ITS good news for Cumbrian producers who supply Arla Foods as the co-operative reports strong results in the UK despite the impact of Covid-19 on the food service sector.

Arla Foods UK achieved revenue of £1bn in the first six months of 2020.

The co-operative processor, owners of Lockerbie Creamery, reported revenues were up 4.7 percent to the end of June compared with the same period last year.

But the company warned that the performance may not be sustained across the rest of the year because the 2020 figure to date masked changes in profitability, operating costs and temporary demand.

Arla Foods UK managing director Ash Amirahmadi explained that lockdown measures saw a dramatic shift from food service to retail business for most of the half-year.

The shift was driven by an increase in dining in and a boom in home baking.

This caused a spike in retail demand for the firm’s products such as Cravendale milk and butter from the Lurpak and Anchor brands.

Sales for Cravendale grew 22 percent, Lurpak 20 percent and Anchor 17 percent between January 1 and June 30 2020 compared with the first half of last year.

These brands drove a 16 percent increase in demand across all of the firm’s products compared with the same period in 2019.

The Arla Group performance price – which measures the value Arla creates per kilogram of owner milk – was at €0.37/kg (33p/kg) compared with €0.36/kg (32p/kg) for the first six months of 2019.

Overall, Arla Group warned that the easing of lockdown measures and reopening of food service sector outlets would slow down its financial performance for the second six months of 2020.

Despite this, the group forecast it would still meet revenue targets for the full year of €10.4bn-€10.8bn (£9.3bn-£9.6bn), with net profit of 2.8-3.2 percent of revenue.

Peder Tuborgh, CEO of Arla Group, comments, “The Covid-19 pandemic is one of the most severe crisis situations I have experienced as CEO of Arla, and we – as many other food companies - saw a very quick change in consumers eating habits as countries shut down around the world. We quickly channelled milk from our Foodservice business into retail and successfully maintained a steady flow of products in demand. This shows just how robust and agile our cooperative really is for our dairy farmers.”