Danish dairy processor Arla Foods has reported half-year earnings of €308m, an 86% increase on the same period last year.

Pre-tax profits for the six months also increased strongly to €261m, while group sales were back 5% to €4.9bn. Milk volumes from farmer suppliers increased almost 2% to 7.2bn litres.

Arla chief executive Peder Tuborgh said the outlook for the second half of 2016 was positive after a difficult period for the dairy industry.

“In a very difficult market environment, we have continued to improve the quality of our business,” he said.

“Despite taking in more milk, Arla managed to move the extra milk into the most profitable sales channels, retail and food service, to maximise the price the company can pay to the farmers.”

While Arla paid a milk price a little below 30c/litre in the first half of 2016 to farmer suppliers, the co-op said it does expect milk prices to rise at the back end of the year. “Looking at the second half of 2016, we see a positive trend taking hold as the milk production is declining again in Europe and prices are starting to go up,” said Tuborgh.

“We have already announced our first increase in the on-account milk price to our farmers with effect from September, and we do expect an improving market situation as we move towards the end of the year,” he said.