Arla Foods, one of the world’s biggest dairy companies, said a weaker pound after Britain’s vote to leave the European Union prompted it to start a cost-cutting program to save 400 million euros ($493.5 million) by the end of 2020.
The move comes as a result of the company’s exposure to the British currency and unfavorable developments in commodity markets, Arla said in a news release.
The company, headquartered in Denmark, increased sales by 8 percent last year to 10.3 billion euros, with a quarter of that in Britain, but took a currency hit of about 150 million euro mostly due to a weaker pound.
The company also has large exposure to the Swedish krona which has weakened against the euro in each of the past five years.
Chief Executive Peder Tuborgh said the company’s profitability had been hit by “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.”
The firm - owned by 11,200 farmers in Denmark, Sweden, Germany, Britain, Luxembourg, the Netherlands and Belgium - is competing with food giants such as Danone and Nestle .
Arla Foods is the biggest dairy company in Britain, where it is known for its butter, cheese and skyr products.
Under the program, Arla expects to return around 300 million euros to farmers while additional savings will be reinvested in the company, it said.
The programme will result in job cuts among Arla’s nearly 19,000 employees, although the exact number was still unclear.
($1 = 0.8105 euros)