reported as FTEs as of 31 December
2025. IT consultants represent a smaller share; only head-
count data are available and have been used.
Employee turnover
Employee turnover is categorised as either voluntary turnover
(when an employee chooses to leave the company) or invol-
untary 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 em-
ployee turnover, we divide the total number of employees
who leave during a specific period by the total number of em-
ployees in that same period. It is important to note that this
calculation is based on the headcount of employees and not
on FTEs. Turnover is calculated for all employees on perma-
nent 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 in-
stance, some tenured employees may receive remuneration
for a few months after their dismissal, and their departure
would be considered in the turnover calculation after this
period.
Grievances on Ethics Line
Number
2025
2024
2023
Reports related to unacceptable behaviour (including harassment and discrimination)
46
44
36
Reports related to other topics
71
56
60
Total reports submitted
117
100
96
Fines for human rights violations and harassment
EUR million
2025
2024
2023
Human rights
-
-
-
Harassment
-
-
-
Total
-
-
-
Gender pay gap
2025
Gender pay gap¹
-3.1%
¹ Since 2025, Arla’s gender pay metric covers all employees. Historically, figures
covered only office-based staff and are not comparable, so no historical compari-
son is provided. In 2024 (under the old scope), Arla reported a gender pay gap of
0% (pay ratio of 1.00).
Total remuneration ratio
2025
Total remuneration ratio
69
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
EMPLOYEES (continued)
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Health and safety metrics
All safety metrics cover production sites, logistics sites, ware-
houses and offices under Arla's control. All workers, i.e. Arla
employees, external agency workers engaged in Arla-related
work and contractors, must promptly report any workplace in-
jury or illness to their team leader or manager, regardless of
severity. Accidents are reported via our internal tool using mo-
bile devices within 24 hours of occurrence.
Our reporting covers both own employees and non-employ-
ees. All rates are calculated per one million working hours. We
collect working hours for employees and non-employees,
while visitors and value-chain workers are excluded.
A lost-time accident is a work-related injury that results in one
or more scheduled days or shifts lost. An accident is classified
as a lost-time accident when the employee cannot perform
regular duties, requires time off for recovery or is assigned
modified duties. This metric includes incidents across all pro-
duction and logistic sites under Arla's control. Until 2025, data
covered production, logistics and head offices; from 2025 on-
wards, the scope expanded to all global offices, providing full
coverage. Recordable accidents include fatalities, lost-time
accidents, restricted work accidents (cases that limit full per-
formance of regular duties after the injury) and medical treat-
ment cases.
Fatalities reporting covers fatalities from work-related injuries
for our own workforce and work-related ill health among
employees.
Uncertainties and limitations
Accidents involving agency workers and contractors are rec-
orded in the reporting system but may have different consid-
erations in terms of inclusion in the lost-time accident rate
and total recordable accident rate calculations.
Days lost due to work-related injuries and accidents are not
recorded until the employee returns to work. This means that
days lost due to incidents occurring late in the year are regis-
tered in the following year.
Gender diversity
Gender diversity for all employees 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 Decem-
ber for 2025 and all historical years. Gender diversity in man-
agement provides insight into the representation of women in
management positions within the organisation.
Arla's gender diversity in management is determined by meas-
uring the proportion of women in director positions or above.
Gender diversity in top management is quantified by the pro-
portion of women in the EMT. This measurement provides in-
sight into the representation of women in executive manage-
ment positions within the organisation.
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 the table displaying
the share of employees covered by collective agreements per
country within the European Economic Area (EEA), we have in-
cluded the three countries with significant employment, de-
fined as representing at least 10% of the total number of em-
ployees. Additionally, four other European countries are in-
cluded, as they are also featured in the employee headcount
breakdown.
The collective agreement coverage is calculated based on
headcount as at 31 December for each year.
Ethics and 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, harass-
ment, food safety, environmental issues and intellectual prop-
erty disclosure. We report externally the total amount of re-
ports received during the year separately for unacceptable
behaviour, including harassment and discrimination, fraud and
bribery allegations and other grievances. See the Grievance
Policy for more information about Ethics Line and the process
of handling grievances.
Ethics Line reports include reports related to fraud and bribery
allegations reported in the corruption and bribery section (see
page 76).
Uncertainties and estimates
It is possible that some work-related discrimination and har-
assment incidents are reported directly to HR and not cap-
tured by the Ethics Line. The significant increase in reports be-
tween 2022 and 2023 is attributed to enhanced communica-
tion and a general rise in awareness about grievance
reporting.
Gender pay gap and total remuneration ratio
The gender pay gap is calculated as the average gross hourly
pay of all male employees subtracted by the average gross
hourly pay of all female employees divided by the average
gross hourly pay of all male employees. Hierarchy variances
are not considered in the metric.
As of 2025, Arla is including all employees in the gender pay
calculation. For historical years, only office-based employees
were covered, thus the result is no longer comparable with
the new calculation and no historical comparison is made
available for the metric.
In 2025, we report on total remuneration ratio for the first
time. The total remuneration ratio is calculated as the ratio
between the median total remuneration for employees ex-
cluding the highest paid individual as a ratio of the highest
paid individuals total remuneration.
Both remuneration metrics include contractual base salaries,
pensions, cash allowances and other benefits based on salary
data end of year.
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
WORKERS IN THE VALUE CHAIN (continued)
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HOW OUR IMPACTS, RISKS
AND OPPORTUNITIES LINK
TO OUR VALUE CHAIN
SUPPLIERS
FARM
Material impacts, risks and opportunities
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.
Strategy and policies
Arla is committed to respecting human rights for all workers in
our value chain. This includes employees of our farmer own-
ers and workers employed by suppliers and business partners.
Our approach is guided by our Human Rights Policy and Code
of Conduct for Suppliers and Business Partners (CoCS) as well
as international standards such as the UN Guiding Principles
on Business and Human Rights (UNGP) and the Organisation
for Economic Cooperation and Development (OECD) Guide-
lines. We aim to prevent and mitigate risks related to labour
rights, health and safety, and modern slavery, while promoting
positive impacts through collaboration and capacity building.
All Arla farmer owners are obliged to adhere to our coopera-
tive'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 requirements
define a framework for how we ensure a fair and safe work-
place 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 cooperative'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 production, 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 spe-
cifically obliged to comply with the provisions of the Modern
Slavery Act.
Workers in the value chain
Impact, risk and opportunity
Type
Description
Potential inadequate working
conditions
Potential
negative
impact
We are aware that some entities in our value chain use migrant and
seasonal workers. Especially in less regulated regions, these workers are
prone to a larger risk of facing poor working conditions and lack of secure
employment protection.
Occupational accident or ill health
Potential
negative
impact
A large share of workers in our value chain work within agriculture,
manufacturing and distribution, which tend to present higher health and
safety risks compared to other industries. Migrant and seasonal workers
are particularly vulnerable to these risks due to language barriers and
limited training.
Potential violence or harassment
Potential
negative
impact
In Arla, we are part of a global value chain, and some entities in our value
chain operate in regions, where there is a risk of harassment,
discrimination and even violence. Migrant and seasonal workers in less
regulated regions are particularly vulnerable to these risks. Some workers
in the upstream value chain may also face violations of local working time
laws.
Human and labour rights outside of
the EU
Potential
negative
impact
As part of a value chain with global sourcing – even if unlikely – a risk of
child and forced labour in the upstream value chain exists, especially
outside the EU.
24
23
22
21
22
21
21
22
23
24
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
WORKERS IN THE VALUE CHAIN (continued)
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Actions
Due diligence approach
As part of our human rights due diligence process to identify
and address potential and actual impacts, as described on
page 65, for workers in our value chain this process includes
us engaging with suppliers and their workers during audits
and production and logistics site visits to assess working con-
ditions and awareness of grievance mechanisms.
Ensuring human rights and ethical standards
in our value chain
We require compliance with our Code of Conduct for Suppliers
and Business Partners (CoCS), which covers a wide range of
environmental, social, ethical and human rights standards.
Signing the CoCS is a key criterion in our supplier selection
process and to become a preferred supplier. By signing our
purchasing agreements, suppliers commit to our commercial
and legal terms, which also include our sustainability goals,
measures to reduce environmental impact, as well as IT secu-
rity requirements.
Our global Purchasing Policy outlines the standards essential
for engaging with suppliers. Employees are advised to use pre-
ferred suppliers and submit written purchase orders through
our systems to safeguard our company and brands, while also
reducing risks for our company and maximising process effi-
ciency. Buying responsibly helps to prevent fraud, drive legal
compliance and meet food safety standards.
During 2025, we ran a 'Responsible Purchasing' campaign for
our employees addressing fraud prevention by ensuring that
payment of invoices is made only to verified suppliers and ver-
ified bank accounts, reducing the risk of fraud. The campaign
also reinforced legal compliance, as Arla's approved suppliers
have agreed to follow legal, environmental and human rights
requirements, and highlighted quality assurance by promot-
ing the use of preferred suppliers to ensure food safety stand-
ards are met and that we receive high-quality products and
services.
Through the work with our CoCS, we promote the possibility
for suppliers and their workers to report any concerns about
misconduct to our grievance and whistleblower service Arla
Ethics Line. Read more about it on page 69.
Agricultural labour is often seasonal and labour-intensive, cre-
ating inherent health and safety risks and reliance on migrant
workers. We emphasise the importance of fair working condi-
tions on farms and engage with farmer owners to raise aware-
ness of labour rights and responsible employment practices.
Arla is a member of AIM-Progress, which is a global forum of
FMCG companies and suppliers collaborating on reward .
The mandatory components of Arlagården® 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.
Metrics and targets
Supplier audits
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 assess-
ments.
Each year, we conduct supplier audits based on risk evalua-
tions. In 2025, we performed 71 physical and virtual audits,
compared to 97 in the previous year. The number of supplier
audits varies from year to year, since they are applied to new
suppliers, new processes, new lines and contract manufactur-
ers as per schedule, or if performance issues, claims or other
concerns arise.
The audits are coordinated by our Supplier Assurance function
to ensure alignment with our standards. 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.
GOVERNANCE
Animal welfare
Political engagement,
corruption and bribery
Focus on animal welfare
Healthy, well looked after cows are essential to strong herd performance
and high milk quality. The farming school in Havredal, Denmark, supplies
organic milk to Arla. It holds the three heart level under the Better Animal
Welfare label (Bedre Dyrevelfærd), a governmental scheme in Denmark that
assesses animal welfare across three levels, with three hearts representing
the highest standard.
In picture: Havredal Vocational School, Viborg, Denmark.
MANAGEMENT REVIEW
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3
2
ARLA FOODS ANNUAL REPORT 2025
73
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
ANIMAL WELFARE (continued)
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HOW OUR IMPACTS, RISKS
AND OPPORTUNITIES LINK
TO OUR VALUE CHAIN
FARM
CONSUMERS
Material impacts, risks and opportunities
Milk is Arla's core raw material, so animal welfare is central to
our business. Healthy, well-cared-for cows support strong
herd performance, milk quality and our reputation. Our farmer
owners are committed to high standards, and animal welfare
remains a key focus as expectations from consumers and reg-
ulators continue to grow.
Strategy and policies
Animal welfare is a priority for Arla, reflecting our ethical com-
mitment and growing expectations from consumers, regula-
tors and stakeholders. Arla recognises cattle as sentient be-
ings capable of experiencing pain and distress, and we take re-
sponsibility for ensuring their needs are met across farms. To
support this, Arla has a dedicated global team focused on de-
fining robust welfare standards and driving continuous im-
provement in collaboration with our farmer owners. Our
current strategic focus areas include responsible antibiotic
use, comfortable housing, cow-calf connection, reducing
close confinement and mitigating climate-related impacts on
farms. These efforts help reduce risks related to herd health,
milk quality and public trust, while also creating opportunities
to strengthen our brand, meet evolving market demands and
lead in sustainable dairy production. By investing in high wel-
fare standards, Arla aims to future-proof its business and con-
tribute positively to the dairy sector's development.
Arla prioritises training and development for employees and
external auditors conducting animal welfare audits. 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.
The Arlagården® programme, the Code of Conduct (CoC) and
our Animal Welfare Statement underline our commitment to
animal welfare. The Arlagården® farm quality assurance pro-
gramme to support animal welfare is regularly updated to re-
flect changing expectations and farm conditions. Arla farmer
owners must submit regular herd health reports and undergo
external animal welfare audits at least every three years, with
extra audits if issues arise. The programme uses four science-
based welfare indicators and aims for no major findings, con-
tinually strengthening its requirements. New farmer owners
are informed of these standards upon joining.
Read more about our policies on page 80.
Animal welfare
Impact, risk and opportunity
Type
Description
Inadequate management of animal
welfare
Potential
negative
impact
As a dairy producer, our production relies heavily on the welfare of dairy
cows. However, we do acknowledge that a risk of poor housing conditions,
improper handling practices and inadequate management exists, which
could negatively affect the physical and psychological well-being of dairy
cows, and in the worst case lead to early death of cows.
New regulation on stable sizes
Risk
Future regulations on the housing of cows will require upgrades for many
Arla farmer owners. While these changes may lead to increased costs and
adjustments in operations, they also present an opportunity to modernise
farming practices. If investments are delayed, however, there could be
some impact on productivity and yields. Taken together with other
upcoming regulations, these changes may shape the long-term future of
dairy farming.
Consumers shifting away from dairy
driven by animal welfare concerns
Risk
Consumers may turn away from dairy products due to negative publicity or
concerns about animal welfare, which would impact sales. Growing
consumer concern for animal welfare is influencing farming, policy and
ethics.
Loss of milk due to animal diseases
Risk
The spread of animal diseases, such as the bluetongue and foot and mouth
diseases, among our farmer owners could lead to higher mortality and
lower milk yields, as seen previously in some regions. There is a risk of
similar outbreaks affecting other key markets, potentially reducing milk
production.
28
26
25
27
25
26
27
28
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
ANIMAL WELFARE (continued)
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Actions
FarmAhead™ Check and Incentive
Animal robustness, which Arla defines as an animal's health
and well-being, is a key focus in Arla's FarmAhead™ Check and
Incentive programmes. Payments to farmers for improving
animal robustness remained stable, totalling EUR 9,6 million.
Many Arla cows now wear monitoring devices, enabling early
detection of health issues and supporting better animal wel-
fare.
Factsheets on cow diseases
In order to stay ahead of the risk that infectious cow diseases
pose to our business, we provide our farmers with factsheets
on the cow diseases that are most relevant to Arla. They con-
tain information on the transmission, clinical signs in cattle,
differential diagnosis, economic impact, prevention and con-
trol, vaccination, and how to report suspected cases. Cur-
rently, the sheets cover bluetongue in dairy cattle, epizootic
haemorrhagic disease, avian influenza, foot and mouth dis-
ease, lumpy skin disease and Q fever. The sheets are available
for all farmers on the Arla Farmers portal and will be expanded
further.
Update of our Animal Welfare Statement
In 2025, we updated our Animal Welfare Statement that pub-
licly describes our commitment on the topic. The commit-
ments added new criteria such as ending long distance animal
transport and prohibiting growth promoting substances.
Metrics and targets
Animal welfare indicators
Four science-based indicators are used to assess the overall
well-being of our farmer owners' herds:
• Cleanliness: Clean cows have a lower risk of being infected
by disease.
• Mobility: Cows walk without any problems, and have no pain
in their legs or hooves.
• Good body condition: Fit cows have the perfect amount of
fat reserves on their bodies; not too little and not too much.
• No injuries: An injury on a cow can be a lump, bump, ulcer or
sore.
We aim for 100% share of farmer owners in all categories with
no major animal welfare issues.
The number of audited farmers with no major issues was
largely unchanged compared to last year, however with a
small decrease in relation to injuries. We aim for no major find-
ings. Even if we are satisfied with our results, we continuously
assess how to improve animal welfare and also ensure that we
identify potential issues.
In 2025, the percentage of audited farms was 35%, corre-
sponding to 2,540 audited farmer owners.
Somatic cell count
Animal welfare KPIs include somatic cell count (SCC), which is
a good indicator of disease and stress in cows.
The average SCC across Arla fell to 175 thousand cells/ml in
2025 from 183 thousand, mainly due to delayed effects of the
2023-2024 bluetongue outbreak. Fertility issues and delayed
pregnancies led to older cows being culled without immedi-
ate replacement, creating a younger milking herd in 2025.
Younger cows produce milk with a lower SCC, driving this im-
provement. The effect is expected to fade as the herd ages.
§ Accounting policies
Somatic cell count (average)
Somatic cells in milk are primarily white blood cells. An ele-
vated level of somatic cells can indicate inflammation (masti-
tis) 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 re-
ported to safeguard milk quality. The figure reported is a
weighted average of Arla's owner milk intake in a given year,
excluding contract milk and milk swaps. An exception is con-
tract milk in the UK, which is also taken into consideration.
The SCC is received from several laboratories across owner
countries and is measured in thousand cells per millilitre. A
SCC above 300 thousand reduces the milk price to the farmer
owner, while a supplement is given for a SCC below 300 thou-
sand.
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® cri-
teria. Audits evaluate four animal-based indicators: body con-
dition, 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 ma-
jor 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 is-
sues 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 com-
parisons may vary since different farms are audited each year.
Only Arla owner farms are included; contract milk or milk from
third-party farms delivering to Arla production sites under milk
swaps are not covered by animal welfare indicators.
Animal welfare indicators
2025
2024
2023
Somatic cell count (thousand cells/ml)
175
183
184
Share of audited farmers with no major cleanliness issues (%)
99.2%
99.1%
99.1%
Share of audited farmers with no major mobility issues (%)
99.8%
99.9%
99.8%
Share of audited farmers with no major injury issues (%)
98.7%
99.6%
99.7%
Share of audited farmers with no major issues related to body condition (%)
99.7%
99.7%
99.9%
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
POLITICAL ENGAGEMENT, CORRUPTION AND BRIBERY (continued)
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HOW OUR IMPACTS, RISKS
AND OPPORTUNITIES LINK
TO OUR VALUE CHAIN
OWN OPERATIONS
Material impacts, risks and opportunities
Maintaining integrity in all business dealings is fundamental to
Arla’s operations. We have zero tolerance for corruption, brib-
ery and fraud, as these practices undermine trust, damage
reputations and can lead to severe legal and financial conse-
quences.
Our ability to influence legislation and collaborate with policy-
makers plays a vital role in supporting the sustainable transi-
tion of the dairy sector. However, this also exposes us to repu-
tational risks, such as accusations of unethical lobbying or
misalignment with climate goals. Managing these dynamics
responsibly is essential to protect trust and create long-term
value for our farmer owners and stakeholders.
Strategy and policies
As a leading dairy cooperative, Arla's political engagement is
essential to driving meaningful change and shaping legisla-
tion that supports the sustainable transition of the dairy sec-
tor. Our involvement ensures representation on issues that di-
rectly affect our farmer owners, enhances collaboration and
helps mitigate risks. We do not make political contributions –
whether direct or indirect, monetary or in-kind – to politicians,
parties, campaigns or fundraising events.
Our Responsible Political Engagement Policy ensures that all
activities are conducted transparently, ethically and in compli-
ance with relevant regulations. It aligns with Arla's Code of
Conduct (CoC), the UN Global Compact principles (see page
79), and the EU Transparency Register's Code of Conduct.
We maintain a strong stance against breaches of our CoC or
applicable regulations. Employees and stakeholders are en-
couraged to report concerns or misconduct through our con-
fidential whistleblower system, Ethics Line, available in 30
languages on the Arla website. Reports can also be made to
local HR, Risk and Compliance or Legal functions. The Ethics
Line Committee, which oversees this grievance channel, re-
ports directly to the CEO.
To prevent fraud, we operate a robust system of internal con-
trols, regularly assessed for effectiveness. We pay particular
attention to higher-risk regions, including the Middle East, Ni-
geria, Central and Southern Africa, Bangladesh, Indonesia and
South America, as well as business areas such as sales, mar-
keting and procurement. These are also monitored closely to
uphold human rights and labour rights, supported by our hu-
man rights due diligence process (see page 79).
All relevant policies are clearly communicated and accessible.
CoC, available in 12 languages, our Anti-bribery Policy and
Lobbying Policy as well as the Reward Policy set clear respon-
sibilities for preventing misconduct across all operations.
These policies apply to everyone working for or on behalf of
Arla and are governed by the EMT and the Legal function.
Regular training and onboarding integration ensure that our
corporate values are embedded throughout the organisation.
Internally, policies are managed via a dedicated portal on our
intranet.
Read more about our policies on page 80.
Political engagement, corruption and bribery
Impact, risk and opportunity
Type
Description
Accusations of unethical conduct
or lobbying by consumers
Risk
There is a risk of accusations of unethical conduct or lobbying related to
climate risks and Arla as a dairy company, which could impact sales.
Non-compliance with corruption
and bribery regulation
Risk
While we as part of the dairy industry have a lower inherent risk of corruption
and bribery due to strong regulation and fewer high-value contracts, we
remain vigilant, particularly as anti-bribery regulations strengthen in the UK
and the EU. If occurring, corruption and bribery can cause legal costs, fines,
lost business and reputational damage, especially affecting customer trust.
30
29
29
30
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
POLITICAL ENGAGEMENT, CORRUPTION AND BRIBERY (continued)
ARLA FOODS ANNUAL REPORT 2025
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Actions
Political engagement
In 2025, our external political engagement continued to sup-
port us in delivering a healthy and sustainable food system.
This included the Danish Green Tripartite Agreement, the
Swedish and UK national food strategies, and regenerative
and carbon farming. We also worked with NGOs and dairy in-
dustry partners on enhancing biodiversity and promoting a
healthy, sustainable diet. Our engagement is aligned with our
risk and opportunity management and directed by our Fu-
ture26 strategy, focusing on delivering on our climate, health
and sustainability ambitions.
Corruption and bribery
To mitigate the risk of non-compliance with corruption and
bribery regulations, Arla has taken a series of coordinated ac-
tions across markets and functions. In the UK, for the second
year in a row, a comprehensive training session was held, cov-
ering over 100 employees, including new starters and col-
leagues from our newly integrated production site AFI Felin-
fach.
At a broader level, updated anti-bribery and corruption poli-
cies were circulated by market heads during the summer,
forming part of a structured short, medium and long-term
compliance strategy. A working group has been established to
develop a proposal for mandatory training, tailored to differ-
ent categories of employees based on risk exposure and role
relevance.
An anti-corruption and bribery awareness campaign targeting
people managers took place at the end of the year. While par-
ticipation was voluntary, the campaign aimed to strengthen
awareness and reinforce a culture of integrity. Targeted
trainings have also been conducted in several international
markets.
We also reviewed and updated key governance documents,
including the Code of Conduct (read more on the update on
page 64), the anti-bribery policy, and guidelines on gifts and
hospitality. These resources are now consolidated on a dedi-
cated SharePoint site, Arla's internal platform for document
management and collaboration, ensuring easy access for em-
ployees and promoting consistent understanding across the
organisation.
Ethics Line reports related to fraud and bribery allegations are
included in total Ethics Line reports in the Employees section
(see page 69).
Metrics and targets
Development of corruption and bribery
In 2025, we received no convictions for violations of anti-cor-
ruption or anti-bribery laws. See page 69 for the number of re-
ports submitted to Ethics Line. The responsibility of anti-cor-
ruption and bribery investigations lies with our Legal function,
which has local coverage of all markets.
Corruption and bribery
2025
2024
2023
Ethics Line reports related to fraud and bribery allegations
29
23
29
Number of convictions for corruption and bribery laws
-
-
-
Fines for corruption and bribery in EUR million¹
-
-
-
¹ Arla Foods Ingredients Brazil has been investigated for purchasing confidential foreign trade data. We cooperated fully with authorities and expect a non-material
leniency fee, and have planned for corrective actions to strengthen local controls.
SUSTAINABILITY
APPENDIX
Whey to Value project
AFI partnered with the Global Alliance for Improved Nutrition (GAIN)
Pakistan, local dairies and other stakeholders on the 'Whey to Value' project.
This initiative converts discarded whey into nutritious drinks and animal
feed, aiming to reduce the environmental footprint, promote circularity and
improve nutrition for vulnerable groups.
In picture: A girl in Pakistan tasted the whey-based products.
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78
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
OTHER DISCLOSURES (continued)
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Sustainability due diligence
The following table shows where to find information about our
due diligence process within the sustainability statements.
For us, due diligence means identifying, assessing and resolv-
ing both actual and potential social and environmental im-
pacts associated with business operations, value chain and in-
vestments. Our primary goal is to protect and uphold human
rights, labour rights and the environment. This involves setting
policies and targets, performing risk assessments and thor-
ough evaluations, taking appropriate actions to prevent and
manage negative impacts and offering effective remedies
when needed.
You can learn more about the key aspects of our due dili-
gence process on the pages listed in the table.
UN Global Compact
In early 2008, Arla signed up to the Global Compact, a UN initi-
ative to promote ethical business practices. As a signatory, we
are committed to observing the Global Compact's 10 funda-
mental 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.
Eliminate all forms of forced and compulsory
labour
5.
The effective abolition of child labour
6.
The elimination of discrimination in respect of employ-
ment and occupation
Environment
7.
Support a precautionary approach to environmental chal-
lenges
8.
Undertake initiatives to promote greater environmental
responsibility
9.
Encourage the development and diffusion of environ-
mentally friendly technologies
Anti-corruption
10. Work against corruption in all its forms, including extor-
tion and bribery
Since 2008, Arla has been a participant of the Global Com-
pact'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 cli-
mate change. In 2010, Arla's CEO signed a CEO Statement of
Support for the Women's Empowerment Principles, an initia-
tive from the Global Compact and the UN Development Fund
for Women (UNIFEM).
Read more about the Global Compact
and its principles at www.unglobalcom-
pact.org and more about Arla's Code of
Conduct at arla.com.
Other disclosures
Core elements of due diligence
Section in sustainability statements
Pages
a
Embedding due diligence in govern-
ance, strategy and business model
Business model
Sustainability strategy
Employees
15
35
64-65
b
Engaging with affected stakeholders
in all key steps of the due diligence
Double materiality assessment - Methodology
38
c
Identifying and assessing adverse
impacts
Double materiality assessment
Impact, risk and opportunity tables for climate, biodiversity, circular, consumers and end-users, employees, workers in the value chain, animal welfare and politi-
cal engagement, corruption and bribery
36-38
41, 52, 57, 62, 64, 71,
74, 76
d
Taking actions to address adverse
impacts
Actions for climate, biodiversity, circular, consumers and end-users, employees, workers in the value chain, animal welfare and political engagement, corruption
and bribery
42, 53, 58, 62, 65, 72,
75, 77
e
Tracking the effectiveness of these
efforts and communicating
Metrics and targets for climate, biodiversity, circular, consumers and end-users, employees, workers in the value chain, animal welfare and political engage-
ment, corruption and bribery
44-47, 54-55, 58-59,
63, 67-69, 72, 75, 77
2025 in focus
About Arla
Performance review
Sustainability statements
Our governance
OTHER DISCLOSURES (continued)
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Policy
Description
Pages
Animal Welfare Statement
Outlines Arla’s approach to animal welfare using the Five Domains framework. Includes commitments on housing, antibiotic use, cow-calf connection, and climate impact. Compliance is checked through Arlagården® audits and farmer training.
74, 75
Anti-bribery Policy
Establishes zero-tolerance for bribery and corruption. Applies to all employees and third parties globally. Covers definitions, prohibited practices, gifts & hospitality rules, charitable donations, reporting obligations, and disciplinary actions.
76, 77
Anti-harassment Policy
Ensures a workplace free from harassment, bullying, and discrimination. Defines harassment types and outlines grievance process, responsibilities, confidentiality, training, and disciplinary measures.
65
Code of Conduct
Arla’s overarching ethical framework covering business principles, food safety, environmental care, animal welfare, workplace standards, human rights, and community relations. Aligns with UN Global Compact and OECD guidelines.
62, 64, 65,
66, 70, 74,
76, 77
Code of Conduct for Suppliers and
Business Partners
Sets expectations for suppliers regarding compliance with laws, human rights, labour standards, anti-bribery, health and safety, environment, and grievance mechanisms. Requires adherence to Arla’s sustainability and ethical standards.
53, 54, 64,
71, 72
Diversity Policy
Promotes diversity and inclusion across Arla. Defines diversity broadly and sets team composition targets. Ensures unbiased recruitment, equal pay and inclusive culture, and includes monitoring and reporting.
65
Environmental Policy
Covers Arla's commitment to reducing environmental impact and combating climate change. Focus areas include climate change, resource efficiency, waste reduction, biodiversity, water stewardship, and sustainable sourcing.
41, 53, 56
General Membership Terms for Arla
Foods amba
Outlines the general membership terms for Arla Foods amba, governing the relationship between the cooperative and its members. It covers rules for joining and resigning, milk delivery and quality standards, payment principles, retention of capital, data
protection, and dispute resolution. Members must comply with cooperative policies, quality programmes, and legal obligations while participating in its democratic governance.
71
Grievance Policy
Framework for reporting concerns including fraud, bribery, harassment, food safety, and environmental issues. Applies to employees and external stakeholders. Details reporting channels, investigation process, confidentiality, and protection against retaliation. 69, 70
Human Rights Policy
Covers Arla's commitment to respecting human rights across operations and supply chain. Aligns with UN and OECD guidelines. Covers due diligence, remediation and grievance mechanisms, and prohibits child labour, forced labour, and human trafficking.
64, 65, 70,
71, 72
Lobbying Policy
Defines principles for lobbying and stakeholder engagement. Aligns with Arla’s values and international standards. Prohibits political contributions and bribery. Sets governance and monitoring structure.
76
Micronutrient Fortification Policy
Guidelines for fortifying products with vitamins and minerals. Based on WHO guidance. Requires justification, adherence to nutritional standards, and safe fortification levels. Applies to all Arla brands except infant and medical products.
62
Parental Leave Policy
Establishes global minimum parental leave: 14 weeks paid for primary caregiver, 2 weeks for secondary caregiver, plus unpaid leave options. Includes employment protection, breastfeeding support, and flexible work arrangements.
64
Quality and Product Safety Policy
Ensures safe, high-quality products across operations. Requires HACCP principles, GFSI certification, risk assessments, traceability, and compliance. Emphasises continuous improvement and quality culture.
62
Recruitment Policy
Sets global standards for hiring processes. Covers planning, sourcing, screening, interviews, assessments, onboarding, and equal opportunities. Promotes internal mobility and compliance with anti-discrimination laws.
65
Remote Working Guideline
Principles for remote work emphasizing flexibility and balance. Covers responsibilities, compliance with local legislation, IT support, and health considerations. Remote work allowed only within country of employment.
64
Responsible Political Engagement
Policy
Principles for engaging with political stakeholders transparently and ethically. Aligns with UN and EU standards. Prohibits bribery and political contributions. Emphasises integrity and compliance.
76
Responsible Sourcing Policy for Fibre
Covers Arla's commitment to responsible sourcing of fibre materials. No deforestation or conversion by 2025. Requires certification, traceability, and human rights compliance. Applies to packaging, energy, and other fibre uses.
53, 55
Responsible Sourcing Policy for Palm
Covers Arla's commitment to responsible palm oil sourcing. No deforestation or conversion by 2025 (2028 for cattle feed). Requires certification, traceability, human rights compliance, monitoring, and reporting.
53, 55
Responsible Sourcing Policy for Soy
Covers Arla's commitment to responsible soy sourcing. No deforestation or conversion by 2025. Prefers certified sources. Applies to feed and ingredients. Includes monitoring and reporting.
53, 55
Reward Policy
Defines global approach to remuneration and benefits. Covers salary, variable pay, allowances, pensions, and other benefits. Ensures fairness, market alignment, and compliance. Includes governance for reviews and promotions.
76
Working Hours Policy
Establishes global standards for working hours. Limits regular hours to 48/week, total to 60/week with exceptions. Ensures voluntary overtime with premium pay and rest days. Includes monitoring, audits, and deviation approval.
64
OUR
GOVERNANCE
In this section
82 Governance framework
84 Management
88 Management remuneration
89 Business ethics
Investment in Bahrain site to grow market leading position
The glass jar with the deep blue Puck® logo on the front is an iconic staple in countless homes
across the MENA region, where the product is a clear market leader in its category. To strengthen
our leadership in the region, we are investing EUR 50 million to expand our Bahrain facility and
increase Puck® spreadable cheese production by 30%. This investment, which commenced at the
end of 2025, will support regional growth, particularly during peak seasons.
In picture: Our employee at the Bahrain site. Demand is especially high during Ramadan and
back-to-school seasons, and during these peaks, production at the site is almost at capacity.
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Governance framework
As a dairy cooperative owned by farmers
across seven countries, Arla operates under
a strong and inclusive governance structure
that gives every member a voice and ensures
their interests are well represented.
In short
Our governance model places decision-making power directly
in the hands of our farmer owners, ensuring their voices shape
our future. As a farmer-owned cooperative, every member
is both a supplier and an owner. We place high value on a
governance system that is clear, dependable, amplifying
member voices and representation.
Two governing bodies steer our cooperative: the Board of
Representatives (BoR) and the Board of Directors (BoD). The
BoR elects the BoD, which works closely with the Executive
Board to shape Arla's strategic direction. For a detailed
overview of our governance principles, please refer to our
Article of Association.
Cooperative governance
Arla is a cooperative dairy company, owned by milk-producing
farmers across seven countries: Denmark, Sweden, Germany,
the UK, Belgium, the Netherlands and Luxembourg. We
organise our cooperative into four geographic areas: Denmark,
Sweden, Central Europe and the UK, each further divided into
regions and member districts. This structure ensures every
farmer has a voice, with clear channels for participation and
influence.
We rely on two key bodies to represent our farmer owners: the
BoR and the BoD.
Board of Representatives (BoR)
The BoR is the cooperative's highest decision-making author-
ity. The members gather at least twice a year to deliberate on
pivotal matters, including the distribution of annual profits and
the election of the BoD.
It comprises 187 members, with 175 being farmer owners and
12 representing our employees. Farmer owners elect their
representatives every two years. Seats are allocated based
on each area's cumulative contribution to the cooperative
in the year preceding the election. Following the equity
assessment on 31 December 2023, the BoR's seat distribution
was finalised and formally confirmed in May 2024. The next
election period will begin in May 2026, based on the equity
distribution as at 31 December 2025.
Owners
As of 31 December 2025, we counted 7,265 farmer owners
in the cooperative (2024: 7,624). The decline is primarily
driven by farmers discontinuing milk production, selling their
farms to other members, or starting to supply other dairy
COOPERATIVE
GOVERNANCE
REGIONS
14 regions
DISTRICTS
111 districts
OWNER NATIONALITIES
7,265 dairy farmers
BOARDS OF DIRECTORS
14 elected owners
3 employee representatives
2 external members
BOARD OF REPRESENTATIVES
175 owners
12 employee representatives
DK
1,713
SE
1,848
CE
1,852
UK
1,852
4 AREA FORUMS
DK, SE, CE, UK
MEMBERS
DK 72
SE 47
CE 26
UK 30
CORPORATE
GOVERNANCE
EXECUTIVE BOARD
CEO and CFO
EMPLOYEES
22,052
EXECUTIVE
MANAGEMENT TEAM
• Executive Board
• Managers for European and
International commercial segments
• Functional heads
FUNCTIONAL HEADS
• Agriculture, Sustainability, Communications
• Supply Chain
• Human Resources
• Marketing and Innovation
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2025 in focus About Arla Performance review Sustainability statements Our governance
companies. This pattern highlights broader structural changes
within the dairy industry in recent years.
District meetings
Each Arla owner belongs to the member district where their
farm is located. In March or April, they attend the annual
ordinary district meeting to review the annual report and
exercise their democratic rights. In even-numbered years,
these meetings also serve to elect the district council and BoR
representatives.
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
of the district councils. These boards meet shortly after
the district assemblies to discuss matters relevant to their
regional 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 line with
the Rules of Procedure for the Boards of Directors of Arla, the
BoD defines the strategic direction, remains fully informed
on significant topics and risks, oversees operations and
assets, maintains proper accounting practices and appoints
the Executive Board. It also safeguards the interests of
wider stakeholders, including lenders, bond investors and
employees.
The BoD comprises 14 farmer owners, three employee
representatives elected by Arla's workforce and two external
members elected by the BoR. The allocation of 14 seats
is based on the equity contribution of each area, with the
current distribution as shown in the box.
Area forums and Joint Area Council
Arla has four area forums, each linked to a specific member
area. These forums connect district council members, the
BoD and the management team. Forum members act as
spokespeople for farmer owners, maintaining open lines of
communication with the BoD and management. They meet
twice a year to exchange updates and raise concerns.
A Joint Area Council brings together four BoR members from
each area. This council addresses cross-area issues, ensuring
consistency and alignment throughout the cooperative.
Corporate governance
Arla's governance structure relies on close collaboration
between the Executive Board and the BoD. Together, they
set the strategic direction, supervise operations and ensure
compliance with relevant regulations and standards.
Executive Board
Appointed by the BoD, the Executive Board drives Arla's long-
term growth and sets the strategic course for the business.
Its remit includes developing group-wide policies, monitoring
progress against objectives and ensuring the cooperative
remains resilient and forward-looking.
The Executive Board also leads risk management efforts and
enforces compliance with legal and internal standards. It
consists of the Chief Executive Officer (CEO) and the Chief
Financial Officer (CFO).
Executive Management Team (EMT)
Appointed by the Executive Board, the EMT oversees Arla's
daily operations and plays a key role in shaping strategies and
planning future operating structures. The team includes the
Executive Board, commercial segment managers for Europe
and International, and four functional heads: Supply Chain
(CSO), Agriculture, Sustainability and Communications (CASO),
Marketing and Innovation (CMO), and Human Resources (CHRO).
To foster collaboration, the EMT meets regularly to share
updates and coordinate initiatives. Each member also
addresses material risks, opportunities and impacts within
their area of responsibility, driving progress towards strategic
targets and advancing Arla's long-term ambitions. More about
sustainability governance on page 35.
Sharing voices for impact
In BoR meetings, repre-
sentatives ensure farmer
perspectives are heard in
cooperative decision-making.
Denmark
6
Sweden
4
Central Europe
2
The UK
2
Employees
Arla employs 22,052 full-time equivalents (FTEs) globally
(2024: 21,895). Three elected employees represent the
workforce on the BoD, while twelve serve on the BoR.
Beyond these roles, employee interests are voiced through
work councils, which bring together both employee and
employer representatives. One of them is the European
Works Council, which serves as a forum for strategic dialogue
between management and employees on matters affecting
the company as a whole. In 2025, the Council focused on
initiatives that foster collaboration and support employee
wellbeing. Key areas included establishing national and local
councils, preparing the supply chain for winter conditions and
advancing psychological safety, including efforts to prevent
unacceptable behaviour.
Our governance model
places decision-making
power in the hands of our
farmer owners, ensuring
their voices shape our future.
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Board of Directors
Arla's BoD is a dynamic group of experienced professionals,
united by a clear purpose: to guide the cooperative's
sustainable growth with clarity and integrity.
Working in close collaboration with the Executive Board, our
BoD defines Arla's long-term strategic direction. Their remit
includes interpreting global market signals, evaluating risks
and making sound decisions that secure the cooperative's
future.
Election of the BoD
Every two years, the BoR elects the BoD through a structured
process. Candidates register, complete a self-assessment
and undergo two interviews: first with the local Evaluation
Committee (EC) then with an external consultant for aligned
assessment. The Regional Board or area forum reviews the
feedback and the nominees are presented for election at the
BoR meeting.
The upcoming election is set for May 2026, and in early
2026 the Board agreed to launch new initiatives to improve
candidate evaluation from 2026 onwards and strengthen
gender diversity across Arla's democratic bodies.
BoD competencies
The BoD is expected to bring a balanced mix of skills and
values, including a strong cooperative spirit, global business
insight, clear communication leadership and sustainability.
To further strengthen digitalisation and brand awareness,
the BoR appointed two external, independent non-executive
members, who now make up 11% of the Board. BoD members
also take part in ongoing training to sharpen their expertise
and remain responsive to Arla's evolving needs.
Diversity
We recognise that diverse perspectives and experiences drive
success, including at Board level. To broaden perspectives
and strengthen decision-making, Arla introduced a gender
diversity target in 2023 and began reporting on female
representation on the BoD. Our goal is 30% female rep-
resentation by the end of 2026. When measurement began in
2023, representation was 25%, and it remains at 25% today.
GENDER COMPOSITION
OF THE BOD1
TENURE OF THE BOD
NATIONALITIES OF THE BOD
0%
0
32%
42%
26%
0-3
years
4-7
years
8+
years
8
5
3
1 1 1
DK
SE
UK DE BE FR
1 Only members elected at the company's general meeting are included.
Meetings and key topics in 2025
In 2025, the BoD held 11 ordinary meetings and three
extraordinary meetings. Among these, four meetings were
held in-person, while the remaining meetings took place
online. Discussions covered a range of topics, including the
potential merger with DMK Group, annual legal compliance
update, climate, nature and biodiversity as well as health.
The Board brings a balanced
mix of skills and values to
secure the cooperative's
sustainable growth.
0%
25%
75%
Female
Male
4
8
10
17
14
12
19
13
3
11
2
15
16
9
6
1
18
5
7
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1. Jan Toft Nørgaard
Member since: 1998
Occupation: Dairy farmer
Internal positions: Chair of the Board of
Directors and the Nomination Committee.
Member of the Remuneration Committee, and
the Accounting and Audit Panel
External positions: Member of the Governing
Board of the Danish Agriculture & Food Council
(2009)
Born: 1960
2. Inger-Lise Sjöström
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, the Nomination Committee, and the
Accounting and Audit Panel
External positions: Chair of the Board of
Directors of the Swedish Dairy Association
(2022). Chair of the LRF Milk Delegation (2024).
Board member of Tillväxtbolaget (2022)
Born: 1973
3. Arthur Fearnall
Member since: 2018
Occupation: Dairy farmer
Internal positions: Area Chair for the UK.
Member 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
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).
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
Member since: 2022
Occupation: Dairy farmer
Internal positions: Chair of the Organic
Committee Sweden. Chair of the Preparatory
Working Group. Vice Chair of the Currency
Working Group. Member of the Global Organic
Committee and the Global Appeals Committee
Born: 1982
6. George Holmes
Member since: 2024
Occupation: Dairy farmer
Internal positions: Chair of the Organic Committee
UK. Member of the Global Organic Committee.
Member of the Accounting and Audit Panel
Born: 1965
7. Gustav Kämpe
Member since: 2021
Occupation: Dairy farmer
Internal positions: Vice Chair of the
Sustainability Working Group
External positions: Member of the Board of
the Swedish Dairy Association and Copa Cogeca
Working Group for Dairy Products (2021). Member
of the LRF Milk Delegation (2024). Dairy ambassa-
dor representing the Global Dairy Platform at the
UN High-Level Political Forum (2024)
Born: 1977
8. Jørn Kjær Madsen
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
Member since: 2019
Occupation: Dairy farmer
Internal positions: Area Chair for Central
Europe. Member of the Joint Area Council and
the Member Relations Group. Chair of the
Organic Committee Central Europe. Member of
the Global Appeals Committee and the Global
Organic Committee
External positions: Chair of the Board of
Directors of Agra Ost Agriculture Research (2016).
Member of the Bauernbund Farmer Association
(2012) and the city council of St. Vith (2024)
Born: 1988
10. Marita Wolf
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 Swedish Farmers Foundation for Agriculture
(2022) and Cooperatives Sweden (2024). Member
of LRF Milk Delegation (2012)
Born: 1959
11. Markus Hübers
Member since: 2017-2019. Re-elected in 2024
Occupation: Dairy farmer
Internal positions: Member of the Nomination
Committee and the Remuneration Committee
Born: 1975
12. René Lund Hansen
Member since: 2019
Occupation: Dairy farmer
Internal positions: Chair of the Currency
Working Group and the Preparatory Working
Group
External positions: Member of the cattle
section of the Danish Agriculture & Food Council
(2019), member of the Governing Board and the
Executive Committee of the Danish Agriculture &
Food Council (2019)
Born: 1967
13. Simon Simonsen
Member since: 2017
Occupation: Dairy farmer, Valuation Consultant
at DLR Kredit A/S
Internal positions: Chair of the Accounting
and Audit Panel. Member of the Remuneration
Committee
External positions: Dairy Ambassador
representing the Global Dairy Platform at the UN
High-Level Political Forum (2017)
Born: 1970
14. Steen Nørgaard Madsen
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
Danish Milk Levy Fund (2012) and the Agro Food
Park Steering Committee (2016)
Born: 1956
15. Anders Olsson
Member since: 2022
Occupation: Technical Coordinator at Götene
Dairy, Sweden
External positions: Member of the Swedish
workers' union
Born: 1966
16. Holger Steen Lund
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
Member since: 2024
Occupation: Bulk farm driver at Aylesbury
Dairy, UK
External positions: Shop steward of Usdaw
Born: 1962
18. Florence Rollet
Member since: 2019 as an advisor. Full
membership since 2022
Occupation: Head of the MSc in Luxury
Marketing and Management, EMLyon, France
External positions: Member of the Board of
Directors of Anora (2023), member of the Board
of Directors of Attica (2024)
Born: 1966
19. Nana Bule
Member since: 2019 as an advisor. 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). Chair of the
Danish Agency for Digital Government (2022),
member of the Board of Directors of Energinet
(2018-2024)
Born: 1978
Owner
Employee
External
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.
1-19
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Executive
Management Team
Leadership at Arla begins with clarity and
purpose. The EMT defines our strategic
direction, ensures alignment across
markets, maintaining focus on long-term
growth and sustainable performance.
GENDER COMPOSITION
OF THE EMT
TENURE OF THE EMT
0%
0%
0
25%
Female
75%
38%
24%
38%
4
2
1
1
Male
0-3
years
4-7
years
8+
years
DK
SE
FR
NL
NATIONALITIES OF THE EMT
The EMT comprises senior leaders with diverse expertise. It
includes two Executive Board members: the Chief Executive
Officer and the Chief Finance Officer, two Commercial
Managers who lead European and International markets and
four specialists with deep functional knowledge.
The EMT shapes strategy
and ensures effective
operations while keeping
Arla competitive and aligned
with its long-term ambitions.
Working collaboratively, the EMT shapes Arla's strategic
direction and ensures the effective implementation of daily
operations, keeping the company agile, competitive and
aligned with its long-term ambitions.
1
4
7
8
5
6
2
3
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MEMBER
BIOGRAPHIES
1. Peder Tuborgh
Position: Chief Executive Officer (CEO), member of the Executive Board
and representing Global Trading & Planning and AFI on the Executive
Management Team
Experience: Peder's story with Arla began in 1987 at MD Foods, long before
he took the role as Chief Executive Officer in 2005. Over the years, he has
navigated a series of senior leadership roles – Marketing Director, Divisional
Director and Executive Group Director – leaving his mark on Arla's growth in
markets as diverse as 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) and Chair of Food & BioCluster (2025)
Born: 1963
2. Torben Dahl Nyholm
Position: Chief Financial Officer (CFO), Executive Vice President, Finance,
Legal, IT and Strategy and member of the Executive Board
Experience: Torben joined Arla in 2012 after several years in M&A consul-
tancy. He built his career in Corporate Finance as a Business Controller and
drove progress through key leadership roles at the intersection of finance
and strategy. Known for his strength in financial strategy and performance
management, he later led the Group Performance Management team
before taking on his current role as Chief Financial Officer and Executive
Vice President for Finance, Legal, IT and Strategy in 2020. In December
2024, he was appointed by the BoD to serve on the Executive Board
Education: MSc in Finance and International Business from Aarhus
University
Born: 1981
3. Ola Arvidsson
Position: Chief Human Resources Officer (CHRO),
Executive Vice President, HR
Experience: Ola started at Arla in 2006 as Corporate HR Director and
advanced to Chief HR Officer the following year. Before Arla, he shaped HR
strategies at Unilever across Europe and the Nordics as Vice President of
HR. Drawing on his strength in building high-performing, people-focused
organisations, Ola brings his leadership approach rooted in his early career
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
4. Hanne Søndergaard
Position: Chief Agriculture, Sustainability and Communications
Officer (CASO), Executive Vice President, Agriculture, Sustainability and
Communications
Experience: Hanne started her Arla journey in 1989 with MD Foods and
played a pivotal role in expanding Arla UK, where she rose to Vice CEO. She
later moved into global marketing as Senior Vice President of Brands and
Categories before becoming Chief Marketing Officer and Executive Vice
President in 2016. Leveraging her strength in brand leadership and sustain-
able transformation, she has, since 2021, led Agriculture, Sustainability and
Communications, driving Arla's global sustainability agenda
Education: Business degrees from the Aarhus University School of Business
and Social Sciences, and Harvard Business School
External positions: Board 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
5. David Boulanger
Position: Chief Supply Chain Officer (CSO), Executive Vice President, Supply Chain
Experience: David joined Arla in 2020, bringing 26 years of supply chain
expertise. Before becoming Chief Supply Chain Officer, he held senior roles
at Mars, Mondelēz and Danone, where he managed global operations in
Early Life and Medical Nutrition. Recognised for his strength in operational
excellence and global supply chain leadership, David focuses on future
proofing Arla's Supply Chain, investing for the future while driving resilience
and efficiency across Arla's end-to-end supply chain
Education: Engineering degree from École Civil des Mines de Paris and
Master's degree in Mathematics
External positions: Member of the Board of Directors of Global Baby SAS (2021)
Born: 1970
6. Patrik Hansson
Position: Chief Marketing and Innovation Officer (CMO), Executive Vice
President, Marketing and Innovation
Experience: Patrik brought extensive consumer goods experience to
Arla in 2011 as Vice President of Marketing and Sales in Sweden after
13 years at Procter & Gamble. In 2015, he established Arla's South-East
Asia headquarters in Kuala Lumpur, Malaysia, then returned to Europe as
Managing Director for Sweden and Germany. With a strong focus on market
expansion and commercial strategy, he assumed his current role as Chief
Marketing Officer in 2022, driving global brands, Innovation and Marketing
Education: Master's degree in Engineering Physics from Chalmers and a
master's degree in Business from Gothenburg University
Born: 1967
7. Mark Boot
Position: Executive Vice President, Europe
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 Senior Vice President of 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 Friesland
Campina. He has held local, regional and global roles in general manage-
ment, marketing and sales across Europe, the US 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
8. Lillie Li Valeur
Position: Executive Vice President, International
Experience: Lillie has built more than two decades of leadership
experience within Arla, taking on senior roles across Asia, Europe and
global markets. She led the German business as Managing Director and
headed the Global Milk-Based Beverages division, driving growth in China,
South-East Asia and Africa. As of April 2025, she serves as Executive Vice
President, International, and is part of the EMT. Recognised for her strength
in international expansion and strategic leadership, she served as CEO
of Good Food Group A/S from 2020 to 2022 and earlier held roles with
Lundbeck and Novartis Consumer Health after starting her career at Bain &
Company
Education: Medical degree from Shanghai Medical University, MBA from
China Europe International Business School (CEIBS)
External Positions: Board member of Plus Pack (2022) and Board member
of China Mengniu Dairy Company Ltd (2025)
Born: 1970
All roles in public administration or
similar held currently or in the previous
two years are listed in the biographies.
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Management
remuneration
Our executive compensation framework is crafted to
inspire high performance and foster value creation. By
aligning rewards with strategic priorities, we empower
our leadership to deliver outcomes that serve the
long-term interests of our farmer owners.
Remuneration governance
At Arla, we believe that transparent and well-structured
remuneration is essential to attracting and retaining the right
leadership. Our approach is shaped by the BoD, which regularly
reviews remuneration practices to ensure they remain relevant
and effective. It considers the recommendations from Arla's
Remuneration Committee (RemCo), which includes the Chair
and Vice Chair meeting quarterly. Acting as a preparatory body
for both the BoD and the BoR, RemCo advises on remuneration
matters for the BoD, the BoR and the Executive Board. Its role is
to ensure that our remuneration principles and incentive pro-
grammes align with Arla's strategic ambitions, strengthening
the foundation for sustainable growth within our cooperative.
Executive Practices
Our remuneration packages are structured to attract, engage
and retain senior leaders with the expertise and drive to
deliver results. They support performance across both
immediate goals and long-term strategic outcomes.
Board of Directors (BoD)
Committed to Arla's long-term vision, members of our
BoD receive a fixed annual fee with no performance-based
incentives. Aside from a modest travel per diem, no additional
compensation is granted for attending meetings or com-
mittee sessions. Those who take on extra responsibilities in
cross-area BoR working groups or committees are recognised
with an additional fixed yearly fee. This approach keeps the
Board's focus firmly on guiding our cooperative's future.
Remuneration is reviewed every two years and approved by
the BoR, with the latest adjustment made in 2024. For details,
see page 150.
Executive Board
To keep our Executive Board's remuneration competitive, we
benchmark against leading European and global Fast-Moving
Consumer Goods (FMCG) companies every two years, using
an independent expert. Any adjustments are agreed by the
RemCo, ensuring our approach stays relevant and fair. The
package itself blends fixed and variable elements.
Fixed remuneration
The fixed pay for our Executive Board reflects the impact and
value each leader brings to Arla. Any annual adjustments are
discussed with the Chair of the Board and approved by the
RemCo.
Short and long-term incentive plans
• Short-Term Incentive (STI): This plan is linked to Arla's
annual business targets. The standard payout is 40% of base
salary, with a maximum of 100%, depending on peer group
performance. Payouts are adjusted by a factor of ±1.25 and
combine company-wide results, including a sustainability
component, with individual leadership performance. The
sustainability component is tied to scope 1 and 2 GHG
reductions, and 10% of the STI is linked to this progress. KPIs
are set at group level and reviewed annually, and final targets
and payouts are approved by the RemCo.
• Long-Term Incentive (LTI): Designed to support strategic
value creation, the LTI plan offers a target payout of 60%
of base salary, with a maximum capped at 120%. It spans a
three-year performance period and is based on two KPIs:
Strategic Branded Volume-Driven Growth and Peer Group
Index. Targets are set at the start of each cycle, and payouts
are based on average performance across the period. The
RemCo approves all programme elements and final payouts.
Executive Management Team (EMT)
EMT remuneration reflects market standards and includes
both fixed and variable elements.
Fixed remuneration
Fixed pay is determined by each member's impact and contribu-
tion. Adjustments are made at the discretion of the CEO.
Short and long-term incentive plans
In addition to the fixed remuneration, all members of the EMT
are included in Arla's STI and LTI schemes, under the same
structure as the Executive Board.
VARIABLE PAY COMPONENTS
EXECUTIVE BOARD AND EMT
Profit
Efficiencies
Sustainability
Branded
volume-driven
revenue growth
Leadership
Performance
versus peer group
SHORT-TERM
INCENTIVE
(STI)
LONG-TERM
INCENTIVE
(LTI)
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Business ethics
TAX MATTERS
As a corporate citizen, we recognise our
responsibility within transparent and
responsible tax matters. Rooted in our
cooperative DNA, our social responsibility
ensures a firm foundation for fair and
sustainable tax practices.
Dialogue-driven approach
We actively strive to maintain an open dialogue with tax
authorities and tax communities. To support this, we have
enhanced relationship programmes with the tax authorities
in our largest markets and proactively contribute to public
consultation responses on relevant tax legislation in cooper-
ation with industry-relevant business groups and corporate
peers. We welcome legislative initiatives that aim to drive fair
and consistent global tax standards.
Tax governance
Our experienced tax function is structured to ensure robust
tax governance across our global operations. We design
and implement clear tax policies, in line with our Key Tax
Principles, and establish and maintain effective tax controls
and processes to secure adherence.
The roles and responsibilities related to our tax function and
tax governance policies are defined in our internal Global Tax
Policy, which is continually reviewed and approved by our CFO.
Our tax practices align with Arla's global
Code of Conduct, supported by a set of essen-
tial tax principles approved by the BoD.
• 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 compliance 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 accordance with relevant
regulations and applicable reporting standards, which
include IFRS
• We build on good relations with the tax authorities and
trust that transparency, collaboration and proactiveness
minimise the extent of disputes
OUR KEY TAX PRINCIPLES
Responsible and transparent tax practices
We carefully analyse and ensure that transactions between
our entities are conducted on market terms and implement
arm's length policies in line with the OECD's Transfer Pricing
Guidelines.
We continuously evaluate any 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 2025, in line
with the UK Capital Allowances Act.
In accordance with the 2016 EU Directive on coun-
try-by-country reporting of tax data, Arla files its coun-
try-by-country data with the Danish tax authorities. The rules
require making the data available to the tax authorities in
other countries as well. The data contains information on
revenues, profits, assets, number of employees and taxes paid
and accrued in the countries in which Arla does business.
For the financial year 2025, Arla will publish tax data of
the Group by 31 December 2026, according to the 2021
EU Directive on public country-by-country reporting. Arla
supports this legislative initiative, as it will enhance tax
transparency for stakeholders of all larger groups.
Presence in non-cooperative jurisdictions
Arla has no presence in the jurisdictions determined as
non-cooperative jurisdictions for tax purposes by the Council
of the European Union (as per the latest update, 10 October
2025).
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 Danish tax regulations for cooperatives, which
are taxable based on the tax value of their equity.
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We operate multiple subsidiaries worldwide, primarily as
limited liability and private limited companies, all of which are
subject to standard corporate taxation.
Value and taxes generated
In 2025, Arla generated a total value of EUR 8 billion from
the milk supplied. Milk sourced from our farmer owners
accounted for EUR 7.5 billion in milk payments, while other
farmers received milk payments totalling EUR 390 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 generated directly from the
milk supplied, our operations extend and generate value into
societies through various 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 Entity (UPE) of the
group. As a result, we are liable to pay taxes for the difference
between the effective tax rate per jurisdiction and the global
minimum tax rate of 15%. Any tax payments under the Global
Pillar Two rules will be made to Denmark (the tax jurisdiction
of the group's parent company, Arla Foods amba). Any tax
payments due under Domestic Minimum Taxes introduced in
several jurisdictions will be made to the respective jurisdiction.
Based on our analyses, it has been determined that our
effective tax rate is well above 15% in most of the jurisdictions
where we operate. We have, however, identified a few jurisdic-
tions, 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 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.
Data Ethics Policy
We updated our Data
Ethics Policy this year
to also include the use
of AI.
In net terms, our 2025 Pillar Two tax cost amounts to
approximately EUR 2.5 million, primarily relating to domestic
minimum tax on our operations in the United Arab Emirates
and Qatar.
To assess the potential future financial effects of the Pillar Two
rules and other related local tax regulations, we continuously
follow the development and enactment of these rules in the
countries where we operate.
For further financial tax details, please refer to Note 5.1 on
page 147.
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 dedication 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 commit-
tee evaluates and offers recommendations on data ethics
issues.
During 2025, we updated our Data Ethics Policy to also
include the use of artificial intelligence (AI). We will evaluate
our practices to determine how to best continue embedding
awareness of data ethics and the use of AI within the business.
No information has been reported under local legislation.
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2
CONSOLIDATED
FINANCIAL
STATEMENTS
Primary statements
Notes
3
1
91
ARLA FOODS ANNUAL REPORT 2025
Protein-powered coffee experience
The latest addition to our Starbucks® chilled coffee portfolio, Starbucks® Protein Drink with Coffee, is
designed for active, health-conscious consumers seeking convenient energy. It features 20 gr of protein,
low-fat milk, no added sugar, and the signature espresso taste. In 2025, Starbucks® chilled coffee
delivered 13.9% branded volume-driven revenue growth.
PRIMARY
STATEMENTS
In this section
93 Income statement
93 Comprehensive income
94 Profit appropriation
95 Balance sheet
96 Equity
99 Cash flow
3
1
92
ARLA FOODS ANNUAL REPORT 2025
CONSOLIDATED FINANCIAL STATEMENTS
2
Primary statements
Notes
INCOME STATEMENT (continued)
ARLA FOODS ANNUAL REPORT 2025
93
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Comprehensive income comprises the profit for the year and
other value adjustments recognised outside the income
statement. The profit for the year was EUR 433 million (2024:
EUR 417 million), while other comprehensive income totalled
EUR -196 million (2024: EUR -11 million). For further details
and commentary on the income statement, please refer to
the relevant notes. Other comprehensive income primarily
reflected the share of fair value and foreign exchange rate
adjustments in associates of EUR -107 million (2024: EUR
-9 million), exchange rate differences arising from translation
of foreign operations of EUR -103 million (2024: EUR 53 mil-
lion) and remeasurement of defined benefit schemes of EUR
8 million (2024: EUR -33 million).
Income statement
Comprehensive income
(EUR million)
Note
2025
2024
Development
Revenue
1.1
15,066
13,770
9%
Production costs
1.2
-12,068
-10,803
12%
Gross profit
2,998
2,967
1%
Sales and distribution costs
1.2
-1,913
-1,824
5%
Administration costs
1.2
-535
-508
5%
Other operating income
1.3
135
48
181%
Other operating costs
1.3
-68
-118
-42%
Share of results after tax in joint ventures and associates
3.3
30
33
-9%
Earnings before interest and tax (EBIT)
647
598
8%
Specification:
EBITDA
1,156
1,109
4%
Depreciation, amortisation and impairment losses
1.2
-509
-511
0%
Earnings before interest and tax (EBIT)
647
598
8%
Financial income
4.2
175
183
-4%
Financial costs
4.2
-308
-318
-3%
Profit before tax
514
463
11%
Tax
5.1
-81
-46
76%
Profit for the year
433
417
4%
Attributable to:
Arla Foods amba
415
401
3%
Non-controlling interests
18
16
13%
Total
433
417
4%
(EUR million)
Note
2025
2024
Profit for the year
433
417
Other comprehensive income
Items that will not be reclassified to the income statement:
Remeasurements of defined benefit schemes
4.7
8
-33
Tax on remeasurements of defined benefit schemes
1
8
Share of other comprehensive income of associates and joint ventures measured by the equity method
3.3
-107
-9
Items that may be reclassified subsequently to the income statement:
Value adjustments of hedging instruments
5
-27
Fair value adjustments
-3
-2
Exchange differences on translation of foreign operations
-103
53
Tax on items that may be reclassified to the income statement
3
-1
Other comprehensive income, net of tax
-196
-11
Total comprehensive income
237
406
Attributable to:
Arla Foods amba
219
390
Non-controlling interests
18
16
Total
237
406
Primary statements
Notes
PROFIT APPROPRIATION (continued)
ARLA FOODS ANNUAL REPORT 2025
94
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
The supplementary payment for 2025 was EUR 296 million,
including interest (2024: EUR 292 million). This corresponded
to 2.19 EUR-cent/kg of owner milk (2024: 2.24 EUR-cent/kg).
Contributed individual capital carried interest of 4.0% in 2025
(2024: 5.0%), corresponding to EUR 14 million. The Board of
Directors approved an interim supplementary payment of
EUR 68 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 2026, 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 individ-
ual capital to be retained. In 2025, this equalled a retainment
of 0.87 EUR-cent/kg of owner milk (2024: 0.84 EUR-cent/kg),
corresponding to EUR 119 million (2024: EUR 109 million).
According to the Retainment Policy, the retained earnings was
split 1/3 on individual capital (contributed individual capital)
and 2/3 on common capital (on the capital account in 2025
and on reserves for special purposes in 2024). The amount al-
located to common capital is reduced by EUR 14 million cor-
responding to the interest paid out in connection with the
supplementary payment. In addition, the contributed individ-
ual capital was adjusted for amounts paid out to members
who reached a limit of 7.8 EUR-cent of individual capital per
kg of owner milk.
Profit appropriation
SUPPLEMENTARY PAYMENT FOR 2025
(EUR-CENT/KG)
Supple-
mentary
payment
Half-year
supple-
mentary
payment in
2025
Interest
March 2026
Final
settlement
March
2026
1 Please refer to Note 1.4.1 for further infor-
mation about the performance price.
2.19
-0.50
-0.11
1.58
PERFORMANCE
PRICE1
56.4
EUR-cent/kg
PROFIT
FOR THE YEAR
STANDARD
PRE-PAID
MILK PRICE
3.1
EUR-cent/kg
415
mEUR
53.3
EUR-cent/kg
(EUR million)
2025
2024
Profit for the year
433
417
Non-controlling interests
-18
-16
Arla Foods amba's share of profit for the year
415
401
Profit appropriation:
Supplementary payment for milk
282
274
Interest on contributed individual capital
14
18
Total supplementary payment
296
292
Transferred to equity:
Common capital (capital account)
76
-
Common capital (reserve for special purposes)
-
69
Individual capital (contributed individual capital)
43
40
Total transferred to equity
119
109
Appropriated profit
415
401
RETAINMENT
0.87
EUR-cent/kg
119
mEUR
Individual capital
0.31
43
Common capital
0.56
76
SUPPLEMENTARY PAYMENT
2.19
EUR-cent/kg
296
mEUR
Supplementary
payment
2.08
282
Interest
0.11
14
Primary statements
Notes
BALANCE SHEET (continued)
ARLA FOODS ANNUAL REPORT 2025
95
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
For details and commentary on the individual asset and liabil-
ity positions, please refer to the relevant notes. For details and
commentary on the equity statement, please see the follow-
ing pages.
Balance sheet
(EUR million)
Note
2025
2024
Development
Assets
Non-current assets
Goodwill
3.1
897
938
-4%
Intangible assets
3.1
287
269
7%
Property, plant and equipment and right-of-use assets
3.2
3,646
3,521
4%
Investments in associates and joint ventures
3.3
462
560
-18%
Deferred tax
5.1
23
31
-26%
Pension assets
4.7
23
11
109%
Other non-current assets
28
24
17%
Total non-current assets
5,366
5,354
0%
Current assets
Inventory
2.1
1,743
1,635
7%
Trade receivables
2.1
1,247
1,317
-5%
Derivatives
4.5
117
90
30%
Other receivables
2.2
327
266
23%
Securities
4.5
551
577
-5%
Cash and cash equivalents
4.1
76
91
-16%
Total current assets
4,061
3,976
2%
Total assets
9,427
9,330
1%
(EUR million)
Note
2025
2024
Development
Equity and liabilities
Equity
Common capital
2,049
2,230
-8%
Individual capital
834
570
46%
Other equity accounts
-161
44
-466%
Supplementary payment to owners
228
228
0%
Equity, attributable to Arla Foods amba
2,950
3,072
-4%
Non-controlling interests
66
66
0%
Total equity
3,016
3,138
-4%
Liabilities
Non-current liabilities
Pension liabilities
4.7
159
166
-4%
Provisions
5.2
54
30
80%
Deferred tax
5.1
106
101
5%
Loans
4.3
2,990
2,808
6%
Total non-current liabilities
3,309
3,105
7%
Current liabilities
Loans
4.3
1,221
1,194
2%
Trade payables and other payables
2.1
1,469
1,433
3%
Provisions
5.2
20
31
-35%
Derivatives
4.5
22
64
-66%
Other current liabilities
2.2
370
365
1%
Total current liabilities
3,102
3,087
0%
Total liabilities
6,411
6,192
4%
Total equity and liabilities
9,427
9,330
1%
Primary statements
Notes
EQUITY (continued)
ARLA FOODS ANNUAL REPORT 2025
96
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Equity
Common capital
Individual capital
Other equity accounts
Suppl. payment
Total equity
(EUR million)
Capital
account
Reserve
for
special
purposes
Total
Merger
reserve
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 own-
ers of Arla
Foods amba
Non-
controlling
interests
Total
equity
Equity at 1 January 2025
845
1,385
2,230
-
390
46
134
570
43
1
-
44
228
3,072
66
3,138
Profit for the year
76
-
76
-
43
-
-
43
-
-
-
-
296
415
18
433
Other comprehensive income
9
-
9
-
-
-
-
-
5
-74
-136
-205
-
-196
-
-196
Total comprehensive income
85
-
85
-
43
-
-
43
5
-74
-136
-205
296
219
18
237
Transactions with owners
1
-
1
-
-22
-4
-7
-33
-
-
-
-
-
-32
-
-32
Transactions with non-controlling interests
-7
-
-7
-
-
-
-
-
-
-
-
-
-
-7
-11
-18
Transfer to merger reserve
-260
-
-260
260
-
-
-
260
-
-
-
-
-
-
-
-
Half-year supplementary payment
-
-
-
-
-
-
-
-
-
-
-
-
-68
-68
-
-68
Supplementary payment regarding 2024
-
-
-
-
-
-
-
-
-
-
-
-
-234
-234
-
-234
Foreign currency translation adjustments
-
-
-
-
-2
1
-5
-6
-
-
-
-
6
-
-7
-7
Total transactions with owners
-266
-
-266
260
-24
-3
-12
221
-
-
-
-
-296
-341
-18
-359
Equity at 31 December 2025
664
1,385
2,049
260
409
43
122
834
48
-73
-136
-161
228
2,950
66
3,016
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
Primary statements
Notes
EQUITY (continued)
ARLA FOODS ANNUAL REPORT 2025
97
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Understanding equity
Equity accounts regulated by the Articles of Association com-
prise three categories: common capital, individual capital and
other equity accounts. The characteristics of each category
are outlined below.
Common capital
Common capital is not allocated to individual members and
consists of the capital account and the reserve for special pur-
poses. The capital account provides a strong foundation for
the cooperative's equity, as the non-impairment clause (de-
scribed in the accounting policies below) ensures it cannot be
used for payments 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.
Individual capital
Individual capital is equity instruments issued to each owner
based on their delivered milk volumes. It comprises contrib-
uted individual capital, delivery-based owner certificates and
injected individual capital. Subject to approval by the BoR,
amounts in these accounts will be paid out if owners leave the
cooperative. Interest is credited to contributed individual capi-
tal and disbursed annually together with the supplementary
payment.
In relation to the approval of the intended merger with the
DMK Group, on 18 June 2025 the BoR authorised the BoD to
transfer EUR 260 million from Arla Foods amba's common
capital to a new capital instrument reserved for Arla's existing
members at the merger date. The amount corresponds to 1
EUR cent per kg milk and is planned for payment in March
2027 and 2028 together with the annual supplementary pay-
ment. The payment is subject to final merger approval by the
authorities and approval by the BoR.
Other equity accounts
Other equity accounts required by IFRS include reserves for
value adjustments of hedging instruments, fair value adjust-
ments of certain financial assets and foreign currency transla-
tion adjustments. The accounts include proportionate
amounts of similar value adjustments in associates and joint
ventures.
Supplementary payment
The proposed supplementary payment account reflects trans-
actions during the year and the carrying amount, including in-
terest on contributed capital, to be paid after BoR approval of
the annual report.
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 decreased by EUR 122 million in 2025 and totalled
EUR 3,016 million at 31 December 2025 (2024: EUR 3,138
million). The equity share was 32%, calculated as total equity
of EUR 3,016 million divided by total assets of EUR 9,427 mil-
lion.
Comprehensive income
Profit for the year amounted to EUR 433 million (2024: EUR
417 million), and other comprehensive income amounted to
EUR -196 million (2024: EUR -11 million). Other comprehen-
sive income included income and expenses as well as gains
and losses that are excluded from the income statement and
not realised at the balance sheet date. Other comprehensive
income primarily reflected the share of fair value and foreign
exchange rate adjustments in associates of EUR -107 million
(2024: EUR -11 million), exchange rate differences arising
from translation of foreign operations of EUR -103 million
(2024: EUR 55 million) and remeasurement of defined benefit
schemes of EUR 8 million (2024: EUR -33 million).
Transactions with farmer owners
In August 2025, the BoD approved an interim supplementary
payment of EUR 68 million for milk deliveries in the first six
months of the year. An additional supplementary payment of
EUR 228 million was proposed to be paid in March 2026, sub-
ject to the BoR's approval of the annual report. In total, the
supplementary payment for 2025 amounted to EUR 296 mil-
lion, including interest on contributed individual capital.
A supplementary payment related to 2024 totalling EUR 234
million was paid in March 2025.
Other transactions with farmer owners resulted in a net out-
flow of EUR 32 million, comprising EUR 33 million paid to
owners resigning or retiring from the cooperative and EUR 1
million received from new members.
In 2026, payments of EUR 32 million to owners resigning or
retiring are expected, subject to the BoR's approval.
Other equity adjustments
Other equity adjustments amounted to EUR -25 million (2024:
EUR -19 million), specified as transactions with non-control-
ling interests of EUR -18 million and foreign exchange rate ad-
justments of EUR -7 million.
DEVELOPMENT IN EQUITY
(EUR MILLION)
Total equity
1 January 2025
Profit
for the year
Other
comprehen-
sive
income
Supplementary
payment
related to 2024
Half-year
supplemen-
tary payment
Other
transactions
with owners
Other
equity
adjustments
Total equity
31 December
2025
3,138
433
-196
-234
-68
-32
-25
3,016
Primary statements
Notes
EQUITY (continued)
ARLA FOODS ANNUAL REPORT 2025
98
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
§ Accounting policies
In this section, it is described how the group's Articles of Asso-
ciation and IFRS regulations are reflected in the accounting
policies.
Common capital
The capital account includes technical items like the remeas-
urement of defined benefit pension schemes, effects from the
disposals and acquisitions of non-controlling interests in sub-
sidiaries and exchange rate differences in equity instruments
issued to owners. Additionally, the capital account is affected
by contributions from new cooperative owners.
According to article 20.1(iii) of the Articles of Association, this
reserve can be used, upon the BoD's proposal, by the BoR to
fully or partially offset substantial extraordinary losses or im-
pairments.
The annual profit appropriation on common capital was in-
cluded in the capital account in 2025 and in the reserves for
special purposes in 2024.
Individual capital
Individual capital instruments are governed by article 20 of
the Articles of Association and the general membership
terms.
Equity instruments issued as contributed individual capital
relate to amounts transferred during the annual profit appro-
priation. These balances earn interest at CIBOR 12 months +
1.5%, which is approved and paid with the supplementary pay-
ment 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 equity instruments issued
during cooperative mergers and when new owners join the
cooperative.
Balances on delivery-based owner certificates and injected
individual capital instruments do not carry interest.
Balances on contributed individual capital, delivery-based
owner certificates and injected individual capital can be paid
out over three years upon termination of the Arla Foods amba
membership, in line with the Articles of Association and sub-
ject to the BoR's approval. Balances are denominated in the
relevant currency of the owner's country. Foreign currency
translation adjustments occur annually, with effects trans-
ferred to the capital account.
Merger reserve is an instrument for existing members at the
date of merger with DMK Group. It is recognised separately in
equity. Payout is subject to final merger approval and BoR
approval.
Proposed supplementary payment to owners is recognised
separately in equity until approved by the BoR.
Other equity accounts
The reserve for value adjustments of hedging instruments in-
cludes the fair value adjustment of derivatives classified as
hedging of future cash flows, where the hedged transaction is
not yet realised.
The reserve for fair value adjustments through other compre-
hensive income 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 translation adjustments in-
cludes differences arising during the translation of financial
statements of foreign companies.
Non-impairment clause
According to the Articles of Association, Arla Foods amba can-
not make payments to owners that would impair the sum of
the capital account and legally required equity accounts un-
der IFRS. The non-impairment clause is evaluated based on
the most recent annual IFRS report. Individual 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 eq-
uity, the individual capital accounts or the reserve for special
purposes, as specified in article 20.1(i), (ii) and (iii) of the Arti-
cles 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 con-
solidated profit and equity, respectively, but is presented sep-
arately.
On initial recognition, non-controlling interests are measured
at either the fair value of the equity interest or the propor-
tional share of the fair value of the acquired companies' identi-
fied assets, liabilities and contingent liabilities. The measure-
ment of non-controlling interests 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
and is part of the profit appropriation. The supplementary pay-
ment is recognised as a reserve in the equity statement until
approved by the BoR, based on a recommendation by the BoD.
The supplementary payment is settled as an interim supple-
mentary payment based on the first six months of milk
deliveries, and a final supplementary payment at year-end.
The interim supplementary payment in the year was recog-
nised in equity.
Primary statements
Notes
CASH FLOW (continued)
ARLA FOODS ANNUAL REPORT 2025
99
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Cash flow
(EUR million)
Note
2025
2024
Half-year supplementary payment
-68
-64
Supplementary payment regarding the previous financial year
-234
-209
Transactions with owners
-32
-28
Transactions with non-controlling interests
-18
-23
New loans obtained
4.3
254
54
Other changes in loans
4.3
-45
557
Payment of lease debt
4.3
-75
-78
Payment to pension plans
4.3
-23
-23
Cash flow from financing activities
-241
186
Net cash flow
-9
-49
Cash and cash equivalents at 1 January
91
138
Net cash flow for the year
-9
-49
Exchange rate adjustment of cash and cash equivalents
-6
2
Cash and cash equivalents at 31 December
76
91
Free operating cash flow
Cash flow from operating activities
862
652
Cash flow from operating investing activities
-651
-629
Free operating cash flow
211
23
Free cash flow
Cash flow from operating activities
862
652
Cash flow from investing activities
-630
-887
Free cash flow
232
-235
(EUR million)
Note
2025
2024
EBITDA
1,156
1,109
Reversal of share of profit in joint ventures and associates
3.3
-30
-33
Reversal of other operating items without cash impact
46
-36
Change in net working capital
2.1
-65
-379
Change in other receivables and other current liabilities
-88
145
Dividends received, joint ventures and associates
3.3
21
24
Interest paid
-152
-173
Interest received
25
34
Taxes paid
-51
-39
Cash flow from operating activities
862
652
Investments in intangible assets
3.1
-85
-74
Investments in property, plant and equipment
3.2
-570
-557
Sale of property, plant and equipment
3.2
4
2
Operating investing activities
-651
-629
Acquisition of financial assets
-15
-24
Sale of financial assets
36
56
Acquisition of enterprises
3.4
-
-290
Financial investing activities
21
-258
Cash flow from investing activities
-630
-887
Primary statements
Notes
CASH FLOW (continued)
ARLA FOODS ANNUAL REPORT 2025
100
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Cash flow from operating activities was EUR 862 million
(2024: EUR 652 million), representing an improvement of EUR
210 million compared to last year. EBITDA contributed with
EUR 1,156 million, an increase of EUR 47 million compared to
last year. Net working capital, other working capital positions
and other adjustments to the operational cash flow amounted
to EUR -294 million compared to EUR -457 million last year,
representing an improvement of EUR 163 million.
The net cash flow from investing activities amounted to EUR-
630 million (2024: EUR -887 million). Cash flow from invest-
ment in property, plant and equipment amounted to EUR
-570 million (2024: EUR -557 million), where continued in-
vestments in mozzarella and cheddar capacities in UK as well
as a continued growth of Arla Foods Ingredients and capacity
and logistics upgrades in Denmark were the main drivers. Cash
flow from investments in intangible assets amounted to EUR -
85 million (2024: EUR -74 million), consisting of continued in-
vestments in the SAP platform and general IT upgrades across
the group.
The effect of financial investing activities was positive with
EUR 21 million from sales of financial assets, compared to
EUR -258 million last year, driven by acquisition of enterprises.
The cash flow from financing activities was EUR -241 million
(2024: EUR 186 million), comprising the net effect of transac-
tions with owners and funding activities including cash man-
agement.
Transactions with owners constituted a cash flow of EUR -334
million, specified as an interim supplementary payment of
EUR -68 million, a supplementary payment regarding 2024 of
EUR -234 million and net payment of individual capital instru-
ments of EUR -32 million.
Transactions with non-controlling interests amounted to EUR
-18 million (2024: EUR -23 million) and consisted of dividend
payments and acquisition of non-controlling interests.
The net cash flow from funding activities was EUR 111 million
and consisted of net cash from utilisation of loan facilities of
EUR 209 million, payment of lease debt of EUR 75 million and
settlement of pension liabilities of EUR 23 million. See Note
4.3 for more details.
Cash and cash equivalents at 31 December 2025 amounted
to EUR 76 million (2024: EUR 91 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
Supplemen-
tary payments
and payments
to leaving
members
Transactions
with non-
controlling
interests
Other
financing
activities
Decrease in
cash
1,156
-65
-229
862
-630
232
-334
-18
111
-9
CONSOLIDATED FINANCIAL STATEMENTS
From Dano® to Damau
We have been part of Nigeria's dairy journey since 1960 through the Arla Dano® brand, known for
providing high-quality milk powder to Nigerian families. Currently, we have a state-of-the-art plant in
Lekki and a processing facility in Kaduna, and we are commissioning the first Arla farm outside Europe in
Damau, Nigeria.
In picture: Employees in Nigeria celebrating our 25th anniversary.
NOTES
In this section
102 Notes introduction
105 Note 1: Revenue and costs
112 Note 2: Net working capital
116 Note 3: Capital employed
125 Note 4: Funding
147 Note 5: Other areas
2
3
1
101
ARLA FOODS ANNUAL REPORT 2025
Primary statements
Notes
NOTES INTRODUCTION (continued)
ARLA FOODS ANNUAL REPORT 2025
102
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
The following sections provide additional disclosures
supplementing the primary financial statements
Note 1
Revenue and costs
Details on the group's performance
and profitability.
Read more on page 105.
Note 2
Net working capital
Development and composition of the
group's inventory and trade balances.
Read more on page 112.
Note 3
Capital employed
Details on production capacity, intangi-
ble assets and financial investments.
Read more on page 116.
Note 4
Funding
Details on funding of the group's
activities.
Read more on page 125.
Note 5
Other areas
Other areas include tax and
management remuneration.
Read more on page 147.
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 go-
ing 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 Alternative Performance
Measures (APMs) issued by the European Securities and
Markets Authority (ESMA), we have provided additional
information on the APMs used by the group. These APMs, and
in particular the performance price, are deemed critical to un-
derstanding 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 sup-
ported by calculations in Note 1.4.
Considering the potential future impact of strategic risks
When preparing the consolidated financial statements the go-
ing concern assumption was applied. Identified strategic 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 potentially 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 per-
formance is inherently judgemental, and different conclusions
could materialise in the future. Read more on uncertainties
and estimates in note 3.2 on page 119, in the risk manage-
ment section on pages 17-18 and the section on climate-re-
lated risks and opportunities on pages 41-42.
Currency exposure
The group is exposed to foreign exchange risk due to transac-
tions conducted in currencies other than EUR and due to the
translation of foreign operations with other operating curren-
cies than EUR. The most significant exposure relates to finan-
cial reporting from entities operating in GBP, USD or USD-
pegged and SEK, and to transactions relating to sales in USD
or USD-pegged currencies.
See Note 4.1.2 for more details on currency risks.
Notes
Introduction
ARLA FOODS ANNUAL REPORT 2025
102
Primary statements
Notes
NOTES INTRODUCTION (continued)
ARLA FOODS ANNUAL REPORT 2025
103
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Special focus areas for 2025
Comparability
2025 was a year characterised by a high level of volatility
within the dairy industry and a continued high level of general
macro-economic uncertainty. Commodity prices were ele-
vated in the first half of the year due to tight supply and firm
demand for dairy products, before falling in the second half of
the year as milk availability grew across Europe.
The group's activity level is normally determined by the vol-
ume of milk delivered by the owners and by the success of
moving milk volumes into branded positions and to interna-
tional markets.
This also applied to 2025 with an overall activity increase due
to more milk delivered by our owners and the successful inte-
gration of AFI Felinfach, an activity acquired late in 2024. Rev-
enue increased with 9,4% to EUR 15,066 million driven by
prices, strong commercial execution and the higher activity
level.
Operational costs increased by 10,5% to EUR 14,516 million
in 2025, driven by higher milk costs paid to farmers, inflation-
ary pressure on input costs and higher staff-related expenses.
The performance price for 2025 totalled 56.4 EUR-cent/kg of
owner milk, representing an increase of 10.8% compared to
last year.
Cash flow from operating activities was EUR 862 million repre-
senting an improvement of 32% compared to last year.
EBITDA contributed with EUR 1,156 million, an increase of
4,2% compared to last year, while improvements in net work-
ing capital, other working capital positions and other adjust-
ments to the operational cash flow accounted for the rest of
the improvement.
Net interest-bearing debt, including pension liabilities, in-
creased 6,6% to EUR 3,667 million, primarily driven by invest-
ments in our operations such as dairies and warehouses. Lev-
erage landed at 3.3, which is within our target range of 2.8 to
3.4. Read more in Note 4.3 on page 134.
The volatility and uncertainty experienced in 2025 was a con-
tinuity of the last three to four years, which makes comparison
with previous years difficult. As uncertainty continues into
2026, predictability will continue to be difficult, and stake-
holders should be careful about using reported results as pro-
jections for the future. The intended merger with the DMK
Group will significantly impact the group's activity level and fi-
nancial position. For more details, see page 11.
Valuation of inventory
The increased milk price volatility in 2025 required additional
and more frequent focus throughout the year on the valua-
tion of inventory positions. We frequently updated our stand-
ard cost model for individual cost components with special fo-
cus on the milk price component throughout 2025, and thor-
oughly reviewed the valuation at 31 December 2025.
The conversion from standard cost to actual cost at the time
of production for the individual inventory categories was cor-
respondingly carefully assessed.
Furthermore, net realisable value was assessed based on the
price development for especially milk commodity products at
the end of the year.
Read more about inventory in Note 2.1.
Valuation of certain assets and liabilities based on a
projection of expected future cash flows
Interest rates stabilised on a lower average level compared to
last year's level, but remain an important component to moni-
tor. Therefore, the valuations of goodwill, gross pension liabili-
ties and interest hedge instruments were carefully assessed
in 2025.
Calculations confirmed adequate headroom and sensitivity
calculations on discount rates, and anticipated future free
cash flows indicated continued robustness of goodwill posi-
tions on all markets.
The fair value of interest hedge instruments increased by
EUR 21 million as a result of stabilised and slightly increased
interest levels, while net pension liabilities remained at the
same level as last year.
Read more about goodwill in Note 3.1, hedge instruments in
Note 4.4 and pension liabilities in Note 4.7.
FarmAhead™ Customer Partnership recognised
as part of revenue
Our sustainability customer programme has now been
launched across most of Arla's core European markets, ena-
bling customers to participate in sustainability projects on
farms, access customer data and receive customised reports
and achieve claimable reductions for ESG reporting. Custom-
ers participating in the programme pay a premium on the
products, recognised as part of revenue.
FarmAhead™ Incentive recognised as part of milk costs
The Incentive model facilitates the redistribution of up to EUR
500 million among farmers based on their engagement in
sustainability initiatives on farms. Read more about the model
on page 43 in the sustainability statements.
In 2025, a total of EUR 354 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.
Classification of power purchase agreements
To support the reduction of scope 1+2 CO2e emissions, Arla
has entered power purchase agreements (PPAs) with a con-
tractual annual energy volume of 549 GWh. Solar energy ac-
counts for 290 GWh, and wind energy accounts for 259 GWh.
Through a structured process, the accounting classification of
the individual contracts was rigorously assessed based on the
latest available guidance and involvement of external exper-
tise. All contracts are for the purpose of own use and classified
as executory supplier contracts.
Read more about commodity price risk in Note 4.1.4 and con-
tractual commitments in Note 5.5.
Climate-related risks in the consolidated
financial statements
Climate-related risks are of great importance to Arla. The man-
agement has assessed the impact on the consolidated finan-
cial statements from such risks and initiatives taken or to be
taken towards addressing them. There was no material impact
on the consolidated financial statements 2025 from climate
changes or the actions taken against climate-related risks.
Potential future impacts were also evaluated. Read more on
page 41.
Points of considerations are described below.
Primary statements
Notes
NOTES INTRODUCTION (continued)
ARLA FOODS ANNUAL REPORT 2025
104
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Risk of decline in milk volumes
Climate-related risks that can potentially reduce milk volumes
in the future are:
• Denmark's government nitrate agreement, along with the
EU's implementation of nature legislation, could drive land-
use changes, increase production costs on farms and reduce
milk production.
• 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 Green
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 potentially affect the future of
dairy operations are:
• Regulations to reduce emissions in production. European
government proposals on sustainability financial levers, such
as the international emissions trading system and climate
taxes, could increase costs for both farmers and processors.
• Changes in consumer behaviour driven by costumers push-
ing for more sustainable products increase the need for sus-
tainable dairy production to stay competitive.
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 transfor-
mation.
• Excess production capacity if milk volumes and operations
decline.
The potential consequences of the above were considered as
part of our impairment test conducted during 2025 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 2025. Sustainability is now an integral part
of all investments in property, plant and equipment which en-
sure future investments to address the risks identified.
Significant accounting estimates and judgements
Preparing the group's consolidated financial statements re-
quires management to apply accounting estimates and judge-
ments that affect the recognition and measurement of the
group's assets, liabilities, income and expenses. The estimates
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 further 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
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
1.1 REVENUE (continued)
ARLA FOODS ANNUAL REPORT 2025
105
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
1.1 REVENUE
Financial comments
Revenue increased by 9.4% to EUR 15,066 million (2024:
EUR 13,770 million).
Sales prices contributed positively to revenue by EUR 1,079
million, mainly driven by higher average price levels in the
retail, foodservice and whey businesses.
The volume/mix impact was positive with EUR 101 million,
driven by higher volumes in Global Industry Sales (GIS) as the
milk pool increased, partly offset by a volume decrease in pri-
vate label and branded retail.
Business combinations added EUR 237 million to revenue and
related to the acquisition of a whey nutrition business from
Volac (now AFI Felinfach) in late 2024.
Arla's revenue was negatively impacted by currency effects
of EUR 121 million, primarily driven by GBP and USD related
exchange rates and partly offset by a positive impact from the
SEK exchange rate.
Note 1.
Revenue and costs
Table 1.1.a Revenue split by country¹
(EUR million)
2025
2024
Share of revenue
in 2025
United Kingdom
3,770
3,492
25%
Sweden
1,962
1,698
13%
Germany
1,712
1,683
11%
Denmark
1,409
1,345
9%
Netherlands
1,106
885
7%
Saudi Arabia
466
449
3%
Finland
411
397
3%
USA
386
296
3%
Oman
292
225
2%
Spain
275
204
2%
Other²
3,277
3,096
22%
Total
15,066
13,770
100%
¹ 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.
² Other countries include, among others, UAE, China, Canada, Belgium, France and Australia
Table 1.1.b - Revenue split by brand
(EUR million)
2025
2024
4,027
3,737
903
837
528
514
248
245
436
393
Arla®
Lurpak®
Puck®
Castello®
Milk-based beverages
Other supported brands
887
863
Strategic branded revenue
7,029
6,589
Private label and other
4,135
3,933
Retail and foodservice in Europe and International
11,164
10,522
Arla Foods Ingredients
1,452
1,015
Global Industry Sales
2,450
2,233
Total
15,066
13,770
DEVELOPMENT IN REVENUE
(EUR MILLION)
2024
Sales prices
Volume/mix
Business
combinations
Currency
2025
13,770
1,079
101
237
-121
15,066
Primary statements
Notes
1.1 REVENUE (continued)
ARLA FOODS ANNUAL REPORT 2025
106
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
In 2025, branded revenue growth remained positive, with a
volume-driven revenue growth of 0.2% (3.7% in 2024) and a
branded revenue increase of 6.7% to EUR 7,029 million
(2024: EUR 6,589 million).
Europe is Arla's largest commercial segment, comprising
57.8% of total revenue (2024: 58.6%). Revenue in Europe in-
creased by 7.9% to EUR 8,704 million (2024: EUR 8,066 mil-
lion). The increase was primarily driven by higher average
price levels. Affected by the high sale price levels, strategic
branded volume-driven revenue decreased by 0.8% (2024:
increase of 4.1%).
The International segment accounted for 16.3% of total reve-
nue (2024: 17.7%). The revenue in International increased to
EUR 2,460 million (2024: EUR 2,435 million), despite negative
effects from currency fluctuations. Strategic branded volume-
driven growth was 2.4% in International (2024: 2.9%), despite
high price levels, particularly in the first half, and ongoing geo-
political uncertainty.
Arla Foods Ingredients accounted for 9.6% of total revenue
(2024: 7.4%), amounting to EUR 1,452 million (2024: EUR
1,015 million), driven by strong global demand for protein
ingredients, favourable market conditions and the successful
integration of AFI Felinfach, which was acquired at the end of
2024. AFI maintained a high value-add share of 79.8% (2024:
79.5%).
The Global Industry Sales (GIS) and other sales segment repre-
sented 16.3% of total revenue (2024: 16.4%) and increased by
8.7% to EUR 2,450 million (2024: EUR 2,254 million), driven
by higher volumes. The overall share of milk solids sold
through GIS increased to 30.6% (2024: 24.8%) supported by
more milk available in the second half of the year.
§ Accounting policies
Revenue is recognised when there is a contract with a cus-
tomer for producing and selling dairy products. Revenue by
commercial segment or market is based on the group's inter-
nal financial reporting practices.
Revenue is recognised in the income statement when a per-
formance obligation is satisfied, at the transaction price allo-
cated to the obligation. This occurs when control of the goods
is transferred to the customer, the amount can be measured
reliably, and collection is probable. Transfer of control is deter-
mined by the relevant trade terms (e.g. Incoterms), which may
vary by customer or transaction.
Revenue related to our FarmAheadTM Customer Partnership
programme forms part of the sales price of the related prod-
ucts and is recognised in line with the general policy above.
Revenue is measured at invoiced sales for the year, net of cus-
tomer-specific deductions such as rebates, cash discounts,
listing fees, promotions, VAT and duties. Customer contracts
may include various discounts. Historical experience is used to
estimate these discounts to ensure accurate revenue recogni-
tion. Customer contracts are, in line with industry practise, in
general below 12 months and therefore considered short-
term.
Revenue is recognised only when it is highly probable that a
significant reversal will not occur, typically when control trans-
fers to the customer and after considering applicable rebates.
Most contracts have short payment terms, so a significant
financing component is not present and the transaction price
is not adjusted for financing.
Uncertainties and estimates
Revenue, net of rebates, is recognised when goods are trans-
ferred to customers. Estimates are used when measuring ac-
cruals for rebates and other sales incentives. Most rebates are
calculated based on terms agreed upon with the customer. In
some customer relationships, the final settlement of the re-
bate depends on future sales volumes, prices and other incen-
tives. Therefore, estimating whether performance obligations
are met involves some judgement. These estimates are based
on historical experience and forecasted future sales.
REVENUE SPLIT BY COMMERCIAL SEGMENTS
(EUR MILLION)
2025
2024
Europe
International
Arla Foods Ingredients
Global Industry Sales
and other sales
8,704
2,460
1,452
2,450
8,066
2,435
1,015
2,254
Primary statements
Notes
1.2 OPERATIONAL COSTS (continued)
ARLA FOODS ANNUAL REPORT 2025
107
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Operational costs increased to EUR 14,516 million in 2025
(2024: EUR 13,135 million). The increase was primarily driven
by higher milk costs paid to farmers, inflationary pressure on
input costs and higher staff-related expenses.
Production costs increased 11,7% to EUR 12,068 million
(2024: EUR 10,803 million). The increase was mainly attributa-
ble to higher weighted-in raw milk costs, which rose to EUR
7,627 million (2024: EUR 6,565 million), reflecting higher milk
prices. Excluding costs of raw milk, production costs increased
to EUR 4,441 million (2024: EUR 4,238 million) representing
an increase of 4,8%. Production-related costs was mainly
driven by an increase in packaging, transportation and staff
costs.
Sales and distribution costs increased by 4.9% to EUR 1,913
million (2024: EUR 1,824 million).
Administration costs increased by 5.3% to EUR 535 million
(2024: EUR 508 million), mainly driven by an increase in staff
costs, costs related to business combinations and inflation.
Operational costs include the consolidation effects from busi-
ness combinations, mainly relating to the acquisition of AFI
Felinfach, which increased operational costs by EUR 144 mil-
lion in 2025.
In 2025, we achieved net savings of EUR 158 million in our
efficiency programme, of which EUR 128 million related to
operational costs, reducing our future cost base.
1.2 OPERATIONAL COSTS
Table 1.2.a Operational costs split by function and type
(EUR million)
2025
2024
Production costs
12,068
10,803
Sales and distribution costs
1,913
1,824
Administration costs
535
508
Total
14,516
13,135
Specification:
Weighed-in raw milk
7,627
6,565
Other production materials¹
2,346
2,255
Staff costs
1,756
1,654
Transport costs
863
814
Marketing costs
275
271
Depreciation, amortisation and impairment
509
511
Other costs²
1,140
1,065
Total
14,516
13,135
¹ Other production materials include packaging, additives, consumables, variable energy and effects of cost of goods sold related to changes in inventory
² Other costs mainly include maintenance, utilities and IT
DEVELOPMENT IN OPERATIONAL COSTS
(EUR MILLION)
2024
Milk costs
COGS from
inventory and
others
Efficiency cost
impact
Inflation
Business
combinations
Currency
2025
13,135
1,032
199
-128
192
144
-58
14,516
Table 1.2.b Weighed-in raw milk
2025
2024
mkg
EUR million
mkg
EUR million
Owner milk
13,577
7,237
12,973
6,195
Other milk
752
390
762
370
Total
14,329
7,627
13,735
6,565
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
1.2 OPERATIONAL COSTS (continued)
ARLA FOODS ANNUAL REPORT 2025
108
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Cost of raw milk
The cost of raw milk increased by 16.2% to EUR 7,627 million
(2024: EUR 6,565 million), driven by a higher average milk
price and increased milk volumes.
Owner milk
Costs related to owner milk increased by EUR 1,042 million
due to a higher average pre-paid milk price and higher
volumes. Arla's average pre-paid milk price increased to
53.3 EUR-cent/kg in 2025 (2024: 47.8 EUR-cent/kg), which
constitutes a 11.5% increase.
In 2025, a total of EUR 354 million related to FarmAheadTM
Check and the FarmAheadTM Incentive model (2024: EUR 337
million) was paid out. The amount was included in the cost of
owner milk. See page 45 in the sustainability statements for
further details.
Other milk
The cost of other milk increased by EUR 20 million due to
higher prices, partly offset by lower volumes. Other milk con-
sists of contract milk acquired to meet local market demands.
Staff costs and number of FTEs
Staff costs increased by 6.2% to EUR 1,756 million (2024: EUR
1,654 million). Staff costs increased due to regular salary in-
creases and additional FTEs. The total number of FTEs in-
creased to 22,052 (2024: 21,895). See the sustainability
statements pages 64-70 for further details.
Depreciation, amortisation and impairment
At EUR 509 million, the amount of depreciation, amortisation
and impairment was consistent with the year before (2024:
EUR 511 million).
§ Accounting policies
Production costs
Production costs cover direct and indirect costs related to
production, including volume movements in inventory and re-
lated inventory valuation. Direct costs comprise the purchase
of milk from owners, including incentives related to FarmA-
headTM Check and the new FarmAheadTM Incentive model, in-
bound transport costs, packaging, additives, consumables, en-
ergy and variable salaries directly related to production. Indi-
rect costs comprise other costs related to the production of
goods, including depreciation and impairment losses on pro-
duction equipment and other supply chain-related costs. The
purchase of milk from cooperative owners is recognised at
pre-paid prices for the accounting period and therefore does
not include the supplementary payment, which is classified as
distributions to owners and recognised directly in equity.
Sales and distribution costs
Costs relating to sales staff, write-down of receivables, spon-
sorships, product development, depreciation and impairment
losses are recognised as sales and distribution costs. Sales and
distribution costs also include marketing expenses relating to
investment in the group's brands such as the development of
marketing campaigns, advertisements, exhibits and others.
Administration costs
Administration costs relate to management and administra-
tion, including administrative staff, office premises and office
costs as well as depreciation and impairment.
Table 1.2.c Staff costs
(EUR million)
2025
2024
Wages, salaries and remuneration
1,504
1,430
Pensions – defined contribution plans
125
109
Pensions – defined benefit plans
1
-
Other social security costs
126
115
Total
1,756
1,654
Staff costs relate to:
Production costs
943
895
Sales and distribution costs
484
477
Administration costs
329
282
Total
1,756
1,654
Average number of full-time employees
22,052
21,895
Table 1.2.d Depreciation, amortisation and impairment
(EUR million)
2025
2024
Intangible assets, amortisation
66
66
Property, plant and equipment and RoU, depreciation
443
445
Total
509
511
Depreciation, amortisation and impairment relate to:
Production costs
368
356
Sales and distribution costs
59
70
Administration costs
82
85
Total
509
511
Primary statements
Notes
1.3 OTHER OPERATING INCOME AND COSTS (continued)
ARLA FOODS ANNUAL REPORT 2025
109
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Other operating income increased to EUR 135 million (2024:
EUR 48 million).
Income from the sale of excess electricity volumes from own
power production plants was EUR 44 million (2024: EUR 28
million). The increase was due to higher market prices for
electricity compared to last year.
Income from commodity hedging instruments related to
diesel, natural gas and electricity reclassified from OCI was
EUR 2 million (2024: EUR 3 million). Please refer to Note 4.4
for further details.
Income from currency hedging instruments reclassified from
OCI was EUR 70 million (2024: EUR 4 million). Please refer to
Note 4.4 for further details.
Other income items amounted to EUR 19 million (2024: EUR
13 million), mainly driven by biomass income of EUR 5 million.
Other operating costs decreased by 42.4% to EUR 68 million
(2024: 118 EUR million).
Costs related to the sale of internally produced electricity re-
mained stable and increased slightly to EUR 29 million (2024:
EUR 27 million) in line with the previous year.
Costs of commodity hedging instruments reclassified from
OCI amounted to EUR 4 million (2024: EUR 32 million). Please
refer to Note 4.4 for further details.
Costs of currency hedging instruments reclassified from OCI
were EUR 22 million (2024: EUR 29 million). Please refer to
Note 4.4 for further details.
Other items amounted to EUR 13 million (2024: EUR 30 mil-
lion). The decrease is due to one-offs in 2024, namely
expenses following fire accidents and expenses relating to
the Felinfach Whey Nutrition business acquisition.
§ Accounting policies
Other operating income and costs include items outside the
usual dairy business activities. These items consist of gains
and losses from the settlement of disputes, remeasurement
gains from step acquisitions of entities, net results from finan-
cial hedging activities and net results from producing and sell-
ing energy from own biogas plants. Additionally, this category
includes gains and losses from the disposal of non-current as-
sets and the divestment of entities.
1.3 OTHER OPERATING INCOME AND COSTS
Table 1.3 Other operating income and costs
(EUR million)
2025
2024
Sale of electricity
44
28
Income from commodity hedging instruments reclassified from OCI
2
3
Income from currency hedging instruments reclassified from OCI
70
4
Other income items
19
13
Other operating income
135
48
Costs related to the sale of electricity
29
27
Costs of commodity hedging instruments reclassified from OCI
4
32
Costs of currency hedging instruments reclassified from OCI
22
29
Other cost items
13
30
Other operating costs
68
118
Primary statements
Notes
1.4 KEY PERFORMANCE INDICATORS (continued)
ARLA FOODS ANNUAL REPORT 2025
110
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
The alternative performance measures disclosed in this note
are key performance indicators for the group. They are not de-
fined by IFRS.
1.4.1 PERFORMANCE PRICE
Financial comments
Arla's performance price is a key measure of overall perfor-
mance, reflecting the value added to each kilogramme of milk
supplied by our farmer owners.
The performance price was 56.4 EUR-cent/kg of owner milk
(2023: 50.9 EUR-cent/kg).
§ Accounting policies
The performance price is calculated by taking the standard-
ised pre-paid milk price included in production costs, adding
Arla Foods amba's share of profit for the year attributable to
farmer owners and then dividing by the total milk volume
weighed in for the year.
1.4.2 STRATEGIC BRANDED VOLUME-
DRIVEN REVENUE GROWTH
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 0.2% (2024: 3.7%).
§ Accounting policies
Strategic branded volume-driven revenue growth (SBVDRG) is
a measure of the share of revenue growth relative to volumes.
Volume-driven revenue is calculated by keeping prices fixed
year on year.
SBVDRG is calculated as the volume growth of EUR 15 million
divided by total strategic branded revenue of EUR 7,029 mil-
lion and equalled 0.2% in 2025.
1.4 KEY PERFORMANCE INDICATORS
Table 1.4.1 Performance price
2025
2024
EUR
million
mkg
EUR-
cent/kg
EUR
million
mkg
EUR-
cent/kg
Owner milk (standard milk (4.2% fat, 3.4% protein))
7,237
13,577
53.3
6,195
12,973
47.8
Arla Foods amba's share of profit for the year
415
13,577
3.1
401
12,973
3.1
Total
7,652
13,577
56.4
6,596
12,973
50.9
Table 1.4.2 Strategic branded volume driven revenue growth
(EUR million)
2025
2024
Strategic branded revenue last year
6,589
6,375
Strategic branded volume-driven revenue growth
15
238
Price and exchange rate adjustments
425
-24
Strategic branded revenue
7,029
6,589
Strategic branded volume-driven revenue growth, %
0.2%
3.7%
Primary statements
Notes
1.4 KEY PERFORMANCE INDICATORS (continued)
ARLA FOODS ANNUAL REPORT 2025
111
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
1.4.3 PROFIT SHARE
Financial comments
The profit share of Arla is targeted at 2.8-3.2% of revenue, cal-
culated on the basis of the profit attributable to our farmer
owners.
For 2025, the profit attributable to our farmer owners
amounted to EUR 415 million (2024: EUR 401 million). This
corresponded to 2.8% of revenue, or 3.1 EUR-cent/kg of milk
delivered, and was distributed to the supplementary payment
and retainment as disclosed in the statement of profit appro-
priation.
§ Accounting policies
Profit share is a measure of profit relative to revenue calcu-
lated as Arla Foods amba's share of profit for the year divided
by total revenue.
Profit share is calculated as EUR 415 million divided by
EUR 15,066 million and equalled 2.8% in 2025.
Table 1.4.3 Profit share
(EUR million)
2025
2024
Revenue
15,066
13,770
Profit for the year
433
417
Profit relating to non-controlling interests
-18
-16
Profit attributable to farmer owners
415
401
Profit share
2.8%
2.9%
Primary statements
Notes
2.1 NET WORKING CAPITAL (continued)
ARLA FOODS ANNUAL REPORT 2025
112
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
2.1 NET WORKING CAPITAL
Financial comments
Net working capital of EUR 1,521 million (2024: EUR 1,519
million) is on par with last year.
A higher level of inventory was offset by lower trade receiva-
ble positions and higher trade payable and other payable posi-
tions.
Note 2.
Net working capital
Table 2.1.a Net working capital
Cash flow
Non-cash flow
(EUR million)
1 January
Included in
operating
cash flow
Business
combi-
nations
Write-
downs
Currency
31 December
2025
Inventory
1,635
141
-
16
-49
1,743
Trade receivables
1,317
-21
-
-1
-48
1,247
Trade payables and other payables
-1,433
-55
-
-
19
-1,469
Total net working capital
1,519
65
-
15
-78
1,521
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
Table 2.1.b Inventory
(EUR million)
2025
2024
Inventory before write-downs
1,763
1,671
Write-downs
-20
-36
Total inventory
1,743
1,635
Raw materials and consumables
350
347
Work in progress
432
457
Finished goods and goods for resale
961
831
Total inventory
1,743
1,635
DEVELOPMENT IN NET WORKING CAPITAL
(EUR MILLION)
1 January
2025
Inventory
Trade
receivables
Trade payables
and other paya-
bles excluding
owner milk
Owner
milk
Currency
31 December
2025
1,519
157
-22
-75
20
-78
1,521
Primary statements
Notes
2.1 NET WORKING CAPITAL (continued)
ARLA FOODS ANNUAL REPORT 2025
113
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Inventory
Inventory increased by 6.6% to EUR 1,743 million (2024:
EUR 1,635 million), an increase of EUR 108 million. The in-
crease was predominantly driven by a combination of in-
creased volumes within our core countries, largely products
containing high levels of fat, as well as higher whey prices
within our AFI business.
Excluding currency effects, the carrying amount of inventory
increased by EUR 157 million.
Trade receivables
Trade receivables decreased by 5.3% to EUR 1,247 million
(2024: EUR 1,317 million), driven by a higher utilisation of the
trade receivables finance programmes.
The utilisation of trade receivables finance programmes in-
creased to EUR 405 million (2024: EUR 353 million). The
group utilises these programmes to manage liquidity and
reduce credit risk on trade receivables.
Managing credit risk exposure on trade receivables is guided
by group-wide policies. Credit limits are set based on the cus-
tomer's financial position and current market conditions. The
customer portfolio is diversified in terms of geography, indus-
try sector and customer size. In 2025, the group was not ex-
traordinarily exposed to credit risk related to significant indi-
vidual customers, but to the general credit risk in the retail
sector. Read more about credit risk in Note 4.1.5.
Overdues above 30 days amounted to 7.2% of the trade re-
ceivables position (2024: 7.1%). Provision for expected losses
was EUR 19 million (2024: EUR 21 million).
Excluding currency effects, the carrying amount of trade
receivables decreased by EUR 22 million.
Trade payables and other payables
Trade payables and other payables increased by 2.5% to
EUR 1,469 million (2024: EUR 1,433 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 programmes, 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 services and an irrevocable
acceptance to pay the invoice at the due date via the funding
partner. The arrangement of early payment is an exclusive
transaction between the supplier and the supply chain finance
provider.
Extended payment terms are not embedded in the pro-
grammes themselves, but agreed with vendors directly.
The liquidity risk for Arla on termination of the programmes is
limited. No securities 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 increased to EUR 177 million (2024:
EUR 165 million).
Excluding currency effects, the carrying amount of trade paya-
bles and other payables, including owner milk, increased by
EUR 55 million.
Table 2.1.c Trade receivables
(EUR million)
2025
2024
Trade receivables before provision for expected losses
1,266
1,338
Provision for expected losses
-19
-21
Total trade receivables
1,247
1,317
Table 2.1.d Trade receivables age profile
2025
2024
(EUR million)
Gross carry-
ing amount
Expected
loss rate
Gross carry-
ing amount
Expected
loss rate
Not overdue
974
0%
1,026
0%
Overdue by less than 30 days
201
<1%
217
<1%
Overdue by between 30 and 89 days
51
<1%
53
<1%
Overdue by more than 90 days
40
43%
42
36%
Total trade receivables before provision for expected losses
1,266
1,338
Table 2.1.e Supply chain finance programmes
(EUR million)
2025
2024
Trade payables and other payables
1,469
1,433
Of which owner milk¹
287
305
Trade payables and other payables excluding owner milk
1,182
1,128
Of which is utilised for financing arrangement
177
165
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
¹ Owner milk due is not part of any supply chain finance programme.
In 2025, the average payment terms to farmers were 15 days.
Primary statements
Notes
2.1 NET WORKING CAPITAL (continued)
ARLA FOODS ANNUAL REPORT 2025
114
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
§ 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 realisable
value is determined by considering inventory marketability
and estimating the sales price, minus completion costs and
costs incurred to execute the sale.
The cost of raw materials, consumables and commercial
goods includes the purchase 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 manufactured goods also in-
cludes an appropriate share of production overheads, includ-
ing depreciation, based on the normal operating capacity of
the production 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 historical records of losses.
Calculated expected losses are adjusted for specific significant
negative developments in geographical areas.
Trade receivables are derecognised once the criteria for de-
recognition have been met, and all substantial risks and re-
wards are transferred.
Trade payables and other payables
Trade payables are measured at amortised cost, which typi-
cally corresponds to the invoiced amounts.
Amounts payable to suppliers that are included in supply
chain finance programmes are classified as trade payables on
the balance sheet and in the cash flow statement as cash flow
from working capital. The liability is recognised in trade paya-
bles until the due date of the invoice.
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 actual cost of the individual product. A key compo-
nent in the standard cost calculation is the cost of raw milk
from farmers, which is determined using the average pre-paid
milk price that matches the inventory's production date.
Due to macroeconomic volatility and its effect on commodity
prices, the valuation of individual cost components, such as
milk-based components, energy, packaging, consumables
and utilities, in our standard cost models was frequently
updated throughout 2025 and thoroughly assessed as at
31 December 2025.
Conversion from standard cost to reflect the actual cost at the
time of production for individual inventory categories was sim-
ilarly assessed.
Indirect production costs are calculated based on relevant as-
sumptions regarding capacity utilisation, production time and
other factors characterising the individual product.
Assessing the net realisable value requires judgement, partic-
ularly when estimating the sales price of certain cheese
stocks with long maturities and bulk products intended for
sale on European or global commodity markets.
Receivables
Expected losses are calculated using several parameters, such
as the number of days overdue, and are adjusted for signifi-
cant negative developments in certain geographical areas.
The financial uncertainty related to the provision for expected
losses is generally considered to be limited. However, if a cus-
tomer's ability to pay deteriorates in the future, further write-
downs may be necessary. Expected losses were carefully
assessed.
Customer-specific bonuses are calculated 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 judgement of
the characteristics of the contracts, for example the payment
terms and collaterals. The programmes are recognised as part
of the net working capital positions.
Primary statements
Notes
2.2 OTHER RECEIVABLES AND OTHER CURRENT LIABILITIES (continued)
ARLA FOODS ANNUAL REPORT 2025
115
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Other receivables
Other receivables increased by EUR 61 million to EUR 327 mil-
lion (2024: EUR 266 million) and consisted mainly of VAT
receivables, prepayments, income tax receivables and other
items.
Other items amounted to EUR 79 million (2024: EUR 81 mil-
lion), mainly driven by deposits and insurance recoveries.
Other current liabilities
Other current liabilities increased by EUR 5 million to EUR 370
million (2024: EUR 365 million). They mainly consist of
employee-related accruals, income tax and VAT payables,
accrued interests and other items.
Employee-related accruals amounted to EUR 189 million
(2024: EUR 172 million), mainly driven by holiday pay, salary
and bonuses and related salary cost accruals.
Other items amounted to EUR 108 million (2024: EUR 126
million), mainly driven by payables to finance partners of trade
receivable finance programmes.
§ Accounting policies
Other receivables and other current liabilities
Other receivables and other current liabilities are measured at
amortised cost usually corresponding to the nominal amount.
2.2 OTHER RECEIVABLES AND OTHER CURRENT LIABILITIES
Table 2.2 Other receivables and current liabilities
(EUR million)
2025
2024
VAT
135
95
Prepayments
73
63
Income tax
31
17
Accrued interest
6
8
Amounts owed by associates and joint ventures
3
2
Other
79
81
Other receivables
327
266
Employee related liabilities
189
172
Income tax
30
20
Accrued interest
18
17
VAT
13
16
Deferred income
7
13
Amounts owed to associates and joint ventures
5
1
Other
108
126
Other current liabilities
370
365
Primary statements
Notes
3.1 INTANGIBLE ASSETS AND GOODWILL (continued)
ARLA FOODS ANNUAL REPORT 2025
116
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
3.1 INTANGIBLE ASSETS AND
GOODWILL
Financial comments
Intangible assets and goodwill
Intangible assets and goodwill amounted to EUR 1,184 million
compared to EUR 1,207 million last year.
Goodwill
The carrying amount of goodwill amounted to EUR 897 mil-
lion (2024: EUR 938 million). The decrease of EUR 41 million
was due to exchange rate adjustments, primarily relating to
goodwill denominated in GBP.
Please refer to table 3.1.b for a specification of goodwill.
Licences and trademarks
The carrying amount of licences and trademarks amounted to
EUR 57 million (2024: EUR 57 million). The carrying amount
primarily relates to the recognition of trademarks from busi-
ness combinations 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 generated trademarks and are consequently not
recognised in the balance sheet. Arla holds long-term licence
agreements on Starbucks® chilled coffee, Kraft™, Galaxy®,
Milka® and other brands in certain product categories and on
certain markets. No values are recognised for these licence
agreements.
IT and other development projects
The carrying amount of IT and other development projects
was EUR 230 million (2024: EUR 212 million). The group con-
tinued investing in the SAP platform and general IT infrastruc-
ture, amounting to EUR 77 million in 2025.
Note 3.
Capital employed
Table 3.1.a Intangible assets and goodwill
(EUR million)
Goodwill
Licences and
trademarks
IT and other
development
projects
Total
2025
Cost at 1 January
938
162
559
1,659
Exchange rate adjustments
-41
-2
-1
-44
Additions
-
8
77
85
Disposals
-
-
-9
-9
Cost at 31 December
897
168
626
1,691
Amortisation and impairment at 1 January
-
-105
-347
-452
Exchange rate adjustments
-
1
1
2
Amortisation and impairment for the year
-
-7
-59
-66
Amortisation on disposals
-
-
9
9
Amortisation and impairment at 31 December
-
-111
-396
-507
Carrying amount at 31 December
897
57
230
1,184
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
Primary statements
Notes
3.1 INTANGIBLE ASSETS AND GOODWILL (continued)
ARLA FOODS ANNUAL REPORT 2025
117
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
§ Accounting policies
Goodwill
Goodwill represents the premium paid by Arla above the fair
value of the identified net assets of an acquired company. On
initial recognition, goodwill is recognised 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 structure and internal financial report-
ing. Cash-generating units are the smallest group of assets ca-
pable of generating independent cash inflows.
Licences and trademarks
Licences and trademarks are initially recognised at cost and
are amortised on a straight-line basis over their expected use-
ful lives, with a maximum period of 20 years.
IT and other development projects
Costs directly attributable to the development phase of IT and
other projects such as design, programming and installation
are recognised as intangible assets. Recognition is only made
when the expenditure can be measured reliably, the project is
technically and commercially feasible, future economic bene-
fits are probable and the group intends to complete and use
the asset and has the necessary resources to do so. These IT
and development projects are then amortised on a straight-
line basis over a period of five to eight years.
Costs incurred during the research or exploration phase,
which involves general assessments of requirements and
available technologies, are treated as expenses as they occur.
3.1.1 IMPAIRMENT TEST
OF GOODWILL
Financial comments
Goodwill is allocated to relevant cash-generating units, pri-
marily within the group's UK activities in the commercial seg-
ment Europe.
Basis for impairment test and applied estimates
Impairment tests are conducted using expected future cash
flows derived from forecasts and long-term strategic targets.
Projections for future cash flows and earnings targets are
made for each individual cash-generating unit, considering
expected developments identified in the Future26 strategy
process and past experience. This includes costs related to
sustainability initiatives undertaken as part of Arla's Future26
ambitions. The impairment tests do not include 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 assump-
tion is future profitability, which considers the impact of mov-
ing milk intake into value-add products and more profitable
markets as well as operational efficiency initiatives.
Test results
In 2025, only limited changes to discount rates were identi-
fied across our markets, with underlying anticipated future
cash flow supporting the goodwill positions. Goodwill posi-
tions and assessments of supporting business cases were
closely monitored throughout the year, with no impairments
identified.
Table 3.1.b Goodwill split by commercial segment and country
(EUR million)
2025
2024
UK
488
513
Finland
40
40
Sweden
21
19
Denmark
61
62
Europe
610
634
MENA
76
85
China
16
16
International
92
101
Argentina
8
9
UK
187
194
Arla Foods Ingredients
195
203
Total
897
938
Table 3.1.c Applied key assumptions
2025
2024
Discount rate,
net of tax
Discount rate,
before tax
Discount rate,
net of tax
Discount rate,
before tax
UK
8.7%
9.9%
8.9%
10.2%
Finland
7.3%
8.3%
7.2%
8.1%
Sweden
7.2%
8.3%
6.8%
7.7%
Denmark
6.9%
7.9%
6.7%
7.7%
MENA
9.2%
10.6%
9.4%
10.7%
China
6.4%
7.1%
6.6%
7.2%
Arla Foods Ingredients
7.5%
8.6%
7.6%
8.6%
Primary statements
Notes
3.1 INTANGIBLE ASSETS AND GOODWILL (continued)
ARLA FOODS ANNUAL REPORT 2025
118
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Calculations confirmed adequate headroom and sensitivity
calculations on discount rates, and anticipated future free
cash flows indicated continued robustness of goodwill posi-
tions on all markets.
§ Accounting policies
Impairment occurs when the carrying amount of an asset ex-
ceeds its recoverable amount through use or sale. For impair-
ment testing, assets are grouped into the smallest cash-gen-
erating units that generate largely independent cash inflows.
However, for goodwill, which does not generate independent
cash inflows, impairment tests are conducted at the level
where cash flows are considered to be largely independent.
The grouping of cash-generating units is determined based on
the management structure and internal financial reporting,
which is assessed annually.
The carrying amount of goodwill is tested for impairment to-
gether 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-gener-
ating units to which the goodwill is allocated, discounted us-
ing a pre-tax discount rate that reflects the current market as-
sessment of the time value of money and risks specific to the
asset or cash-generating unit.
The carrying amount of other non-current assets is assessed
annually against their recoverable amount to identify any indi-
cations of impairment. Any impairment of goodwill is sepa-
rately recognised in the income statement and cannot be
reversed.
The recoverable amount of other non-current assets is deter-
mined 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-current assets is recognised
in the income statement under production costs, sales and
distribution costs or administration costs. Impairment recog-
nised can only be reversed to the extent 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
carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisa-
tion, if no impairment loss had been recognised.
Uncertainties and estimates
Uncertainties and estimates play a significant role in the good-
will impairment tests. The group of cash-generating units to
which goodwill is allocated is defined based on the manage-
ment structure and assessed annually.
Goodwill impairment tests are conducted at least once a year
for each group of cash-generating units. The expected cash
flow approach is used to determine the value in use, with key
parameters including anticipated future free cash flows and
assumptions on discount rates.
Anticipated future free cash flows
The anticipated future free cash flows are determined based
on current forecasts and long-term 2029 targets derived from
the Future26 process and current profitability. These fore-
casts and targets are established at the cash-generating unit
level. External sources of information and industry-relevant
observations, such as macroeconomic and market conditions,
are considered in this determination.
All applied assumptions undergo scrutiny, relying on manage-
ment's best estimates and expectations, which inherently
involve judgement. These assumptions encompass expecta-
tions related to revenue growth, EBIT margins and capital
expenditure. They also include moving milk intake into value-
add products and more profitable markets and operational ef-
ficiency initiatives. Furthermore, future cash flow projections
include cost and capital expenditures related to sustainability
initiatives undertaken as part of Arla's sustainability strategy.
For the growth rate beyond the strategy period, it has been set
to the expected inflation rate in the terminal period, assuming
no nominal growth.
Discount rates
A discount rate, specifically the weighted average cost of capi-
tal (WACC), is applied for each individual cash-generating unit.
The rate is determined based on assumptions regarding inter-
est rates and risk premiums. WACC is recalculated 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
3.2 PROPERTY, PLANT AND EQUIPMENT (continued)
ARLA FOODS ANNUAL REPORT 2025
119
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Arla's main property, plant and equipment are located in
Denmark, the UK, Germany and Sweden. The carrying amount
was EUR 3,646 million (2024: EUR 3,521 million).
Additions amounted to EUR 645 million (2024: EUR 689 mil-
lion).
Additions included continued investments in the cheddar pro-
duction facilities in Taw Valley Dairy, the UK, and investments
in Arla Foods Ingredients to support growth in the value-add
segment.
In 2025, new investments were initiated, including invest-
ments in capacity and logistics upgrades in Denmark and
transformation of the Lockerbie Dairy in the UK into a centre
of excellence for UHT and Lactofree milk.
Depreciation amounted to EUR 443 million (2024: EUR 445
million), on par with last year.
3.2 PROPERTY, PLANT AND EQUIPMENT
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
2025
Cost at 1 January
2,405
4,682
884
553
8,524
Exchange rate adjustments
-31
-33
-16
-16
-96
Additions
78
134
57
376
645
Transferred from assets in the course of construction
106
188
20
-314
-
Disposals
-50
-124
-39
-
-213
Cost at 31 December
2,508
4,847
906
599
8,860
Depreciation and impairment at 1 January
-1,103
-3,243
-657
-
-5,003
Exchange rate adjustments
10
17
10
-
37
Depreciation and impairment for the year
-110
-247
-86
-
-443
Depreciation on disposals
33
124
38
-
195
Depreciation and impairment at 31 December
-1,170
-3,349
-695
-
-5,214
Carrying amount at 31 December
1,338
1,498
211
599
3,646
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
PROPERTY, PLANT AND EQUIPMENT BY COUNTRY
(EUR MILLION)
2025
2024
Denmark
Sweden
UK
Germany
Other
1,627
336
815
437
431
1,573
324
763
431
430
Primary statements
Notes
3.2 PROPERTY, PLANT AND EQUIPMENT (continued)
ARLA FOODS ANNUAL REPORT 2025
120
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
§ Accounting policies
Property, plant and equipment are measured at cost less ac-
cumulated depreciation and accumulated impairment losses.
Assets under construction, land and decommissioned plants
are not depreciated.
Cost
Cost includes the acquisition price and any costs directly re-
lated to an asset until it is ready for its intended use. For self-
constructed assets, cost covers both direct and indirect costs
related to materials, components, payroll and borrowing costs
from both specific and general borrowing directly associated
with asset construction. Further, payment on account is in-
cluded in the carrying amount of assets under construction. If
significant parts of a property, plant or equipment item have
different useful lives, they are recognised as separate items
(major components) and depreciated individually. When com-
ponent parts are replaced, any remaining carrying amount of
the replaced parts is derecognised from the balance sheet
and recognised as an accelerated depreciation 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 bene-
fits to the group. Other expenses, such as general repairs and
maintenance, are recognised in the income statement as they
occur.
Depreciation
Depreciation allocates the cost of an asset, less its estimated
recoverable amount at the end of its useful life, to the periods
in which the group benefits from its use.
Property, plant and equipment are depreciated on a straight-
line basis from the acquisition date or when the asset is ready
for use, based on estimated useful lives.
The depreciation base is the asset's cost minus its residual
value and any impairment losses.
Residual value is the estimated amount recoverable through
sale or scrappage at the balance sheet date, assuming the
asset is at its expected age and condition at the end of its
useful life.
Residual values are determined at acquisition and reviewed
annually. Depreciation ceases when the carrying amount
equals the residual value or when the asset is decommis-
sioned.
Any changes to the useful life or the residual 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 distribution 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 expensed in the income state-
ment. The depreciable amount of an item is based on the as-
set's cost or carrying amount and its residual value. Estimates
are also made to determine the amount the group can re-
cover at the end of an asset's useful life. An annual review is
conducted to evaluate the appropriateness of the deprecia-
tion 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 transformation, or from excess pro-
duction capacity if milk volumes and operations decline.
In 2025, non-current assets in the balance sheet were not af-
fected by such impairment. Sustainability has become an inte-
gral part of all CapEx investments, ensuring that future invest-
ments address the identified risks.
Table 3.2.b Estimated useful life in years
2025
2024
Office buildings
50
50
Production buildings
20-30
20-30
Machinery and technical facilities
5-20
5-20
Other fixtures and fittings, tools and equipment
3-7
3-7
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
2021
2022
2023
2024
2025
521
429
533
689
645
406
414
417
445
443
452
373
445
557
570
332
340
347
366
362
88
132
75
81
70
79
56
74
74
69
Primary statements
Notes
3.2 PROPERTY, PLANT AND EQUIPMENT (continued)
ARLA FOODS ANNUAL REPORT 2025
121
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
3.2.1 RIGHT-OF-USE ASSETS
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 an-
other major right-of-use asset category. Filling machines typi-
cally have useful lives of seven years, whereas other technical
plants are depreciated between one and seven years. Cars and
trucks have on average useful lives of four and five years, re-
spectively. In total, the group has approximately 3,800 leases.
The total carrying amount of right-of-use assets was EUR 222
million (2024: EUR 253 million), as specified in table 3.2.1.a.
Additions to right-of-use assets during the year amounted to
EUR 75 million (2024: EUR 132 million). Lease liabilities are
specified in Note 4.3.
§ Accounting policies
All leases, except for short-term and low-value leases, are rec-
ognised 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 measured on a present
value basis, which includes the net present value of fixed lease
payments, variable lease payments based on an index or a rate
and purchase options when it is reasonably certain that they
will be exercised, less any lease incentives receivable.
The lease payments are discounted using an incremental bor-
rowing rate.
The corresponding right-of-use asset is measured at cost,
which includes the initial 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 reduction 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 recog-
nised 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 assessment of the incremen-
tal borrowing rate, service components and facts and circum-
stances that could create an economic 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
2025
Carrying amount at 1 January
151
16
86
253
Additions
41
-
34
75
Disposals
-45
-2
-31
-78
Depreciation and impairment for the year
-38
-3
-40
-81
Depreciation on disposals
29
2
30
61
Exchange rate adjustments
-7
-
-1
-8
Carrying amount at 31 December
131
13
78
222
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
Table 3.2.1.b Amounts recognised in the income statement and the cash flow statement
(EUR million)
2025
2024
Expenses related to short-term and low-value leases
43
46
Interest expenses on lease liabilities
12
11
Total amounts recognised in the income statement
55
57
Payment of lease debt
74
78
Total cash flow from right of use assets
129
135
Primary statements
Notes
3.3 ASSOCIATES AND JOINT VENTURES (continued)
ARLA FOODS ANNUAL REPORT 2025
122
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
The share of the profit in associates and joint ventures
amounted to EUR 30 million (2024: EUR 33 million).
COFCO Dairy Holdings Limited (CDH) and
China Mengniu Dairy Company Limited (Mengniu)
The group has invested in CDH, which is classified as an asso-
ciate. CDH has a non-controlling financial interest in Mengniu,
a large Chinese dairy company.
The group's proportionate share of CDH's net asset value was
EUR 339 million (2024: EUR 453 million), representing the fair
value of Arla's indirect interest in Mengniu.
The indirect investment in Mengniu is measured at the pro-
portionate share of the fair value based on the listed share
price in Hong Kong at the reporting date. Fair value changes
are together with foreign exchange rate adjustments recog-
nised in other comprehensive income, and dividends received
are recognised as share of profit from associates because the
shares are held through CDH.
CDH holds no significant assets other than its investment in
Mengniu, and its reported revenue relates to dividends
received from Mengniu. Through CDH, Arla holds an indirect
5.3% interest in Mengniu. See table 3.3.c for further details
on CDH.
Lantbrukarnas Riksförbund (LRF)
The carrying amount of the investment related to the mem-
bership of Lantbrukarnas Riksförbund in Sweden amounted to
EUR 99 million (2024: EUR 90 million).
§ Accounting policies
Investments in which Arla has a significant 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 ventures are recognised
using the equity method and measured at the proportionate
share of the entities' net asset values, calculated in accord-
ance with Arla's accounting policies. Goodwill related to acqui-
sitions of these investments 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 proportionate share of un-
realised inter-company profits or losses.
Dividends received from associates and joint ventures reduce
the value of the investment.
Investments in associates and joint ventures with negative net
asset values are measured at zero. If Arla has a legal or con-
structive 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 envi-
ronment in which the equity-accounted investee operates, or
a significant or prolonged decline in the fair value of the in-
vestment below its carrying amount.
3.3 ASSOCIATES AND JOINT VENTURES
Table 3.3.a Associates and joint ventures
(EUR million)
2025
2024
Carrying amount at 1 January
560
560
Net profit
30
33
Dividends received
-21
-24
Fair value adjustments in OCI
-71
-24
Exchange rate adjustments in OCI
-36
15
Carrying amount at 31 December
462
560
Table 3.3.b Specification of associates and joint ventures
(EUR million)
2025
2024
COFCO Dairy Holdings Ltd.
339
453
LRF and other associates
106
94
Other joint ventures
17
13
Carrying amount of associates and joint ventures
462
560
Primary statements
Notes
3.3 ASSOCIATES AND JOINT VENTURES (continued)
ARLA FOODS ANNUAL REPORT 2025
123
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Where the equity-accounted investment is considered an in-
tegral 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 investee, with-
out having control or joint control over those policies. Judge-
ment is required to determine when significant influence ex-
ists. Factors considered include representation on the BoD,
participation in policy-making processes, material transac-
tions between the entities and interchange of managerial per-
sonnel.
CDH and Mengniu
The group holds a 30% investment in CDH, which is classified
as an associate due to a cooperation agreement granting sig-
nificant influence, including the right to representation on
the BoD.
The indirect ownership in Mengniu amounts to 5.3% of the
shares, and Arla holds no significant influence.
Lantbrukarnas Riksförbund (LRF)
Arla holds a 24% ownership interest in LRF, a politically inde-
pendent professional organisation for Swedish entrepreneurs
involved in agriculture, forestry and horticulture.
Based on a detailed analysis of the LRF arrangement, Arla's
active ownership interest 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 rep-
resented the Swedish dairy industry 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 exercises significant in-
fluence in LRF, and the investment is therefore classified as an
associate.
Table 3.3.c COFCO Dairy Holdings Ltd. (CDH) Disclosures
(EUR million)
2025
2024
Financial information¹
Revenue
41
38
Net profit
41
38
Other comprehensive income
-118
-14
Non-current assets
670
757
COFCO Dairy Holdings Ltd. has no other significant assets or liabilities
Other information
Dividends received from CDH
13
13
Arla's ownership of CDH
30%
30%
Arla's proportionate share of net profit in CDH
13
22
Arla's proportionate share of fair value of Mengniu based on listed share price
339
453
¹ Based on the latest available financial reporting
Table 3.3.d Transactions with associates and joint ventures
(EUR million)
2025
2024
Purchase of goods
48
47
Trade receivables¹
2
2
Trade payables¹
-7
-10
¹ Included in other receivables and other payables
Primary statements
Notes
3.4 BUSINESS COMBINATIONS (continued)
ARLA FOODS ANNUAL REPORT 2025
124
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Acquisition of enterprises in 2025
No material entities, non-controlling interests or activities
were acquired or divested in 2025.
Arla group to merge with DMK Group
In 2025 Arla and DMK Group announced a merger agreement.
The merger awaits approval by competition authorities. The
transaction is expected to be closed in the first half of 2026.
Acquisition of enterprises in 2024
Felinfach Whey Nutrition business
In November 2024, Arla acquired a whey nutrition business
and production facility in the UK from Volac International
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 business and to improve and
secure whey production capacity in the UK.
Goodwill from the acquisition amounted to EUR 147 million
and relates to the AFI segment. It is supported by strategic ad-
vantages and synergies and consolidates our position as the
whey nutrition market leader.
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 Lockerbie to handle effluent from the manufac-
turing 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.
§ Accounting policies
Newly acquired companies are included in the consolidated
financial statements when the group gains control. The acqui-
sition amount is measured at its fair value. If the agreement al-
lows for payment changes due to future events (contingent
consideration), it is measured at fair value at the acquisition
date.
Changes in contingent consideration estimates are recog-
nised in the income statement. Acquisition-related costs are
also recognised in the income statement as they occur. Ac-
quired assets, liabilities and contingent liabilities are meas-
ured at fair value on the acquisition date.
In step acquisitions, the shareholding held before gaining con-
trol is remeasured 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 acquisition is rec-
ognised as the cost of the entire shareholding in the com-
pany.
Goodwill arises when the total of the fair value of the trans-
ferred 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 assessed annu-
ally for impairment.
This approach also applies in mergers with other cooperatives,
where the owners of the acquired company become owners
of Arla Foods amba. The purchase price is determined at the
acquisition date when the net assets' fair values are trans-
ferred, and equity instruments are issued. If the consideration
exceeds the fair value of the identifiable net assets, it is recog-
nised as goodwill.
Changes in the group's interest in a subsidiary 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 un-
changed.
Gains or losses on the sale of subsidiaries 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 cru-
cial. 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 contingent liabilities as well as
measuring the company's fair value at the time of acquisition.
3.4 BUSINESS COMBINATIONS
Table 3.4 Business combinations
(EUR million)
2025
2024
Property, plant and equipment
-
127
Inventory
-
16
Trade receivables
-
24
Trade payables
-
-24
Other net assets
-
15
Fair value of net assets
-
158
Goodwill
-
157
Consideration transferred
-
315
Cash in acquired business
-
-25
Cash flow from business combinations
-
290
Primary statements
Notes
4.1 FINANCIAL RISKS (continued)
ARLA FOODS ANNUAL REPORT 2025
125
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
4.1 FINANCIAL RISKS
Financial comments
Financial risks are an inherent part of the group's operating
activities and as a result, 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
management approach in place to mitigate short-term mar-
ket volatility, while simultaneously achieving the highest pos-
sible milk price.
The group's comprehensive financial risk management strat-
egy and system builds on a thorough understanding of the in-
teraction between the group's operating activities and under-
lying financial risks. The overall framework for managing finan-
cial risks, being the Treasury Policy, is approved by the Board
of Directors (BoD) on a regular basis and managed centrally.
The policy outlines risk limits for each type of financial risk,
permitted financial instruments and counterparties.
The group's financial risk exposure is reported to the BoD on a
monthly basis. Hedging the volatility of milk prices is not
within the scope of financial risk management, but is an inher-
ent component of the group's business model.
4.1.1 LIQUIDITY RESERVES
Adequate liquidity reserves
In 2025, liquidity reserves increased by EUR 492 million to
EUR 2,030 million driven by an increase in loan facilities. Look-
ing at the maturity profile of the group's debt and the fore-
casted cash flow, the liquidity reserves are considered ade-
quate and are expected to remain at the same level during
2026. Ensuring the availability of sufficient operating liquidity
and credit facilities for operations is the primary goal of man-
aging liquidity risk. Based on the liquidity models suggested by
the rating agencies, Arla's liquidity reserves of EUR 2,030 mil-
lion are assessed adequate for the coming 12 months.
For further details regarding securities included in the liquidity
reserves, please refer to Note 4.6.
Supply chain finance programmes and trade receivables fi-
nancing relating to customers form part of the group's
liquidity management. Selected suppliers have access to the
group's supply chain finance facilities, which allow those sup-
pliers to benefit from the group's credit profile. For further de-
tails regarding supply chain finance programmes and trade re-
ceivables financing, please refer to Note 2.1.
Around 94% (2024: 94%) of the day-to-day liquidity flow of
the group is managed and controlled centrally and to a wide
extent via cash pooling arrangements. This secures a scalable
and efficient operating model. As a result, the group is able to
ensure cost-efficient utilisation of credit facilities and limit ex-
cess cash.
Note 4.
Funding
Table 4.1.1.a Liquidity reserves
(EUR million)
2025
2024
Free cash and cash equivalents
36
62
Restricted cash
18
14
Not readily available cash
22
15
Cash and cash equivalents
76
91
Free securities
10
10
Restricted securities
11
20
Securities used in repurchase arrangements
530
547
Securities
551
577
Free cash and cash equivalents
36
62
Free securities
10
10
Unutilised committed loan facilities > 1 year
1,315
952
Loan facilities < 1 year
669
514
Liquidity reserves
2,030
1,538
Interest-bearing debt maturing < 1 year
753
659
LIQUIDITY RESERVES
(EUR MILLION)
2025
2024
Free cash and cash
equivalents
Free securities
Unutilised committed
loan facilities > 1 year
loan facilities < 1 year
Interest-bearing debt
maturing < 1 year
36
10
1,315
669
753
62
10
952
514
659
Primary statements
Notes
4.1 FINANCIAL RISKS (continued)
ARLA FOODS ANNUAL REPORT 2025
126
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Arla operates in several countries with restrictions and regula-
tions on the transferability of cash and securities. At 31 De-
cember 2025, cash of EUR 18 million (2024: EUR 14 million)
was located in countries with restrictions and regulations on
the transferability of cash, while the amount related to re-
stricted securities was EUR 11 million (2024: EUR 20 million).
Cash and securities in Argentina, China, Bangladesh and Sene-
gal 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 circumstances such
as local administrative processes or shareholder agreements.
At 31 December 2025, EUR 22 million (2024: EUR 15 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-dis-
counted contractual cash flow of these liabilities amounted to
EUR 6,359 million (2024: EUR 6,277 million), of which EUR
2.887 million (2024: EUR 2,863) can be required to be settled
during the next 12 months. The carrying amount was EUR
5,708 million (2024: EUR 5,509 million). The difference be-
tween the non-discounted contractual cash flow and carrying
amount represents the interest expenses on the interest-
bearing debt including costs arisen at initial recognition,
which are amortised over the duration of the liabilities.
Throughout the year and at year-end there has been signifi-
cant headroom towards covenants in credit facilities. For
further details regarding covenants on credit facilities, please
refer to Note 4.3.
Table 4.1.1.b Maturity of gross financial liabilities
Maturity
(EUR million)
Carrying
amount
Total
2026
2027
2028
2029
2030
2031
2032
2033-2035
After 2035
2025
Issued bonds
445
465
196
146
123
-
-
-
-
-
-
Mortgage credit institutions
1,189
1,658
48
56
84
110
110
110
110
408
622
Credit institutions
2,001
2,145
868
916
199
56
104
1
1
-
-
Schuldschein
351
369
209
6
3
151
-
-
-
-
-
Lease liabilities
225
225
71
52
34
24
16
28
-
-
-
Other current liabilities
6
6
6
-
-
-
-
-
-
-
-
Trade payables and other payables
1,469
1,469
1,469
-
-
-
-
-
-
-
-
Derivative instruments
22
22
20
1
1
-
-
-
-
-
-
Total
5,708
6,359
2,887
1,177
444
341
230
139
111
408
622
Maturity
(EUR million)
Carrying
amount
Total
2025
2026
2027
2028
2029
2030
2031
2032-2034
After 2034
2024
Issued bonds
524
568
124
188
139
117
-
-
-
-
-
Mortgage credit institutions
1,203
1,843
131
93
97
104
112
115
115
397
679
Credit institutions
1,672
1,722
1,025
45
484
4
161
1
1
1
-
Schuldschein
351
385
15
210
7
153
-
-
-
-
-
Lease liabilities
252
252
71
57
41
26
18
39
-
-
-
Other current liabilities
10
10
10
-
-
-
-
-
-
-
-
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
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 flow 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
4.1 FINANCIAL RISKS (continued)
ARLA FOODS ANNUAL REPORT 2025
127
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Risk mitigation
Risk
Liquidity and funding are vital for the group to be able to pay
its financial liabilities as they become due. Risk management
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 interest-bearing debt and sets limitations on
debt maturing within the next 12- and 24-month periods.
Unused committed facilities are considered when calculating
average maturity.
How we act and operate
In addition to the Treasury Policy, the BoD 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 opportu-
nities to be explored and implemented. The funding strategy
is supported by farmer owners' long-term commitment to in-
vesting in the business. It is the group's objective to maintain
its credit quality at a robust investment grade level.
4.1.2 CURRENCY RISK
Financial comments
The group is exposed to both transaction 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 decreased by EUR 41 million compared to
last year due to negative transaction effects. Part of this expo-
sure is 'hedged' by costs in the same currency. Financial in-
struments such as trade receivables, trade payables and other
items denominated in currencies other than the individual en-
tities' functional currencies are also exposed to currency risks.
The net effect from the revaluation of these financial instru-
ments is recognised in financial income or financial costs. A
net loss of EUR 17 million (2024: EUR 4 million) was recog-
nised in financial costs.
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 recognised in other income or other costs, respec-
tively. A net profit impact of EUR 48 million (2024: EUR -25
million) was recognised. Please refer to Note 1.3. A profit im-
pact from hedging should be expected in years where export
currencies weaken during the year and vice versa.
The group is exposed to translation effects from entities
reporting in currencies other than EUR. The group is mainly
exposed to translation of entities reporting in GBP, SEK, USD
and DKK. Due to translation effects, revenue decreased by
EUR 80 million (2024: EUR +31 million) compared to the
revenue reported last year.
Simultaneously, costs increased by EUR 12 million (2024:
EUR -17 million) compared 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 currency translation
adjustments. In 2025, a net loss of EUR 103 million (2024:
EUR +53 million) was recognised in other comprehensive in-
come.
The pre-paid milk price indirectly absorbs both transaction
and translation effects, and therefore the net profit 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%.
Compared to last year, the average exchange rate of the SEK
strengthened by 3.4%, while the GBP and USD weakened by
1.2% and 4.1%, respectively.
The group is increasingly involved in emerging markets where
efficient hedging is often not feasible due to currency regula-
tions, illiquid financial markets or expensive hedging costs.
Among the most important markets are Nigeria, Bangladesh,
Lebanon, the Dominican Republic and Argentina. Countries
with less efficient currency markets represented 4% (2024:
4%) of the group's revenue in 2025.
Table 4.1.1.c Average maturity
Policy
2025
2024
Minimum
Maximum
Average maturity, gross debt
4.9 years
5.0 years
2 years
-
Maturity < 1 year, net debt
0%
0%
-
25%
Maturity > 2 year, net debt
91%
91%
50%
-
REVENUE SPLIT BY CURRENCY
(EUR MILLION)
2025
2024
EUR
GBP
SEK
DKK
USD
SAR
Other
5,089
3,806
1,858
1,626
1,448
376
864
4,612
3,495
1,601
1,419
1,369
382
892
Primary statements
Notes
4.1 FINANCIAL RISKS (continued)
ARLA FOODS ANNUAL REPORT 2025
128
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Risk mitigation
The group's external exposure is calculated as financial assets
and liabilities denominated in currencies other than the func-
tional currency of each legal entity, i.e. open positions, plus
any derivatives, i.e. hedging of future cash flows, converted at
group level into currency risk against DKK, i.e. EUR/DKK,
USD/DKK etc. The aggregate of the open positions and hedg-
ing of future cash flows of the group's currency 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 in-
struments hedging those investments, are excluded.
Risk
According to the Treasury 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. Individual currency exposures are hedged
in accordance with the Treasury 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 op-
tion strategies, are accounted for as fair value through the in-
come statement.
Arla Foods amba's functional currency is DKK. The risk on EUR
is ranked alongside with DKK, hence EUR positions are treated
as DKK when monitoring risks. The Executive Board has the
discretion to decide if and when investments in foreign opera-
tions should be hedged (translation risks) with an obligation to
inform the BoD at the next meeting.
Table 4.1.2.a Exchange rates
Closing rate
Average rate
2025
2024
Change
2025
2024
Change
EUR/GBP
0.872
0.829
-4.9%
0.856
0.846
-1.2%
EUR/SEK
10.802
11.474
6.2%
11.060
11.434
3.4%
EUR/DKK
7.469
7.458
-0.1%
7.464
7.459
-0.1%
EUR/USD
1.175
1.041
-11.4%
1.128
1.082
-4.1%
EUR/SAR
4.410
3.893
-11.7%
4.233
4.059
-4.1%
Table 4.1.2.b External 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
2025
EUR/DKK
362
303
665
1.0%
4
3
USD/DKK¹
-13
-534
-547
5.0%
-1
-27
GBP/DKK
22
-224
-202
5.0%
1
-11
SEK/DKK
5
-81
-76
5.0%
0
-4
SAR/DKK
59
-177
-118
5.0%
3
-9
2024
EUR/DKK
211
-
211
1.0%
2
-
USD/DKK¹
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
¹ Including AED, QAR
Primary statements
Notes
4.1 FINANCIAL RISKS (continued)
ARLA FOODS ANNUAL REPORT 2025
129
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
4.1.3 INTEREST RATE RISK
Financial comments
The average duration of the group's interest hedging of inter-
est-bearing debt, including derivatives but excluding pension
liabilities, was unchanged compared to last year.
The market value of derivatives hedging future interest cash
flow amounted to EUR 58 million (2024: EUR 71 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 exposure. Profit exposure re-
lates to net potential impairment of non-current assets. Other
comprehensive income exposure 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 50 million (2024: EUR 33 million) positive
effect would be recognised in other comprehensive income. A
decrease in the interest rate would have the opposite effect.
Please refer to table 4.1.3.a.
A change in interest rates will, all other things being equal,
also impact headroom calculated in connection with impair-
ment test of goodwill and gross pension liabilities.
Cash flow sensitivity
A change in interest rates will impact interest rate payments
on the group's unhedged floating-rate debt. Table 4.1.3.a
shows the one-year cash flow sensitivity.
Policy
Interest rate risk must be managed according to the Treasury
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 se-
cure relatively stable and predictable financing costs. The in-
terest 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 independently
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-efficient manner without changing underlying loan
agreements.
The mandate from the BoD provides the group with the op-
portunity to use derivatives, such as interest rate swaps and
options, in addition to interest 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 com-
prehensive
income
2025
Financial assets
-610
1.0%
6
-1
Derivatives
-
1.0%
15
51
Financial liabilities
4,217
1.0%
-18
-
Net interest-bearing debt excluding pension liabilities
3,607
3
50
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
Table 4.1.3.b Duration
Policy
2025
2024
Minimum
Maximum
Duration
2.4
2.2
1
7
Primary statements
Notes
4.1 FINANCIAL RISKS (continued)
ARLA FOODS ANNUAL REPORT 2025
130
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
4.1.4 COMMODITY PRICE RISK
Financial comments
Energy commodity contracts, except for electricity contracts
covered by power purchase agreements, are predominately
related to a floating official price index. The Treasury function
uses financial derivatives to hedge energy commodity price
risk. This secures full flexibility to change suppliers without
having to take future hedging into consideration.
Hedging activities focus on the most significant risks, includ-
ing electricity, natural gas and diesel. For 2026, the forecasted
energy commodity spend, excluding taxes and distribution
costs, for the countries covered by hedging amounts to EUR
154 million based on the prices at 31 December 2025.
The purpose of hedging is to reduce volatility in energy-re-
lated costs. In 2025, hedging activities resulted in a net loss of
EUR 2 million (2024: EUR -29 million), please refer to table
1.3. The net loss in 2025 was partly offset by lower physical
energy costs. The result of hedging activities, classified as
hedge accounting, is recognised in other income and costs.
At the end of 2025, 54% of the forecasted energy spend for
2026 was hedged. A 50% increase in commodity prices would
negatively impact the forecasted unhedged energy spend by
approximately EUR 35 million (2024: EUR -40 million). If the
forecasted energy prices were 50% higher at 31 December
2025, a gain of EUR 25 million (2024: EUR 42 million) would
positively impact other comprehensive income.
For other physical supplier contracts covering ingredients
and packaging primarily depend on a fluctuating official price
index.
Power purchase agreements
Arla has signed power purchase agreements covering 549
GWh (2024: 549 GWh), of which a yearly production of 401
GWh was in operation at 31 December 2025 (2024: 194 GWh).
No new agreements were signed in 2025. The committed
quantity of 549 GWh is intended for own use.
Power purchase agreements that went into operation in 2025
are expected to cover 18% (2024: 10%) of the yearly electric-
ity consumption in Europe (based on 2025 numbers), and
21% (2024: 14%) of the yearly electricity consumption com-
ing from renewable sources in Europe (based on 2025 num-
bers).
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 certifi-
cates for the agreements, is EUR 72 (2024: EUR 72).
In 2025, Arla incurred costs of EUR 23 million (2024: EUR 7
million) related to purchase of electricity under existing power
purchase agreements. A limited amount of volumes were un-
used at the time of delivery during 2025. Income from the
sale of unused volumes was offset against the cost of pur-
chasing corresponding volumes on a daily basis and within the
same markets.
The majority of the agreements do not contain price adjust-
ment clauses like indexation. Only a few of the low quantity
agreements have an indexation element with a maximum
increase included, which is immaterial for Arla.
Under normal circumstances, none of the agreements are ter-
minable during the contract period. However, termination can
Table 4.1.4.a Contracted power purchase agreements
Country
Annual MWh
of energy
contracted
Price terms
Average
duration
In operation
Objective
Classification
2025
Denmark
323,400
Fixed
10 years
2023 - 2027
Own use
Executory contracts
Sweden
90,000
Fixed
10 years
2025 - 2026
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
In operation
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
Primary statements
Notes
4.1 FINANCIAL RISKS (continued)
ARLA FOODS ANNUAL REPORT 2025
131
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
happen in case of default related to various circumstances. In
general, termination does not affect the parties' obligation
and liability to fulfil obligations accrued during the term of the
agreements. Termination in case of default can result in ter-
mination payment by the defaulting party.
All agreements are assessed through a structured process
based on the latest available guidance as well as involvement
of external expertise. All contracts are physical and for the pur-
pose of own use and are therefore classified as executory sup-
plier contracts.
At 31 December 2025, contractual obligations covering
power purchase agreements amounted to EUR 373 million
(2024: EUR 408 million). For additional information about con-
tractual obligations, please refer to Note 5.5.
Risk mitigation
Risk
The group is exposed to energy price risk related to the pro-
duction and distribution of dairy products. Increased com-
modity prices negatively impact production and distribution
costs.
The group is exposed to seasonality and intra-day production
fluctuations of electricity sourced via power purchase agree-
ments, which can result in sale and purchase of imbalance be-
tween production and consumption. To mitigate the risk of
sale of produced electricity, the group is investing in energy-
optimising units to utilise excess electricity produced.
Fair value sensitivity
A change in energy prices will impact the fair value of the
group's hedged commodity derivative instruments, measured
through other comprehensive income and the unhedged en-
ergy consumption through the income statement. Table
4.1.4.b shows the sensitivity of a 50% increase in energy
prices for both hedged and unhedged energy purchases. A
decrease in energy prices would have the opposite effect.
Policy
According to the Treasury Policy, the forecasted consumption
of electricity, natural gas and diesel can be hedged 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 price risk is managed by the Treasury function. Energy
price risks are mainly hedged by entering into financial deriva-
tive contracts, 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 US and New Zealand
remain small, but are evolving. The group has engaged in
hedging activities for a small part of the group's dairy com-
modity trading volume. As the dairy derivative market devel-
ops, we expect this to play an increasing role in managing
fixed price contracts with customers in the coming years.
Table 4.1.4.b Hedged commodities
Potential accounting impact
Sensitivity
Carrying
amount
Income
statement
Other
comprehensive
income
2025
Diesel / natural gas
50%
-6
-18
22
Electricity
50%
-1
-17
3
Total
-7
-35
25
2024
Diesel / natural gas
50%
9
-20
38
Electricity
50%
-
-20
4
Total
9
-40
42
Primary statements
Notes
4.1 FINANCIAL RISKS (continued)
ARLA FOODS ANNUAL REPORT 2025
132
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
4.1.5 CREDIT RISK
Financial comments
In 2025, the group continued to experience very limited
losses from defaulting counterparties such as customers, sup-
pliers and financial counterparties.
All major financial counterparties had satisfactory credit rat-
ings 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 relationship banks and where financial counterparties with
a satisfactory credit rating do not operate, the group deviated
from the rating requirement. Out of the EUR 19 million (2024:
EUR 30 million) placed in weaker speculative grade, EUR 11
million (2024: EUR 20 million) was restricted surplus cash in
Argentina invested in securities.
Further information on trade receivables is provided in
Note 2.1.
The maximum exposure to credit risk is approximately equal
to the carrying amount.
As in previous years, the group continuously worked with
credit exposure and experienced a very low level of losses aris-
ing from customers.
To manage the financial counterparty risk, the group uses
master netting agreements when entering into derivative
contracts. The absolute majority of derivatives used for hedg-
ing do not include cash collateral clauses. Table 4.1.5 shows
the counterparty exposure for those agreements covered by
entering into netting agreements that qualify for netting in
case of default.
Risk mitigation
Risk
Credit risks arise from operating activities and engagement
with financial counterparties. Furthermore, a weak counter-
party credit quality can reduce their ability to support the
group going forward, thereby jeopardising the fulfilment of
our group strategy.
Policy
Counterparties for financial contracts are selected based on a
relationship bank strategy. New financial counterparties must
be approved by the Executive Board, following a recommen-
dation from the Treasury function. A minimum long-term rat-
ing 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 counterparty, no rating is necessary. If the
counterparty has multiple credit ratings, the average rating is
used (rounded up). However, in geographies without sufficient
coverage from our relationship banks, the Treasury function
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 coverage. This is considered an ac-
ceptable risk due to the group's investments in emerging mar-
kets. If a customer payment is delayed, internal procedures
are followed to minimise losses. The group works with a select
few financial counterparties and continuously monitors their
credit ratings.
CREDIT RATING OF FINANCIAL ASSETS PLACEMENT
(EUR MILLION)
2025
2024
AAA
AA
AA-
A+
A
A-
BBB+
Stronger
speculative
grade1
Weaker
speculative
grade1
73%
0%
7%
12%
2%
1%
1%
2%
3%
73%
0%
2%
14%
2%
2%
1%
2%
4%
Table 4.1.5 Credit rating of financial assets placement
(EUR million)
AAA
AA
AA-
A+
A
A-
BBB+
Stronger spec-
ulative grade¹
Weaker specu-
lative grade¹
Total
2025
Securities
540
-
-
-
-
-
-
-
11
551
Cash
-
2
9
16
16
8
3
14
8
76
Derivatives
-
-
40
76
-
-
1
-
-
117
Total
540
2
49
92
16
8
4
14
19
744
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
¹ Definition based on S&P rating scale. Stronger speculative grade: BB+ to B- and weaker speculative grade: CCC+ to D.
Primary statements
Notes
4.2 FINANCIAL ITEMS (continued)
ARLA FOODS ANNUAL REPORT 2025
133
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Financial items decreased by EUR 2 million to EUR 133 mil-
lion. The negative effect from the development in foreign ex-
change rates was offset by a positive development in interest
expenses.
Net interest expenses amounted to EUR 136 million, a de-
crease of EUR 12 million compared to last year driven by lower
interest cost due to lower interest rates.
Average interest expenses, excluding interest related to pen-
sion assets and liabilities, were 3.3% (2024: 4.4%). Interest
cover increased to 8.5 (2024: 7.5) driven by lower net interest
expenses. For a definition of average interest expenses, ex-
cluding 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 recognised 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 fi-
nancial 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, construction 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
2025. For 2025, an interest rate of 3.3% was used (2024:
4.4%). Financial income and financial costs relating to finan-
cial assets and financial liabilities were recognised using the
effective interest method.
4.2 FINANCIAL ITEMS
Table 4.2 Financial income and financial costs
(EUR million)
2025
2024
Financial income:
Interest securities, cash and cash equivalents
22
34
Foreign exchange rate gains
126
137
Fair value adjustments and other financial income
27
12
Total financial income
175
183
Financial costs:
Interest on financial instruments measured at amortised cost
153
178
Foreign exchange rate losses
143
141
Interest on pension liabilities
5
4
Interest transferred to property, plant and equipment
-16
-18
Fair value adjustments and other financial costs
23
13
Total financial costs
308
318
Net financial costs
133
135
Primary statements
Notes
4.3 NET INTEREST-BEARING DEBT (continued)
ARLA FOODS ANNUAL REPORT 2025
134
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Net interest-bearing debt, excluding pension liabilities, in-
creased to EUR 3,607 million (2024: EUR 3,367 million). The
development was driven by investments in our operations
such as dairies and warehouses.
Pension liabilities decreased by EUR 7 million to EUR 159 mil-
lion. Net interest-bearing debt, including pension liabilities,
amounted to EUR 3,766 million (2024: EUR 3,533 million).
The UK pension scheme net assets were EUR 23 million
(2024: EUR 11 million). The net pension asset position in the
UK was excluded from the calculation of net interest-bearing
debt including pension liabilities, hence also leverage.
Arla's leverage ratio was 3.3. This corresponded to a minor in-
crease of 0.1 compared to last year, driven by an increase in
net interest-bearing debt, which was partly offset by improved
EBITDA. The result of 3.3 was within the long-term target
range of 2.8-3.4.
The average maturity of interest-bearing borrowings de-
creased by 0.1 year to 4.9 years. Average maturity is affected
by a lapse of time to maturity and the level of net interest-
bearing debt, and is offset by new facilities.
The equity ratio decreased to 32% (2024: 34%).
Funding
The group applies a diversified funding strategy to balance the
liquidity and refinancing risk with the aim of achieving low
financing costs. Major business combinations or investments
are funded separately.
A diverse funding strategy includes diversification of markets,
currencies, instruments, banks, lenders and maturities to se-
cure broad access to funding and to ensure that the group is
independent of one single funding partner or one single mar-
ket. All funding opportunities are benchmarked against the
three-month EURIBOR rate, and derivatives are applied to
match the currency of our funding needs. The interest profile
is managed with interest rate swaps independently of the indi-
vidual loans. At 31 December 2025, 44% (2024: 33%) of the
total interest-bearing borrowings was covered by interest rate
swaps.
The credit facilities contain financial covenants on equity/to-
tal assets (equity ratio) of at least 20% and minimum equity of
EUR 750 million as well as standard non-financial covenants.
Reporting of covenants varies from quarterly, semi-annually to
annually. At 31 December 2025, the carrying amount of uti-
lised credit facilities containing covenants was EUR 2,447 mil-
lion (2024: EUR 2,098 million) with 8% maturing within one
year (2024: 19%), 53% maturing between one to five years
(2024: 35%) and 39% after five years (2024: 46%). At 31 De-
cember 2025, none of Arla's credit facilities contained con-
tractual conditions linked to business-related KPIs that would
trigger a change in the future cash flow of the facilities. The
group did not default on or fail to fulfil any loan agreements in
2025. Arla expects to meet all required covenants.
During 2025, the group's most significant funding activities
were:
• A new syndicated credit facility of EUR 1,000 million with
Arla's core banks, consisting of EUR 500 million with
maturity in July 2028 and EUR 500 million with maturity in
July 2030. The facility replaced an existing facility of EUR 400
million with the same banks.
• A five-year long-term loan of EUR 100 million with maturity
in April 2030.
• A three-year long-term term loan facility of EUR 150 million
with maturity in August 2028.
• Arla has a commercial paper programme in Sweden denomi-
nated in SEK and EUR. The average utilisation in 2025 was
EUR 166 million (2024: EUR 148 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.
4.3 NET INTEREST-BEARING DEBT
3.3
Leverage in 2025
(2024: 3.2 (2.9 adjusted for business combinations))
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 capac-
ity 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)
Net interest-bearing debt
excluding pension liabilities
Pension liabilities
Target range leverage 2.8-3.4
Leverage
2021
2022
2023
2024
2025
2,221
2,825
2,683
3,367
3,607
245
161
167
166
159
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Primary statements
Notes
4.3 NET INTEREST-BEARING DEBT (continued)
ARLA FOODS ANNUAL REPORT 2025
135
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Table 4.3.c Cash flow, net interest-bearing debt
Cash flow
Non-cash changes
(EUR million)
1 January
Included in
financing
activities
Addi-
tions
Reclassi-
fications
Foreign
exchange
move-
ments
Fair
value
changes
Re-
stricted
cash and
securi-
ties
31 De-
cember
2025
Long-term borrowings
2,808
254
75
-183
23
13
-
2,990
Short-term borrowings
1,204
-120
-
183
-40
-
-
1,227
Pension liabilities
166
-11
-
3
6
-5
-
159
Total interest-bearing debt
4,178
123
75
3
-11
8
-
4,376
Securities
-557
21
-
-
2
3
-9
-540
Cash and cash equivalents
-77
9
-
-
6
-
4
-58
Other interest-bearing assets
-11
-
-
-
-1
-
-
-12
Net interest-bearing debt
3,533
153
75
3
-4
11
-5
3,766
Cash flow from long- and short-term borrowings of EUR 134 million (EUR -120 million and EUR 254 million, respectively) can be reconciled to the cash flow statement
as new loans obtained (EUR 254 million), other changes in loans (EUR -45 million) and lease payments (EUR -75 million). Cash flow from pension liabilities of EUR -11
million is part of the total amount of payment to pension plans in the cash flow statement of EUR -23 million, which also includes payments regarding net pension
assets
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
-10
-
-
-4
13
-
166
Total interest-bearing debt
3,349
524
132
211
-45
7
-
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
598
132
6
-43
9
-19
3,533
Cash flow from long- and short-term borrowings 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). Cash flow from pension liabilities of EUR -10 mil-
lion is part of the total amount of payment to pension plans in the cash flow statement of EUR -23 million, which also includes payments regarding net pension assets
Table 4.3.a Net interest-bearing debt
(EUR million)
2025
2024
Long-term borrowings
2,990
2,808
Short-term borrowings
1,227
1,204
Securities, cash and cash equivalents (excluding restricted securities and cash)
-598
-634
Other interest-bearing assets
-12
-11
Net interest-bearing debt excluding pension liabilities
3,607
3,367
Pension liabilities
159
166
Net interest-bearing debt including pension liabilities
3,766
3,533
Table 4.3.b Borrowings
(EUR million)
2025
2024
Long-term borrowings:
Issued bonds
260
419
Mortgage credit institutions
1,174
1,118
Bank borrowings
1,245
734
Schuldschein
151
351
Lease liabilities
160
186
Total long-term borrowings
2,990
2,808
Short-term borrowings:
Issued bonds
185
105
Commercial papers
99
153
Mortgage credit institutions
15
85
Bank borrowings
127
238
Schuldschein
200
-
Repurchased liability
530
547
Lease liabilities
65
66
Other current liabilities
6
10
Total short-term borrowings
1,227
1,204
Total interest-bearing borrowings
4,217
4,012
Primary statements
Notes
4.3 NET INTEREST-BEARING DEBT (continued)
ARLA FOODS ANNUAL REPORT 2025
136
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Table 4.3.d Net interest-bearing debt excluding pension liabilities and the effect of hedging, maturity
(EUR million)
Total
2026
2027
2028
2029
2030
2031
2032
2033-2035
After 2035
2025
DKK
1,036
21
37
61
85
84
82
78
280
308
SEK
574
293
147
125
4
3
2
-
-
-
EUR
1,786
200
912
307
56
103
3
-
34
171
GBP
39
12
12
7
3
2
3
-
-
-
Other
172
91
9
45
5
3
19
-
-
-
Total
3,607
617
1,117
545
153
195
109
78
314
479
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
88
235
466
162
259
13
5
30
212
GBP
21
5
11
10
6
2
5
-
-
-
Other
177
112
25
7
5
4
19
-
-
-
Total
3,367
559
512
678
353
337
110
71
266
481
Table 4.3.e Currency profile of net interest-bearing debt excluding pension liabilities¹
(EUR million)
Original principal
Effect of swap
After swap
2025
DKK
1,036
-
1,036
SEK
574
-491
83
EUR
1,786
-192
1,594
GBP
39
374
413
Other
172
309
481
Total
3,607
-
3,607
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
¹ Before and after derivative financial instruments
MATURITY OF NET INTEREST-BEARING
DEBT EXCLUDING PENSION LIABILITIES
AT 31 DECEMBER 2025
(EUR MILLION)
Debt
Unused committed facilities
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
>10
0-1Y
1-2Y
2-3Y
3-4Y
4-5Y
5-6Y
6-7Y 7-10Y
>10
INTEREST PROFILE FOR NET INTEREST-BEAR-
ING DEBT EXCLUDING PENSION LIABILITIES
AT 31 DECEMBER 2025
(EUR MILLION)
Fixed debt
Fixed via options
Fixed via swap
Floating
INTEREST PROFILE FOR NET INTEREST-BEAR-
ING DEBT EXCLUDING PENSION LIABILITIES
AT 31 DECEMBER 2024
(EUR MILLION)
Fixed debt
Fixed via options
Fixed via swap
Floating
1Y
2Y
3Y
4Y
5Y
6Y
7Y
10Y
1Y
2Y
3Y
4Y
5Y
6Y
7Y
10Y
617
1.117
545
153
195
109
78
314
479
215
500
100
500
559
512
678
353
337
110
71
266
481
302
250
400
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Primary statements
Notes
4.3 NET INTEREST-BEARING DEBT (continued)
ARLA FOODS ANNUAL REPORT 2025
137
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
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
2025
Issued bonds:
Commercial papers
Fixed
2.4%
0-1 year
99
Fair value
500 mSEK maturing 14.01.2026
Floating
3.2%
0-1 year
47
Cash flow
1,500 mSEK maturing 17.07.2026
Floating
2.6%
0-1 year
139
Cash flow
1,500 mSEK maturing 23.07.2027
Floating
3.0%
1-2 years
139
Cash flow
500 mSEK maturing 14.01.2028
Floating
3.6%
2-3 years
46
Cash flow
400 mSEK maturing 12.10.2028
Floating
3.7%
2-3 years
37
Cash flow
400 mSEK maturing 12.10.2028
Fixed
4.9%
2-3 years
37
Fair value
Total issued bonds
3.0%
544
Mortgage credit institutions:
Fixed-rate
Fixed
2.9%
0-1 year
27
Fair value
Floating-rate
Floating
2.8%
0-1 year
1,162
Cash flow
Total mortgage credit institutions
2.8%
1,189
Bank borrowings:
Fixed-rate
Fixed
2.2%
0-1 year
593
Fair value
Floating-rate
Floating
3.2%
0-1 year
1,660
Cash flow
Total bank borrowings
2.9%
2,253
Other borrowings:
Leases
Fixed
5.4%
0-20 years
225
Cash flow
Other borrowings
Floating
1.4%
0-1 year
6
Cash flow
Total other borrowings
5.3%
231
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:
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
Primary statements
Notes
4.3 NET INTEREST-BEARING DEBT (continued)
ARLA FOODS ANNUAL REPORT 2025
138
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
§ Accounting policies
Financial instruments
Financial instruments are recognised at the date of trade. The
group ceases to recognise financial assets when the contrac-
tual rights to the underlying cash flows either cease to exist or
are transferred 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 off-
set or settle the financial asset and the liability simultane-
ously.
Financial assets
Financial assets are classified on initial recognition and subse-
quently 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 de-
pends on the financial asset's contractual cash flow character-
istics and how these are managed.
Financial assets where the group intends to collect the con-
tractual cash flow are classified and measured at amortised
cost.
Financial assets that are part of liquidity management are clas-
sified and measured at fair value through other comprehen-
sive income. All other financial assets are classified and meas-
ured 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 converted to cash or cash equivalents.
Financial assets measured at fair value through other
comprehensive income
Financial assets measured at fair value through other compre-
hensive income consist of mortgage credit bonds, which cor-
respond 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 accumulated in the fair
value reserve in equity.
Interest income, impairment and foreign currency translation
adjustments of debt instruments are recognised in the in-
come statement on a continuous basis under financial in-
come and financial costs. In connection with the sale of finan-
cial assets classified at fair value through other comprehen-
sive income, accumulated gains or losses previously
recognised in the fair value reserve are recycled to financial
income and financial costs.
Financial assets measured at fair value through
profit or loss
Securities classified at fair value through the income state-
ment consist primarily of listed securities which are moni-
tored, measured and reported continuously in accordance
with the group's Treasury Policy. Changes in fair value are rec-
ognised in the income statement under financial income and
financial costs.
Liabilities
Upon initial recognition, debt to mortgage credit and credit in-
stitutions as well as issued bonds are measured at the trade
date at fair value plus transaction costs. Subsequently, liabili-
ties are measured at amortised cost with the difference be-
tween loan proceeds and the nominal value recognised in the
income statement over the expected life of the loan.
Lease obligations related to leases are recognised under liabil-
ities and measured at amortised cost. Other financial liabilities
are measured at amortised cost. For details on pension liabili-
ties, please refer to Note 4.7.
Primary statements
Notes
4.4 DERIVATIVES (continued)
ARLA FOODS ANNUAL REPORT 2025
139
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
The group has entered into derivative contracts to secure a
stable cash flow in future years. The value of cash flow hedges
increased by EUR 5 million to EUR 48 million. The increase
was driven by a reduction in the negative value of currency
contracts, while the value of interest rate and commodity con-
tracts has decreased.
Currency contracts
The value of currency contracts used for hedging increased by
EUR 34 million compared to last year. The higher value was
due to changed currency exchange rates combined with the
maturing of existing contracts and value adjustments of new
contracts.
Interest rate contracts
The value of interest rate contracts used for hedging de-
creased by EUR 13 million compared to last year. The lower
value was a result of lower long-term interest levels and utili-
sation of interest hedges during the year.
Commodity contracts
The value of commodity contracts used for hedging de-
creased by EUR 16 million compared to last year. The lower
value was a result of market prices decreasing to levels below
the hedged prices combined with the 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 in-
terest 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 manage-
ment. The objective of the currency swaps is to match the
timing of the in- and outflow of foreign 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 balance sheet.
Fair value hedging
Changes in the fair value of derivatives which meet the criteria
for hedging the fair value of recognised assets and liabilities
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 recognised in other comprehensive in-
come as a reserve for hedging transactions under equity until
the hedged cash flows impact the income statement. The re-
serve 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.
4.4 DERIVATIVES
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
2026
2027
2028
2029
After
2029
2025
Currency contracts
-3
-3
-3
-
-
-
-
Interest rate contracts
58
58
16
15
11
11
5
Commodity contracts
-7
-7
-7
-
-
-
-
Hedging of future cash flows
48
48
6
15
11
11
5
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
Primary statements
Notes
4.4 DERIVATIVES (continued)
ARLA FOODS ANNUAL REPORT 2025
140
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
The accumulated change in value recognised in other com-
prehensive 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 on an ongoing basis in the income
statement under financial income and costs.
Table 4.4.b Value adjustment of hedging instruments
(EUR million)
2025
2024
Deferred gains and losses on cash flow hedges arising during the year
-42
27
Value adjustments of currency hedging instruments reclassified to other operating income and costs
48
-25
Value adjustments of commodity hedging instruments reclassified to other operating income and costs
-2
-29
Value adjustments of currency hedging instruments reclassified to financial items
2
-1
Value adjustments of interest hedging instruments reclassified to financial items
-1
1
Total value adjustment of hedging instruments recognised in other comprehensive income in the year
5
-27
Primary statements
Notes
4.5 FINANCIAL INSTRUMENTS (continued)
ARLA FOODS ANNUAL REPORT 2025
141
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
4.5 FINANCIAL INSTRUMENTS
Table 4.5.a Categories of financial instruments
(EUR million)
2025
2024
Derivatives
51
2
Shares
9
8
Financial assets measured at fair value through the income statement
60
10
Securities
551
577
Financial assets measured at fair value through other comprehensive income
551
577
Currency instruments
2
-
Interest rate instruments
57
62
Commodity instruments
7
26
Derivative assets used as hedging instruments
66
88
Trade receivables
1,247
1,317
Other receivables
327
266
Cash
76
91
Financial assets measured at amortised cost
1,650
1,674
Derivatives
-1
4
Financial liabilities measured at fair value through the income statement
-1
4
Currency instruments
6
37
Interest rate instruments
4
6
Commodity instruments
13
17
Derivative liabilities used as hedging instruments
23
60
Long-term borrowings
2,990
2,808
Short-term borrowings
1,227
1,204
Trade payables and other payables
1,469
1,433
Financial liabilities measured at amortised cost
5,686
5,445
Table 4.5.b Fair value hierarchy - carrying amount
(EUR million)
Level 1
Level 2
Level 3
Total
2025
Financial assets:
Securities
551
-
-
551
Shares
9
-
-
9
Derivatives
-
117
-
117
Total financial assets
560
117
-
677
Financial liabilities:
Issued bonds
-
445
-
445
Mortgage credit institutions
-
1,189
-
1,189
Derivatives
-
22
-
22
Total financial liabilities
-
1,656
-
1,656
2024
Financial assets:
Securities
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
-
1,791
-
1,791
Primary statements
Notes
4.6 SALE AND REPURCHASE ARRANGEMENTS (continued)
ARLA FOODS ANNUAL REPORT 2025
142
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Risk mitigation
Methods and assumptions applied to fair value measurement
of financial instruments is described below.
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 discounted cash flow models
and observable market data. The fair value is determined as a
termination price and, consequently, the value is not adjusted
for credit risks.
Option instruments
The fair value is calculated using option models and observa-
ble market data such as option volatilities. The fair value is de-
termined 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 valuation techniques and
observable market data.
Level 3: Fair values measured using valuation techniques and
observable as well as significant non-observable market data.
Financial comments
The group has invested in listed Danish mortgage bonds un-
derlying its mortgage debt. By entering into a sale and repur-
chase arrangement on the mortgage bonds, the group is able
to achieve a lower interest rate compared to current market
interest rates on mortgage debt. The mortgage bonds are
measured at fair value through other comprehensive income.
The proceeds from these bonds create a repurchase obliga-
tion which is recognised in short-term borrowings and meas-
ured at fair value.
In addition to mortgage bonds, the group holds other securi-
ties with a carrying amount of EUR 14 million (2024: EUR 23
million).
4.5 FINANCIAL INSTRUMENTS (continued)
4.6 SALE AND REPURCHASE ARRANGEMENTS
Table 4.6 Transfer of financial assets
(EUR million)
Carrying
amount
Notional
amount
Fair value
2025
Mortgage bonds
537
542
537
Repurchased liability
-530
-531
-530
Net position
7
11
7
2024
Mortgage bonds
554
556
554
Repurchased liability
-547
-544
-547
Net position
7
12
7
Primary statements
Notes
4.7 PENSION LIABILITIES (continued)
ARLA FOODS ANNUAL REPORT 2025
143
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
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 contribution plans for em-
ployees. For these defined contribution plans, the group is not
subject to the same investment, interest rate, inflation or lon-
gevity risks as it is for the defined benefit plans. The benefits
that employees receive are dependent on the contributions
paid, investment returns and the form of benefit chosen at re-
tirement.
Pension plans in Sweden
The recognised net pension liability in Sweden was EUR 142
million at 31 December 2025, a decrease of EUR 8 million
compared to last year. Discount rates in Sweden increased
compared to 31 December 2024, resulting in lower pension
liabilities with a small decrease in inflation expectations
also contributing. This was partially offset by unfavourable
exchange rate movements. Mortality assumptions remained
consistent with last year. See table 4.7.e for a summary of
key assumptions.
These pension plans are contribution-based plans, guarantee-
ing a defined benefit pension at retirement. The plan assets
are legally structured as a trust, and the group has control
over the operation of the plan and the associated invest-
ments.
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 20 mil-
lion at 31 December 2025, an increase of EUR 9 million com-
pared to last year.
While discount rates remained unchanged in the UK, inflation
expectations decreased, resulting in lower pension liabilities.
Pension liabilities in the UK decreased by EUR 64 million from
the previous year to EUR 817 million at 31 December 2025.
See table 4.7.e for a summary of key assumptions.
The return on plan assets in 2025 was negative. This was pre-
dominantly driven by the performance of the matching assets
which are designed to track liability movements as closely as
possible. Matching assets make up a significant portion of the
asset portfolio and are part of the strategy to maintain stability
within the pension plan. In addition to this, we also saw de-
creases in the value of other plan assets with debt vehicles
seeing the biggest decrease compared to last year. See the
plan asset investments in the UK section for further details on
the strategy adopted by the trustees. In addition to a negative
return on plan assets, we saw unfavourable exchange rate
movements, partially offset by interest income, leading to an
overall net decrease in the fair value of plan assets in the UK of
EUR 54 million. All investments 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 fu-
ture accruals, but retains a salary link. The plan is a registered
pension scheme, and the assets are held in legally separate,
trustee-administered funds. The trustees of the plan are re-
quired by law to act in the best interests of the plan partici-
pants while at the same time administering the plan in accord-
ance with the purpose for which the trust was created, and are
responsible for drawing up the investment, funding and
4.7 PENSION LIABILITIES
Table 4.7.a Pension liabilities recognised in the balance sheet
(EUR million)
Sweden
UK
Other
Total
2025
Present value of funded liabilities
157
817
29
1,003
Fair value of plan assets
-16
-837
-16
-869
Deficit/(surplus) of funded plans
141
-20
13
134
Present value of unfunded liabilities
1
-
1
2
Net pension liabilities recognised in the balance sheet
142
-20
14
136
Specification of total liabilities:
Present value of funded liabilities
157
817
29
1,003
Present value of unfunded liabilities
1
-
1
2
Total liabilities
158
817
30
1,005
Presented as:
Pension assets
-3
-20
-
-23
Pension liabilities
145
-
14
159
Net pension liabilities
142
-20
14
136
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
Primary statements
Notes
4.7 PENSION LIABILITIES (continued)
ARLA FOODS ANNUAL REPORT 2025
144
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
governance policies. A representative of the group attends
trustee meetings to provide the group's view on the invest-
ment strategy, but the ultimate control lies with the trustees.
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 ulti-
mately approved by The Pensions Regulator. The most recent
triennial valuation of the plan was carried out at 31 December
2022, and on the agreed funding basis, the plan was in a sur-
plus position. The next triennial valuation will be carried out on
31 December 2025 with the work being undertaken in 2026.
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 realised in
the short term. The trustees invest in different categories of
assets and with different allocations among those categories
according to the plan investment principles.
Currently, the plan investment strategy is to maintain a bal-
ance of growth assets (property and infrastructure), income
assets (comprising credit investments and corporate bonds)
and matching assets (comprising a liability hedge portfolio
and a buy-in annuity policy), with a weighting towards match-
ing assets. In 2021, a strategy was adopted to reduce the
plan's exposure to the UK property market, with a large por-
tion of it being completed during 2024 and 2025.
Part of the investment objective is to minimise fluctuations in
the plan's funding levels due to changes in the value of the
Table 4.7.b Development in pension liabilities
(EUR million)
2025
2024
Present value of liabilities at 1 January
1,078
1,128
Interest costs
52
49
Actuarial gains and losses from changes in financial assumptions (OCI)
-24
-70
Actuarial gains and losses from changes in demographic assumptions (OCI)
-
1
Benefits paid
-67
-68
Exchange rate adjustment
-34
38
Present value of pension liabilities at 31 December
1,005
1,078
Table 4.7.c Development in fair value of plan assets
(EUR million)
2025
2024
Fair value of plan assets at 1 January
923
982
Interest income
47
45
Return on plan assets excluding amounts included in net interest on the net defined benefit liability (OCI)
-16
-102
Contributions to plans
12
13
Benefits paid
-56
-58
Administration costs
-1
-
Exchange rate adjustments
-40
43
Fair value of plan assets at 31 December
869
923
Actual return on plan assets:
Calculated interest income
47
45
Return excluding calculated interest
-16
-102
Actual return
31
-57
The group expects to contribute EUR 23 million to the plan assets in 2026 and EUR 83 million in 2027-2030.
MATURITY OF PENSION LIABILITIES
AT 31 DECEMBER 2025
(EUR MILLION)
UK 936
Sweden 162
Other 30
MATURITY OF PENSION LIABILITIES
AT 31 DECEMBER 2024
(EUR MILLION)
UK 943
Sweden 155
Other 37
0-1Y
1-5Y
5-10Y
10-20Y 20-30Y 30-40Y >40Y
0-1Y
1-5Y
5-10Y
10-20Y 20-30Y 30-40Y >40Y
0
100
200
300
400
0
100
200
300
400
Primary statements
Notes
4.7 PENSION LIABILITIES (continued)
ARLA FOODS ANNUAL REPORT 2025
145
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
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 assets 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 on the basis of the
trustees' funding assumptions, which use a discount rate
derived from gilt yields.
LDI primarily involves the use of government bonds. Deriva-
tives 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 underlying investments, which are
traded daily on liquid markets, but on aggregate are segre-
gated mandates managed on behalf of the plan and therefore
unlisted.
Annuity policies consist of a bulk annuity contract with an in-
surance 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 ben-
efit payments under the pension scheme.
Infrastructure investments are in large-scale public systems,
services and facilities such as power, road and water systems.
These investments aim to generate stable long-term inflation-
linked cash flows.
The remainder of the plan assets consists of loans to compa-
nies or governments (debt vehicles and bonds), commercial
property investments (properties) as well as insurance-linked
securities and cash (other assets).
§ Accounting policies
Pension liabilities and similar non-current liabilities
The group has post-employment pension plan arrangements
with a significant number of current and former employees.
The post-employment pension plan agreements take the
form of defined contribution plans and defined benefit plans.
Defined contribution plans
For defined contribution plans, the group pays fixed contribu-
tions to independent pension companies. The group has no
obligation to make supplementary payments beyond those
fixed payments, 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 ex-
pensed in the income statement as incurred.
Defined benefit plans
Defined benefit plans are characterised by the group's obliga-
tion to make specific payments from the date the plan mem-
ber is retired, depending on, for example, the member's
seniority and final salary. The group is subject to the risks and
rewards associated with the uncertainty whether the return
generated by the assets will meet the pension liabilities, which
are affected by assumptions concerning mortality and infla-
tion.
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 bene-
fit plan. The net liability is the amount of future pension bene-
fits 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) discounted to a present value (the defined benefit
Table 4.7.d Specification of plan assets
(EUR million)
2025
%
2024
%
Debt vehicles
313
36
349
38
Liability hedge portfolio
219
25
238
26
Annuity policies
183
21
200
22
Infrastructure
65
8
69
7
Bonds
56
6
6
1
Properties
5
1
29
3
Equity instruments
1
0
-
-
Other assets
27
3
32
3
Fair value of plan assets at 31 December
869
100
923
100
Table 4.7.e Assumptions for the actuarial calculations
(%)
2025
2024
Discount rate assumptions
Discount rate, UK
5.5
5.5
Discount rate, Sweden
3.9
3.5
Inflation assumptions
Inflation (CPI), UK
2.3
2.7
Inflation (CPI), Sweden
1.7
1.8
Mortality assumptions (life expectancy in years at age 65)
Male in the UK
20.7
20.4
Female in the UK
22.8
22.8
Male in Sweden
22.8
21.9
Female in Sweden
24.4
23.9
Primary statements
Notes
4.7 PENSION LIABILITIES (continued)
ARLA FOODS ANNUAL REPORT 2025
146
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
liability), less the fair value of assets 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.
The balance sheet amount of the net liability is impacted by
remeasurements, which include the effect of changes in as-
sumptions used to calculate the future liability (actuarial gains
and losses) and the return generated on plan assets (exclud-
ing interest). Remeasurements are recognised in other com-
prehensive income.
Interest costs for the period are calculated using the dis-
counted rate used to measure the defined benefit liability at
the start of the reporting period applied to the carrying
amount of the net liability, taking into account changes arising
from contributions and benefit payments. The net interest
costs and other costs relating to defined benefit plans are rec-
ognised 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 significant 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 spon-
sors, including (if applicable) the group. In July 2024, the UK
courts dismissed an appeal against the 2023 judgement. In
2025, the government proposed a legislative solution to the
judgement. However, uncertainties remain as the details and
effectiveness of the final legislation have not yet been con-
firmed.
The group and pension trustees are discussing the judgement
and subsequent announcements, and the impact (if any) is be-
ing considered by the pension trustees' legal advisers. Until
this work is complete, the group is unable to determine the
impact (if any), and it will be assessed as relevant in the future.
As such the figures provided in this disclosure make no allow-
ance for the judgment.
Table 4.7.f Sensitivity of gross pension liabilities to key assumptions
(EUR million)
2025
2025
2024
2024
Impact on pension liabilities at 31 December
+
-
+
-
Discount rate +/- 10 bps
-10
10
-12
12
Life expectancy +/- 1 year
36
-36
37
-37
Inflation +/- 10 bps
6
-6
7
-7
Table 4.7.g Recognised in the income statement
(EUR million)
2025
2024
Administration costs
1
-
Recognised as staff costs
1
-
Interest costs on pension liabilities
52
49
Interest income from plan assets
-47
-45
Recognised as financial costs
5
4
Total amount recognised in the income statement
6
4
Table 4.7.h Recognised in other comprehensive income
(EUR million)
2025
2024
Actuarial gains and losses on liabilities from changes in financial assumptions (OCI)
24
70
Actuarial gains and losses on liabilities from changes in demographic assumptions (OCI)
-
-1
Return on plan assets, excluding amounts included in net interest on the net defined benefit liability
-16
-102
Total amount recognised in other comprehensive income
8
-33
Primary statements
Notes
5.1 TAX (continued)
ARLA FOODS ANNUAL REPORT 2025
147
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
5.1 TAX
Financial comments
Tax in the income statement
Total tax costs increased to EUR 81 million (2024: EUR 46 mil-
lion), primarily due to an increase in current year corporate tax
and deferred tax costs.
The effective tax rate increased to 15.8% compared to 9.8%
last year, primarily driven by changes in the effects of compa-
nies subject to cooperative tax and increased non-deductible
expenses.
Current income tax
Cost related to current income taxes increased to EUR 63 mil-
lion (2024: EUR 45 million). The increase is mainly due to
strong results relating to our ingredients business in the
UK and Argentina.
Deferred tax
Costs incurred in the income statement relating to adjust-
ments of deferred taxes amounted to EUR 18 million, repre-
senting an increase of EUR 17 million compared to last year.
Net deferred tax liabilities amounted to EUR 83 million, repre-
senting a net increase of EUR 13 million compared to last
year. The primary changes in gross temporary differences
were driven by increased deferred tax liabilities in property,
plant and equipment.
Deferred tax liabilities equalled EUR 106 million, which mainly
relate to provisions, pension liabilities and other liabilities.
These were in part offset by deferred tax assets amounting to
EUR 23 million relating to tax losses carried forward and other
tax assets.
The group recognises deferred tax assets, including the value
of tax losses carried forward, where management assesses
that the tax assets may be utilised in the foreseeable future by
offsetting against taxable income. The assessment is per-
formed on an ongoing basis and is based on the budgets and
business plans for future years.
The group recognised deferred tax assets in respect of tax
losses carried forward in the amount of EUR 5 million (2024:
EUR 12 million). The net decrease in tax losses carried forward
is mainly due to the reversing effects of Argentinian tax rules
applicable in 2024, reducing the local inflationary effects on
the taxable income in 2024.
Deferred tax assets relating to tax losses carried forward not
recognised totalled EUR 37 million, primarily related to
activities in the UK, the US and Denmark.
§ Accounting policies
Tax in the income statement
Tax in the income statement includes current tax and adjust-
ments to deferred tax. Tax is recognised in the income state-
ment, except where it relates to a business combination or
Note 5.
Other areas
Table 5.1.a Tax recognised in the income statement
(EUR million)
2025
2024
Current income tax
Current income tax on profit for the year relating to:
Cooperative tax
7
5
Corporate income tax
52
32
Pillar Two tax
3
10
Adjustments to current taxes of previous years
1
-2
Total current income tax costs
63
45
Deferred tax
Change in deferred tax for the year
17
-
Adjustment to deferred taxes of previous years
1
1
Impact of changes in tax rates and laws
-
-
Total deferred tax costs
18
1
Total tax costs in the income statement
81
46
Table 5.1.b Calculation of effective tax rate
(EUR million)
2025
2024
Profit before tax
514
463
Tax applying the statutory Danish corporate income tax rate
22.0%
113
22.0%
102
Effect of tax rates in other jurisdictions
0.0%
-
-0.2%
-1
Effect of companies subject to cooperative taxation
-6.8%
-35
-11.3%
-52
Impact of Pillar Two tax
0.6%
3
2.2%
10
Non-deductible expenses, less tax-exempt income
0.4%
2
-2.7%
-12
Share of profit/loss after tax in associates and joint ventures
-0.8%
-4
-1.3%
-6
Adjustment for tax costs of previous years
0.4%
2
-0.2%
-1
Recognition and adjustments of previously unrecognised tax assets
-0.2%
-1
-0.2%
-1
Current year losses for which no deferred tax asset is recognised
0.2%
1
0.8%
4
Other adjustments
0.0%
-
0.7%
3
Total
15.8%
81
9.8%
46
Primary statements
Notes
5.1 TAX (continued)
ARLA FOODS ANNUAL REPORT 2025
148
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
items (income or costs) recognised directly in other compre-
hensive income.
Current tax
Current tax is assessed based on tax legislation applicable to
entities in the group subject to cooperative or corporate in-
come taxation. Cooperative taxation is based on the equity of
the cooperative, while corporate income tax is calculated
based on the company's taxable income for the year. Current
tax liabilities 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 liabilities are disclosed as part of other current lia-
bilities.
Deferred tax
Deferred tax is measured using the balance sheet liability
method for all temporary differences between the tax base of
assets and liabilities and their carrying amounts in the consoli-
dated financial statements. However, deferred tax is not rec-
ognised 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 enacted or substantially enacted by the end of
the reporting period and are expected to apply when the re-
lated 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 state-
ment, except for items recognised in other comprehensive
income.
Deferred tax assets, including the value of tax losses carried
forward, are recognised under other non-current assets at the
value at which they are expected to be utilised, either by re-
ducing tax on future earnings or by offsetting against deferred
tax payable in companies within the same legal tax entity or
jurisdiction.
The mandatory exception in IAS 12 regarding the recognition
and disclosure 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 expecta-
tions about future taxable profits. Actual future taxes may dif-
fer from these estimates due to changes in expectations re-
garding future taxable income, future statutory changes in in-
come taxation or the outcome of tax authorities' final review
of the group's tax returns. The recognition of a deferred tax as-
set also depends on an assessment of the future recoverabil-
ity of the asset.
Pillar Two taxes
As the guidance and rules related to Pillar Two taxes are con-
tinuously being updated, the final 2025 Pillar Two top-up
taxes payable may differ from the cost recognised in the in-
come statement.
Income tax treatments
Since tax legislation, case law and tax authority practice do not
always provide clarity on all transactions, uncertainties exist.
Arla recognises and measures uncertain tax positions in line
with the IFRIC 23 standard.
Table 5.1.c. Deferred tax assets and liabilities
(EUR million)
2025
2024
Net deferred tax liability at 1 January
-70
-60
Deferred tax recognised in the income statement
-18
-1
Deferred tax recognised in other comprehensive income
6
5
Acquisitions in connection with business combinations
-
-15
Exchange rate adjustments
-1
1
Balance sheet reclassification of deferred tax assets/liabilities
-
-
Net deferred tax liability at 31 December
-83
-70
Deferred tax, by gross temporary difference
Intangible assets
-2
-3
Property, plant and equipment
-36
-17
Provisions, pension liabilities and other
-20
-28
Tax losses carried forward
5
12
Other assets/liabilities
-30
-34
Total deferred tax, by gross temporary difference
-83
-70
Recognised in the balance sheet as:
Deferred tax assets
23
31
Deferred tax liabilities
-106
-101
Total
-83
-70
Primary statements
Notes
5.2 PROVISIONS (continued)
ARLA FOODS ANNUAL REPORT 2025
149
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Provisions amounted to EUR 74 million (2024: EUR 61 mil-
lion). Provisions primarily 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 insur-
ance provisions. These are assessed based on historical
records, including the number of insurance events and the
related costs considered. The scope and extent of onerous
contracts are also estimated.
Fees paid to EY
EY is appointed as auditors of Arla by the Board of Representa-
tives (BoR).
5.2 PROVISIONS
5.3 FEES TO AUDITORS
Table 5.2 Provisions
(EUR million)
Insurance
provisions
Restructuring
provisions
Other
provisions
Total
2025
Total
2024
Provisions at 1 January
27
4
30
61
51
New provisions during the year
-
8
9
17
25
Reversals
1
-
-
1
-
Used during the year
-1
-
-4
-5
-15
Provisions at 31 December
27
12
35
74
61
Non-current provisions
10
9
35
54
30
Current provisions
16
3
1
20
31
Provisions at 31 December
26
12
36
74
61
Table 5.3 Fees to auditors appointed by the Board of Representatives
(EUR million)
2025
2024
Statutory audit
2.2
1.9
Other assurance engagements
0.4
0.4
Tax assistance
0.5
0.2
Other services
0.4
1.1
Total fees to auditors
3.5
3.6
Primary statements
Notes
5.4 MANAGEMENT REMUNERATION AND TRANSACTIONS WITH RELATED
PARTIES (continued)
ARLA FOODS ANNUAL REPORT 2025
150
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
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 BoR. The BoD's remuneration was
most recently adjusted in 2024. The principles applied to the
remuneration of the BoD are described on page 87. Members
of the BoD are paid for milk supplies to Arla Foods amba in
accordance 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 2025, the Executive Board consisted of Chief Executive
Officer Peder Tuborgh and Chief Financial Officer Torben Dahl
Nyholm. The principles applied to the remuneration of the
Executive Board are described on page 88.
Table 5.4.a includes accrued amounts related to the respec-
tive reporting period. The amount was based on reported key
figures together with estimates of performance compared to
peers and, consequently, the final future payout may differ.
The disclosed short-term variable incentives for 2025 in-
cludes an adjustment of EUR 0.5 million relating to settlement
of the 2024 programme. If the adjustment had been included
last year, the short-term variable incentives costs for 2025
would have been EUR 1.5 million and the total remuneration
to the Executive Board would have been EUR 6.3 million rep-
resenting an increase of EUR 0.4 million compared to last
year.
5.4 MANAGEMENT REMUNERATION AND TRANSACTIONS WITH RELATED PARTIES
Table 5.4.a Management remuneration
(EUR million)
2025
2024
Board of Directors
Wages, salaries and remuneration
1.9
1.8
Total
1.9
1.8
Executive Board
Fixed compensation
2.8
2.8
Pension and other benefits
0.5
0.5
Short-term variable incentives
2.0
0.7
Long-term variable incentives
1.5
1.4
Total
6.8
5.4
Table 5.4.b Transactions with the Board of Directors
(EUR million)
2025
2024
Purchase of raw milk
44.8
33.2
Half-year supplementary payment
0.4
0.3
Supplementary payment regarding previous years
1.8
1.1
Total
47.0
34.6
Unsettled milk deliveries in trade payables and other payables
1.8
1.8
Individual capital instruments
3.2
3.3
Total
5.0
5.1
Primary statements
Notes
5.5 CONTRACTUAL COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES
(continued)
ARLA FOODS ANNUAL REPORT 2025
151
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial comments
Contractual obligations and commitments amounted to
EUR 814 million (2024: EUR 869 million). Commitments relat-
ing to power purchase agreements decreased by 35 million.
Commitments relating to investments in property, plant and
equipment increased by EUR 7 million. Other contractual obli-
gations and commitments consisted of IT licences, short-term
and low-value leases and others and decreased by net EUR 27
million.
Arla provided security on property for mortgage debt based
on the Danish Mortgage Act with a nominal value of 1,193
EUR million (2024: EUR 1,209 million). Financial surety and
guarantee obligations amounted to EUR 32 million (2024:
EUR 29 million).
Arla is party to a small number of lawsuits, disputes and other
claims. It is management's assessment that the outcome of
these will most likely not have a material impact on the
group's financial position beyond what has already been rec-
ognised in the financial statements.
Subsequent events
No subsequent events with a material impact on the consoli-
dated financial statements have occurred after the balance
sheet date.
5.5 CONTRACTUAL COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES
5.6 EVENTS AFTER THE BALANCE SHEET DATE
Table 5.5 Contractual commitments¹
(EUR million)
0-1 year
1-5 years
5+ years
Total
2025
Power purchase agreements
35
157
181
373
Property, plant and equipment investment commitments
190
116
-
306
IT contracts
51
41
-
92
Short-term and low value leases
43
-
-
43
Total
319
314
181
814
2024
Power purchase agreements
30
157
221
408
Property, plant and equipment investment commitments
219
80
-
299
IT contracts
52
64
-
116
Short-term and low value leases
46
-
-
46
Total
347
301
221
869
¹ 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
5.7 GENERAL ACCOUNTING POLICIES (continued)
ARLA FOODS ANNUAL REPORT 2025
152
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Basis for preparation
The consolidated financial statements included in this annual
report are prepared in accordance with IFRS Accounting
Standards as adopted by the EU, and additional disclosure re-
quirements 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 regulated EU
marketplace. The consolidated financial statements were au-
thorised for issue by the company's BoD on 16 February 2026
and presented for approval by the BoR on 25 February 2026.
The functional currency of the parent company is DKK. The
presentation currency of the parent company and of the
group is EUR.
These consolidated financial statements are prepared in mil-
lion EUR with rounding.
Consolidated financial statements
The consolidated financial statements are prepared as a com-
pilation of the parent company's and the individual subsidiar-
ies' financial statements in line with the group's accounting
policies. Revenue, costs, assets and liabilities, along with items
included in the equity of subsidiaries, are aggregated and pre-
sented on a line-by-line basis. Inter-company shareholdings,
balances and transactions as well as unrealised income and
expenses arising from inter-company transactions are elimi-
nated.
The consolidated financial statements comprise Arla Foods
amba (parent company) and the subsidiaries in which the par-
ent company directly or indirectly holds more than 50% of the
voting rights or otherwise maintains control to obtain benefits
from its activities. Entities in which the group exercises joint
control through a contractual arrangement are considered
joint ventures. Entities in which the group exercises a
significant but not a controlling influence are considered as-
sociates. A significant influence is typically obtained by hold-
ing or having at the group's disposal, directly or indirectly,
more than 20%, but less than 50% of the voting rights in an
entity.
Unrealised gains arising from transactions with joint ventures
and associates, i.e. profits from sales to joint ventures or asso-
ciates and whereby the customer pays with funds partly
owned by the group, are eliminated against the carrying
amount of the investment in proportion to the group's inter-
est in the company. 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 his-
torical cost basis, except for certain items with alternative
measurement bases, which are identified in these accounting
policies.
Translation of transactions and monetary
items in foreign currencies
Each group entity determines its functional currency based on
its primary economic environment. Transactions in foreign
currencies are recorded in the functional currency at the
transaction date rate. Monetary assets and liabilities in foreign
currencies are translated at the reporting date rate, and ex-
change differences are recognised in the income statement
under financial items. Non-monetary items measured at his-
torical cost in a foreign currency are translated upon initial
recognition.
Translation of foreign operations
Assets and liabilities of consolidated entities, including net as-
sets and goodwill of joint ventures and associates with a func-
tional currency other than EUR, are translated into EUR at the
year-end rate. Revenue, costs, and share of net profit or loss
are translated at the average monthly rate, unless it differs
materially from the transaction date rate. Exchange differ-
ences are recognised in other comprehensive income and ac-
cumulated in the translation reserve. Upon partial divestment,
the relevant portion of the translation reserve is transferred to
net profit or loss, together with any divestment gains or
losses.
Adoption of new or amended IFRS
The group has implemented all new standards and interpreta-
tions effective in the EU from 1 January 2025. The disclosures
on loan covenants in Note 4.3 have been updated in accord-
ance with the amendments to IFRS 7. The new standard and
interpretation 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 standards and interpretations which are not yet
applicable. Arla will adopt these new standards when they be-
come mandatory.
In April 2024, the IASB issued IFRS 18 Presentation and Disclo-
sure in Financial Statements, replacing IAS 1. This new stand-
ard introduces specific requirements for income statement
presentation, including designated totals and subtotals. Enti-
ties must classify all income and expenses into one of five cat-
egories: operating, investing, financing, income taxes and dis-
continued operations, with the first three being new. Addition-
ally, IFRS 18 mandates the disclosure of management-defined
performance measures and establishes new guidelines for ag-
gregating and disaggregating financial information.
Effective for Arla's reporting period beginning on January 1,
2027, IFRS 18 and its amendments to other standards will be
applied retrospectively. Arla is currently monitoring the imple-
mentation guidance and evaluating the impacts of IFRS 18 on
the financial statements. Impacts are expected to include:
• Foreign exchange rate differences will be classified into the
category of the item causing the difference.
• Certain interest income and fair value adjustments on invest-
ing assets will be presented within the investing category.
• The share of results in joint ventures and associates will be
classified into the investing category, below operating profit.
Moreover, IAS 7 Statement of Cash Flows has undergone con-
sequential amendments. These changes include altering the
starting point for determining cash flows from operations to
'operating profit or loss' and eliminating the optional classifi-
cation of cash flows from interest paid (to be presented in the
financing category) and interest received (to be presented
within investing activities). Furthermore, new disclosures on
management-defined performance measures and details of
expenses by nature are required.
Further, the IASB issued Amendments to IFRS 9 and IFRS 7 -
Contracts Referencing Nature dependent Electricity (effective
1 January 2026). The amendments apply only to contracts
that reference nature-dependent electricity (Power purchase
agreements) and clarify the ‘own-use’ requirements for in-
scope contracts and adds new disclosure requirements. It is
expected that this will have no material impact on the finan-
cial statements.
5.7 GENERAL ACCOUNTING POLICIES
Primary statements
Notes
5.8 GROUP CHART (continued)
ARLA FOODS ANNUAL REPORT 2025
153
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
5.8 GROUP CHART
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
97
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
99
Arla Foods Ingredients Felinfach Holdings Limited
UK
GBP
100
Arla Foods Ingredients Felinfach Limited
UK
GBP
100
Arla Foods Ingredients Felinfach 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 tuottajapalvelut²
Finland
EUR
39
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
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 Company Ltd
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
100
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 S.A.
Senegal
XOF
100
Primary statements
Notes
5.8 GROUP CHART (continued)
ARLA FOODS ANNUAL REPORT 2025
154
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
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. KG¹
Germany
EUR
50
Arla Foods Kuwait Company WLL
Kuwait
KWD
49
Arla Kallassi Foods Lebanon S.A.L.
Lebanon
LBP
50
Arla Foods Qatar W.L.L
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
TG Arla Dairy Products LFTZ Enterprise
Nigeria
NGN
50
TG Arla Dairy Products Ltd.
Nigeria
NGN
50
Arl For General Trading Ltd.
Iraq
USD
51
Arla Foods Dairy Products (Shanghai) Co. Ltd.
China
CNY
100
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/S³
Denmark
DKK
100
Dofo Inc.
USA
USD
100
Aktieselskabet J. Hansen
Denmark
DKK
100
J.P. Hansen USA Inc.
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
99
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
5.8 GROUP CHART (continued)
ARLA FOODS ANNUAL REPORT 2025
155
2
CONSOLIDATED FINANCIAL STATEMENTS
1
3
Financial statements of the parent company
Under section 149 of the Danish Financial Statements Act,
these consolidated financial statements represent an extract
of Arla's complete annual report. To make this report more
manageable and user-friendly, we publish consolidated finan-
cial 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 supple-
mentary 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 BoD
and the Executive Board, as well as the independent auditor'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
34
Cocio Chokolademælk A/S
Denmark
DKK
50
Marygold Trading K/S³
Denmark
DKK
100
Mejeriforeningen
Denmark
DKK
91
COFCO Dairy Holdings Limited ²
British Virgin Islands
HKD
30
Svensk Mjölk Ekonomisk förening
Sweden
SEK
75
Svensk Mjölk AB
Sweden
SEK
75
Tillväxtbolaget för Sveriges Lantbrukare AB ²
Sweden
SEK
19
Lantbrukarnas Riksförbund, förening u.p.a.²
Sweden
SEK
24
Jörd International A/S
Denmark
DKK
100
Ejendomsselskabet Gjellerupvej 105 P/S
Denmark
DKK
100
Baby&Me ApS
Denmark
DKK
50
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
¹ Joint ventures
² Associates
³ 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
AND OTHER
DISCLOSURES
Management's and auditor’s reports
Other disclosures
1
2
156
ARLA FOODS ANNUAL REPORT 2025
3
Danish heritage, enjoyed worldwide
Born in Denmark in 1893, Castello® is available in more than 60 countries, with the US and Canada
as the largest markets. The launch of its Whipped Dips range ignited enthusiasm in the US and
earned the title of Product of the Year 2025 in the Dip Snack category, reinforcing Castello®'s
position in the premium cheese segment.
MANAGEMENT’S
AND AUDITOR’S
REPORTS
In this section
158 Board of Directors'
and Executive Board's report
159 Independent auditor's report
on the consolidated and parent
company financial statements
161 Independent auditor's assurance
report on the sustainability
statements
1
2
157
ARLA FOODS ANNUAL REPORT 2025
REPORTS AND OTHER DISCLOSURES
3
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 2025. 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 2025 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 2025.
In our opinion, the management's review of the annual report
(pages 4-90) 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 presentation 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, 16 February 2026
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
Florence Rollet
Nana Bule
Anders Olsson
Holger Lund
Paul Cullen
Peder Tuborgh
CEO
Torben Dahl Nyholm
CFO
1
2
REPORTS AND OTHER DISCLOSURES
3
158
ARLA FOODS ANNUAL REPORT 2025
Management's and auditor's reports Other disclosures
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 2025, which
comprise income statement, statement of comprehensive
income, balance sheet, statement of changes in equity, cash
flow statement and notes, including material accounting pol-
icy information, 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 2025 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 2025 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 requirements
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 state-
ments' (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 fulfilled 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
materially 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 accordance 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 consol-
idated 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 preparing 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,
individually 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.
• 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 concern 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 concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's
1
2
REPORTS AND OTHER DISCLOSURES
3
159
ARLA FOODS ANNUAL REPORT 2025
Management's and auditor's reports Other disclosures
report to the related disclosures in the financial statements
or, if such disclosures 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 infor-
mation 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, 16 February 2026
EY Godkendt Revisionspartnerselskab
CVR no. 30 70 02 28
Henrik Kronborg Iversen
Partner, State Authorised Public Accountant
MNE no. 24687
Jan Mortensen
Partner, State Authorised Public Accountant
MNE no. 40030
1
2
REPORTS AND OTHER DISCLOSURES
3
160
ARLA FOODS ANNUAL REPORT 2025
Management's and auditor's reports Other disclosures
Independent auditor’s
assurance report on the
sustainability statements
Reasonable assurance opinion
We have conducted a reasonable assurance engagement on
the following selected disclosures (selected sustainability
KPIs) in the sustainability statements of Arla Foods amba (the
group) for the financial year 1 January - 31 December 2025:
• KPIs in the table on Progress against scope 1 and 2 target,
Progress against scope 3 FLAG and non-FLAG emissions
targets, Greenhouse gas emissions (scope 1, 2, 3), Soil
carbon sequestration, Biogenic emissions, Energy consump-
tion, Electricity consumption in Europe on pages 45-47
• KPI in the table on Recalls on page 63
• KPIs in the table on Health and safety metrics on page 68
• KPIs in the tables on Gender diversity for all employees,
Gender diversity in management, Gender diversity in
top-management, Distribution of employees by age group,
Employee headcounts, Employee turnover and Number of
employees by contract type on pages 67-69
• KPIs in the table on Animal welfare indicators on page 75
In our opinion the selected sustainability KPIs on pages
45-47, 63, 67, 67-69 and 75 in the sustainability statements
are, in all material respects, prepared in accordance with the
general accounting policies as described on page 39 and the
accounting policies listed along with the KPIs on pages 48-51,
63, 69-70 and 75.
Limited assurance conclusion
We have conducted a limited assurance engagement on the
remaining parts of the sustainability statements of Arla Foods
amba for the financial year 1 January - 31 December 2025.
Based on the procedures we have performed and the
evidence we have obtained, nothing has come to our
attention that causes us to believe that the remaining parts of
the sustainability statements are not prepared, in all material
respects, in accordance with the general accounting policies
as described on page 39 and the accounting policies listed
along with the KPIs.
Basis for reasonable assurance opinion
and limited assurance conclusion
We conducted our combined reasonable and limited
assurance engagement in accordance with International
Standard on Assurance Engagements (ISAE) 3000 (Revised),
Assurance engagements other than audits or reviews of
historical financial information ('ISAE 3000 (Revised)') and the
additional requirements applicable in Denmark.
The procedures in a limited assurance engagement vary
in nature and timing from, and are less in extent than for, a
reasonable assurance engagement. Consequently, the level
of assurance obtained in a limited assurance engagement is
substantially lower than the assurance that would have been
obtained had a reasonable assurance engagement been
performed.
We believe that the evidence we have obtained is sufficient
and appropriate to provide a basis for our reasonable
assurance opinion and limited assurance conclusion. Our
responsibilities under this standard are further described in
the Auditor's responsibilities for the assurance engagement
section of our report.
Our independence and quality management
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. We have also fulfilled our other ethical
responsibilities in accordance with these requirements and
the IESBA Code.
EY Godkendt Revisionspartnerselskab applies International
Standard on Quality Management 1, 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.
Management’s responsibilities for
the sustainability statements
Management of the group is responsible for:
• Designing and implementing a process for identifying the
information included in the sustainability statements as
described in the the general accounting policies on page 39
and the accounting policies listed along with the KPIs
• The preparation of the sustainability statements in accord-
ance with the general accounting policies as described on
page 39 and the accounting policies listed along with the
KPIs;
• Designing, implementing and maintaining such internal
control that management determines is necessary to enable
the preparation of the sustainability statements, in accord-
ance with the general accounting policies as described on
page 39 and the accounting policies listed along with the
KPIs that is free from material misstatement, whether due to
fraud or error; and
• The selection and application of appropriate sustainability
reporting methods and making assumptions and estimates
that are reasonable in the circumstances.
Auditor’s responsibilities for
the assurance engagement
Our objectives are to
a) plan and perform the assurance engagement to obtain
reasonable assurance about whether the selected
sustainability KPIs on pages 45-47, 63, 67, 67-69 and 75
in the sustainability statements are free from material
misstatement, whether due to fraud or error, and to
issue an assurance report that includes our reasonable
assurance opinion.
b) plan and perform the assurance engagement to obtain
limited assurance about whether the remaining parts
of the sustainability statements are free from material
misstatement, whether due to fraud or error, and to issue
an assurance report that includes our limited assurance
conclusion.
Misstatements can arise from fraud or error and are consid-
ered material if, individually or in the aggregate, they could
reasonably be expected to influence decisions of users taken
on the basis of the sustainability statements as a whole.
TO THE STAKEHOLDERS
OF ARLA FOODS AMBA
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As part of our combined reasonable and limited assurance
engagement in accordance with ISAE 3000 (Revised) we
exercise professional judgement and maintain professional
scepticism throughout the engagement.
Our responsibilities in respect of the sustainability statements
for a reasonable assurance engagement include:
• Identification of disclosures where material misstatements
at the assertion level are likely to arise, whether due to fraud
or error; and
• Designing and performing procedures responsive to
assessed risks of material misstatement at the assertion
level for the selected sustainability KPIs on pages 45-47,
63, 67, 67-69 and 75. 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.
Our responsibilities in respect of the sustainability statements
for a limited assurance engagement include:
• Identification of disclosures where material misstatements
are likely to arise, whether due to fraud or error; and
• Designing and performing procedures responsive to
assessed risks of material misstatement at the disclosures
level for the remaining parts of the sustainability statements.
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.
Summary of the work performed
The assurance engagement involves performing procedures
to obtain reasonable assurance for evidence about the
selected sustainability KPIs on pages 45-47, 63, 67, 67-69 and
75 and limited assurance for evidence about the remaining
parts of the sustainability statements.
The nature, timing and extent of procedures selected depend
on professional judgement, including the identification of
disclosures where material misstatements are likely to arise,
whether due to fraud or error, in the sustainability statements
as a whole.
In conducting our reasonable assurance engagement, we:
• Obtained an understanding of the group's reporting process-
es relevant to the preparation of the selected sustainability
KPIs on pages 45-47, 63, 67, 67-69 and 75 in its sustainabil-
ity statements by obtaining an understanding of the group’s
control environment, processes and information systems
relevant to the preparation of the selected sustainability KPIs
on pages 45-47, 63, 67, 67-69 and 75 in the sustainability
statements but not evaluating the design of particular
control activities, obtaining evidence about their implemen-
tation or testing their operating effectiveness;
• Performed analytical procedures on the selected sustain-
ability KPIs on pages 45-47, 63, 67, 67-69 and 75 in the
sustainability statements, and investigated fluctuations and
relationships that are inconsistent with other information or
that differ significantly from our expectations;
• Tested methods, assumptions and data for developing
material estimates, by evaluating how these methods were
selected and applied, whether the assumptions and data
used are appropriate, and tested the data used to source
information;
• Agreed key items and representative samples based on
generally accepted sampling methodology to source
information to check accuracy and completeness of the
data; and
• Visited selected sites to conduct walkthroughs of data
gathering, calculation and consolidation processes related
to the reasonable assurance of metrics.
In conducting our limited assurance engagement, we:
• Obtained an understanding of the group's reporting process-
es relevant to the preparation of its remaining parts of the
sustainability statements by obtaining an understanding of
the group's control environment, processes and information
systems relevant to the preparation of the remaining parts
of the sustainability statements but not evaluating the
design of particular control activities, obtaining evidence
about their implementation or testing their operating
effectiveness;
• Performed inquiries of relevant personnel and analytical
procedures on selected information in the remaining parts
of the sustainability statements;
• Performed substantive assurance procedures on selected
information in the remaining parts of the sustainability
statements ; and
• Evaluated methods, assumptions and data for developing
material estimates and how these methods were applied;
Copenhagen, 16 February 2026
EY Godkendt Revisionspartnerselskab
CVR no. 30 70 02 28
Henrik Kronborg Iversen
Partner, State Authorized Public Accountant
MNE no. 24687
Monica Mai Bak Larsen
Partner, Climate Change and Sustainability Services
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OTHER
DISCLOSURES
In this section
164 Glossary
165 Corporate calendar
Falkenberg dairy fuelled the cottage cheese crave
In 2025, cottage cheese surged in popularity, fuelled by social media buzz around wraps and pizzas.
Our Falkenberg dairy, Europe's largest in cottage cheese, delivered around 27,000 tonnes, which was
just over a 17% increase compared with the previous year. This growth was achieved without adding
new production lines, but instead through to process optimisation, efficiency gains and round-the-clock
dedication. To sustain this momentum, Arla has decided to invest almost SEK 70 million in the site to
meet growing demand for KESO® cottage cheese, increasing its capacity by approximately 1,500 tonnes
per year.
In picture: Arla employee at Falkenberg dairy.
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Glossary
AI is an abbreviation for artificial intelligence. It
refers to the development of computer systems
that can perform tasks requiring human‑like intel-
ligence, such as learning and decision‑making.
AIB stands for Association of Issuing Bodies, the
organisation that manages the European system
for Guarantees of Origin (GOs). The AIB emission
factor represents the greenhouse gas intensity
(CO₂ per kWh) of electricity not covered by GOs,
based on the European residual mix.
Arla® Nutrition Criteria is our guideline to
ensure the nutritional quality of our products.
Arlagården® is the name of our quality
assurance programme.
ATNi stands for Access to Nutrition Initiative.
It is a global benchmarking index that evaluates
food and beverage companies on their efforts
to improve access to nutritious products and
responsible marketing practices.
Average interest expenses, excluding
those related to pension assets and
liabilities are calculated by first determining
the net interest expense. This includes all interest
expenses, such as borrowing charges and interest
on finance leases, but excludes cash discounts
and default interest. The resulting amount is
then reduced by interest income from securities.
Finally, the net interest expense is divided by the
net interest-bearing debt, excluding pension
assets and liabilities, to arrive at the average
interest expense.
BEPS is an abbreviation for base erosion and
profit shifting. These are tax avoidance strategies
that exploit gaps and mismatches in tax rules to
artificially shift profits to low or no-tax locations.
BEVs stands for battery electric vehicles. These
are vehicles powered entirely by electricity stored
in batteries, with no internal combustion engine.
Big 5 is an abbreviation referring to the five key
focus areas in Arla's FarmAhead™ Incentive.
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.
BoR is an abbreviation of Board of Represent-
atives, Arla's highest governing body. It consists
of elected farmer owners who represent the
cooperative's members to make key strategic
decisions.
CapEx is an abbreviation of capital expenditure.
Capacity cost is defined as the cost of
running the general business, and includes staff
costs, maintenance, energy, cleaning, IT, travel,
consultancy and others.
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.
CBG is an abbreviation for compressed biogas.
It is a purified and compressed biogas used as
a renewable fuel, typically in transportation or
energy applications.
CH4 refers to methane. It is a potent greenhouse
gas produced during processes such as livestock
digestion and manure management.
CoC stands for the Arla Code of Conduct.
CoCS is an abbreviation for Arla's Code of
Conduct for Suppliers.
COD is an abbreviation for 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 to improve the transparency,
comparability and reliability of companies'
sustainability disclosures on environmental, social
and governance matters.
DAKOFO is the Danish Grain and Feed Associ-
ation. It is an industry organisation representing
companies involved in grain, feed and related
agricultural products in Denmark.
DCF is an abbreviation of deforestation- and
conversion-free.
DEFRA stands for the Department for Environment,
Food and Rural Affairs.
DMA refers to double materiality assessment.
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.
EEA is an abbreviation for the European
Economic Area.
EFRAG refers to the European Financial
Reporting Advisory Group. It is the organisation
that provides technical advice to the European
Commission on financial and sustainability
reporting standards, including the development of
ESRS under CSRD.
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, including
minority interests, to total assets, and is a measure
of the financial strength of Arla.
ERM refers to Enterprise Risk Management. It is a
structured approach for identifying, assessing and
managing risks across an organisation to support
strategic objectives and resilience.
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 the EU Emissions
Trading System, a market-based approach used
to control pollution by providing economic
incentives for achieving reductions in the
emissions of pollutants.
EUDR is the EU Deforestation Regulation. It is a
European law aimed at preventing products linked
to deforestation or forest degradation from being
placed on the EU market.
FarmAhead™ Technology is a toolbox of
data-driven and science-based technologies con-
sisting of the FarmAhead™ Check, the FarmAhead™
Incentive, the FarmAhead™ Innovation and the
FarmAhead™ Customer Partnership. It is designed
to enable our farmer owners to understand,
measure and advance their individual sustainability
transitions on the farm.
FLAG stands for forest, land and agriculture. It
is a category used in greenhouse gas accounting
and sustainability reporting to capture emissions
and removals related to land use, forestry, and
agricultural activities.
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 positions. An FTE of 1.0 is equivalent to a
full-time worker, while an FTE of 0.5 equals half of
the full workload.
GDPR is an abbreviation of the General Data
Protection Regulation, which regulates data
protection 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 individuals over their personal data
and to simplify the regulatory environment for
international business by unifying the regulation
within the EU.
Global Industry Sales 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.
GM stands for genetically modified. It describes
organisms whose genetic material has been
altered using biotechnology to introduce new
traits or characteristics.
Greenhouse Gas Protocol (GHGP)
provides accounting 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.
HSR stands for the Health Star Rating. It is a
labelling system that rates the overall nutritional
profile of packaged foods to help consumers
make healthier choices.
HVO stands for hydrotreated vegetable oil. It is a
renewable diesel fuel produced by hydrotreating
vegetable oils or animal fats, offering lower
emissions compared to fossil fuels.
IDF stands for the International Dairy Federation.
It is a global organisation that promotes science-
based standards and best practices for the dairy
sector to ensure quality, safety and sustainability.
IFRS is an abbreviation of International
Financial Reporting Standards which are a globally
recognised set of accounting standards developed
and maintained by the International Accounting
Standards Board (IASB).
lncoterms refer to International Commercial
Terms. These are a series of pre-defined commer-
cial terms published by the International Chamber
of Commerce (ICC) defining responsibilities, costs,
and risks for buyers and sellers in a sales contract.
Innovation pipeline is defined as the net
incremental revenue generated from innovation
projects up to 36 months from their launch.
Interest cover is the ratio of EBITDA to net
interest costs.
IROs is the abbreviation for impacts, risks
and opportunities identified through a double
materiality assessment.
LBM stands for liquefied biomethane. It is
a renewable fuel produced by purifying and
liquefying biogas, commonly used as a low-carbon
alternative to fossil fuels in transport and energy
applications.
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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.
LTA stands for lost-time accident. It refers to a
workplace incident that results in an employee
being unable to perform their regular job duties
for at least one full workday or shift following the
accident.
MBB is an abbreviation of milk-based beverages.
MENA is an abbreviation of the Middle East and
North Africa.
Milk volume is defined as total intake of raw
milk in kg from owners and contractors.
N2O is nitrous oxide, a greenhouse gas with
a high global warming potential, commonly
produced from agricultural activities, indus-
trial processes, and combustion, contributing
significantly to climate change.
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.
NGOs stands for non-governmental organisa-
tions.
Non-GMO means non-genetically modified
organisms, for example non-genetically modified
feed crops for cows.
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
Starbucks® chilled coffee that contribute to
strategic branded volume-driven revenue growth.
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
agreements 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
settlement period.
Private label refers to retail brands which are
owned by retailers, but produced by Arla based on
contract manufacturing agreements.
Corporate
calendar 2026
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' 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.
QEHS stands for Quality, Environmental, Health
and Safety. It is a function within Arla's supply
chain safeguarding the quality and safety of
production.
Risk commodities refer to commodities that
are associated with environmental, social and
governance risks throughout their supply chains.
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.
Starbucks® chilled coffee (previously
referred to as Starbucks™) is the updated term
we use in the report to be more precise by
specifying the product category. The scope
remains unchanged.
Strategic brands are defined as products sold
under branded products such as Arla®, Lurpak®,
Castello®, Puck® and Starbucks® chilled coffee.
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.
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 environmen-
tal 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, the
currency in question also depreciates against the
EUR). Currencies in the MENA region are typical
examples.
Value-added protein segment
contains products with special functionality and
compounds, compared to standard protein con-
centrates 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.
WMP is an abbreviation of whole milk powder.
FEBRUARY 25-26
Board of Representatives meeting
FEBRUARY 26
Publication of the consolidated annual report for 2025
MAY 20-21
Elections for the Board of Representatives
AUGUST 27
Publication of the consolidated half-year results for 2026
OCTOBER 1-2
Board of Representatitves meeting
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Arla Foods amba
Sønderhøj 14
DK-8260 Viby J.
Denmark
CVR: 25 31 37 63
Phone: +45 89 38 10 00
Email: 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
Email: arla@arlafoods.com
www.arlafoods.co.uk