Lurpak-maker Arla reports steady first half as protein boom offsets falling milk price

COPENHAGEN, Aug 27 (Reuters) - Danish dairy producer Arla on Thursday reported broadly steady revenue in the first half of the year as sales of pricier protein-rich products offset a fall in milk prices, and lifted its annual guidance to reflect its recent merger with Germany's DMK Group. 

The company said the shift toward protein-rich dairy, such as skyr yoghurt, cottage cheese and protein shakes, spans both retail products and its business-to-business ingredients division and is a trend it expects to continue for the rest of the year. 

"Food prices, including dairy, have dropped during the last year, and of course, the consumers react to that immediately," Arla CEO Peder Tuborgh told Reuters.

Arla, which makes Lurpak butter and Castello cheese and also sells whey to other protein-product producers, has previously attributed the increase in demand for high-protein products in part to the growing use of weight-loss drugs. 

Revenue for the January-June period edged up to €7.6 billion ($8.86 billion) from €7.5 billion from a year earlier.

The cooperative, which competes with the likes of Danone and Nestle, raised its guidance for strategic branded volume-driven revenue growth to between 4% and 6% for the full year, up from the 1% to 3% seen previously.

Arla also raised its 2026 revenue guidance to reflect the completion of its merger with DMK Group in June, to between €16.8 billion and €17.6 billion from a previous range of €13.3 billion to €14.1 billion.

While a global oversupply of milk continues to pressure dairy prices, early signs of stabilisation point to a possible gradual recovery later this year, the company said.

Arla's performance price, the amount paid to farmer-owners per kilo of milk, fell to €0.44 per kilogram from €0.58 per kilogram a year earlier.

The Denmark-based company is now owned by more than 11,000 dairy farmers in Denmark, Sweden, Britain, Germany, Belgium, Luxembourg and the Netherlands, after the DMK merger.

$1 = 0.8580 euros)

(Reporting by Soren Jeppesen, editing by Louise Rasmussen, Kirsten Donovan)