Arla Foods delivered its strongest financial performance ever in 2025, posting record revenue of €15.1 billion. Behind the impressive figures, however, lies a dramatic market shift, as a surge in European milk supply pushed prices down in the second half of the year.
2025 became a record-breaking year on almost every parameter: the highest milk intake ever at 14.3 billion kilograms, the highest average milk price paid to farmers at 56.4 eurocents per kilogram, and historic revenue. Net profit reached €415 million, prompting the Board of Directors to propose a supplementary payment to owners of 2.2 eurocents per kilogram of milk delivered.
CEO Peder Tuborgh views the result as validation of the company’s strategic direction:
– Our historic result demonstrates that our strategy is working. We have strengthened our market position, delivered record value to our owners, and taken important steps toward a more sustainable future, he said in a press release.
From balance to surplus
While the first half of the year was characterised by strong demand and a balanced market, conditions shifted in the second half. Favourable weather and an exceptionally good feed harvest across Europe led to one of the sharpest increases in milk volumes in recent times.
This sudden surge in supply pushed global commodity prices downward. Despite this, Arla delivered strong results, which management attributes to a resilient business mix and internal efficiency improvements amounting to €158 million – well above the expected target of €90–110 million.
Ingredients and brands drive growth
Subsidiary Arla Foods Ingredients (AFI) played a key role in the year’s success. The segment grew by 43.1 per cent to revenue of €1,452 million, supported by the acquisition of Volac’s Whey Nutrition business and strong global demand for protein.
Arla’s branded products also performed strongly, with branded revenue increasing by 6.9 per cent to more than €7 billion. Although high prices put pressure on volumes in the first half of the year, consumers returned in the second half, resulting in overall volume growth of 0.2 per cent for the year. The Starbucks® iced coffee range continued its strong momentum, posting a notable volume increase of 13.9 per cent.
Major investments and outlook for 2026
Arla is not resting on its laurels. In 2025, the cooperative approved investments totalling €731 million. These include expansions of cream cheese production in Holstebro, a new Skyr line in Sweden, and a new UHT Centre of Excellence in Scotland. At the same time, the group is awaiting regulatory approval of the planned merger with Germany’s DMK Group.
For 2026, the cooperative expects continued high milk supply to put pressure on prices in the early part of the year. Revenue is therefore forecast to range between €13.3 billion and €14.1 billion, lower than in 2025 due to market prices, while the net profit share is expected to remain stable at 2.8–3.2 per cent.
Peder Tuborgh emphasises that Arla is prepared to navigate changing market conditions:
– We enter 2026 fully prepared for the market conditions ahead. Pressure from high milk volumes will shape the early part of the year, but we also see the opportunities this brings. As prices adjust, we expect consumers to return to dairy products with renewed purchasing power, he says.
By Maja Løvstrup
Photo: Colourbox
