But it stated it managed to develop its revenues in contrast with the identical interval final 12 months regardless of seeing a decline within the variety of gross sales.
Arla Foods UK, which is the nation’s largest dairy co-operative, owned by round 2,000 farmers, reported a 16.9% surge in revenues to £1.37 billion.
It got here as the typical milk worth elevated to 48.2 cents (41.3p) per kilogram within the first half, from 46.6 cents (40p) per kilogram on the identical time final 12 months.
However, a decline in commodity costs meant that common milk costs dropped from an all-time excessive seen in the course of the second half of 2022.
Milk manufacturing is rising however shoppers are spending much less, Arla stated.
Revenues from the UK enterprise’s branded merchandise, which embrace milk manufacturers Cravendale and Lactofree, and yoghurt model Skyr, fell by 5.2% over the primary half of the 12 months, with the amount of gross sales throughout its manufacturers dipping.
This is as a result of shoppers have been choosing discounted and own-label merchandise, with Arla supplying the likes of milk, cream, cheese and butter to supermarkets reminiscent of Asda.
“As anticipated, the market conditions put our branded products under pressure,” stated Jonathan Dixon, senior vice chairman of gross sales at Arla’s UK arm.
“During the first half of 2023, we continued to see inflationary pressure resulting in consumers moving towards discount channels and private label products.
“However, we have started to see our brand performance improve towards the end of the first half year due to significant investment in our brands and our continued innovation in the dairy aisle.”
Arla Group, which produces dairy merchandise for nations throughout Scandinavia , stated that worth will increase applied earlier helped develop its revenues by greater than a tenth, with model revenues pushed up by a soar in Lurpak gross sales.
Arla slashed the dimensions of the butter blocks earlier this 12 months whereas costs remained elevated.
The firm stated it was working to minimise the inflationary influence for shoppers however that it wanted to assist its farmers who face traditionally excessive price pressures.
Peder Tuborgh, Arla Foods’ chief govt, stated: “We anticipate that inflation and its influence on consumer patterns will continue to mark the remaining part of 2023, putting pressure on branded volumes in most markets.
“However, we expect an increase in the underlying category growth to contribute to branded growth slowly picking up again.”
The group lowered its full-year gross sales expectations to as much as 13.7 billion euros (£11.8 billion) and barely decreased its revenue steerage.
It additionally revealed a payout to its farmer homeowners of 1 euro per kilogram of milk for the newest half 12 months.
