Arla has announced half-year results for 2023, a period which saw continued inflationary pressure, declining dairy commodity prices and a shift in consumer behaviours.

These issues have impacted the European co-op's performance, with it posting a net profit of €103m (£88.3m), or 1.5% of revenue compared to 3% in the same period last year.

However, the co-operative's overall revenue was €7 billion for the first half of 2023, a 10.7% increase compared to €6.3 billion in the first half of 2022.

Arla was also able to deliver a performance price of 49.7 EUR-cent/kg milk, enabling a half-year supplementary payment to farmers of 1 EUR-cent/kg milk based on the half-year volumes as planned.

In the UK, net revenue for Arla in the first half of 2023 was £1.37bn, a growth of 16.9 percent compared to the same period in 2022.

But Arla’s UK foodservice business saw negative volume growth of -1.8%, compared to 19% growth in the first half of 2022, where the surge in demand was due to Covid-19 restrictions easing.

Arla said it expected to see positive growth in its UK foodservice business in the second half of the year.

Senior VP of sales at Arla Foods UK, Jonathan Dixon, said: “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."

While Arla said it expected inflation to soften, it warned that commodity markets continued to be marked by uncertainty in the coming half year.

Arla Foods CEO, Peder Tuborgh, said: “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."

Arla has lowered its full-year expectations for revenue to €13.2-13.7 billion and expects to deliver a profit within the range of 2.8-3% of revenue, narrowed from 2.8 - 3.2%.