Arla Foods slashing cost cuts 'due to Brexit'

Arla Foods has announced that is has been forced to cut £351m of costs due to Brexit's impact on sterling and due to commodity prices.

The Lurpak owner has already begun to pare costs after putting a plan into action at the end of 2017 but the Danish firm said on Friday that the scope of the savings had been increased in recent months.

Arla plans to deliver an annual run-rate of at least €400m of savings by 2020. "The profit impact will build throughout the life of the programme.”

The company, the largest producer of dairy products in Scandinavia, reported sales up 8% last year to €10.3bn with British sales accounting for a quarter of that number. It also took a hit of €150m in the UK due to the weak pound.

CEO Peder Tuborgh said: "At Arla Foods we have always had a culture and strong track record of creating efficiencies and removing costs for the benefit of our farmer owners, customers and consumers, so in that sense nothing is new.

"What is new, however, are two unexpected developments that have hit us, both of which are outside of our control. These are the currency impact of Brexit on our actual performance and the impact of the reversal in commodity prices on fat and protein on our relative performance against our international peers.

"These developments have negatively impacted our profitability, and as a responsible business we have to act to remove the impact of these new developments, and the action we are taking is a three-year transformation programme which cuts across our whole business and sets out to restore our profitability."