Danish Crown fights off ‘challenging’ pork market

By Aidan Fortune contact

- Last updated on GMT

A challenging pork market meant Danish Crown posted modest earnings growth
A challenging pork market meant Danish Crown posted modest earnings growth
Danish Crown has reported a growth in earnings for the first half of the year despite what it calls a “challenging” global pork market.

Its earnings for the period were up 1.5% year-on-year. The number of pigs slaughtered by Danish Crown were also up 1.5% however this was less than the business expected.

Revenue for the group was down from 30.7 billion DKK to 30.1 billion DKK year-on-year. This is down to the divestment of Plumrose in the US, which accounted for revenue of 1.7 billion DKK during the same period last year.

Jais Valeur, group CEO of Danish Crown, said: “We're generally satisfied with our results, with all of our processing companies reporting growth. Sokołów is doing well in Poland, Tulip Food Company is posting increased earnings on export, and things are moving in the right direction for Tulip Ltd. The aggregate results of the processing companies for the half-year are up 171 million DKK on the same period last year.”

The average price per kg paid to farmers was 0.76 DKK lower than last year, something that has been attributed to volatile exchange rates. “The decrease in price paid to our owners is regrettable, as we're actually seeing satisfactory demand for our products,”​ said Valeur. “This decrease is first and foremost due to the low USD exchange rate, which has both eroded the prices received for our exports to Asia and strengthened the competitive power of the US abattoirs in China, Japan and Southeast Asia.”

Future strategy

As part of its growth strategy between now and 2021, Danish Crown’s goal is to improve the price per kg of pork paid to farmers by approximately 0.60 DKK compared to an EU index. Its focus is on developing the business in Danish Crown's four domestic markets in northern Europe and in Asia. In addition, the focus globally is on the categories of natural casings, bacon, canned products and pizza toppings.

“We've taken a step towards achieving our ambitious goals,”​ said Valeur. “Compared to last year, we've improved our earnings across the group by 0.27 DKK per kilo compared to the EU index. At the same time, a number of strategically important acquisitions have been made. We're making progress, but there is much hard work ahead for us to realise our strategic goal.”

DAT-Schaub, Danish Crown's sales and processing company for natural casings had a “good half-year and posted significant growth in both revenue and earnings”.

“The combination of a global sales organisation and an efficient production setup is working and strengthens our belief in our strategic goal of becoming a global leader in the supply of natural casings by the end of 2021,”​ said Valeur. “This area of our business has already been expanded to include activities in Spain and South America as well as production facilities in China, and more developments are on the way.”

UK disappointment

It also reported that since the start of the year in the UK, Tulip Ltd hasn’t seen the expected growth in demand from the UK retail market, which remains “very competitive”.

Beef markets

The business reported that prices for Danish beef have been rising, and the average price per kg paid to farmers is approximately 10% higher than last year. “However, earnings in Danish Crown Beef are being adversely affected by a general decrease in the number of slaughter animals in Denmark and a sluggish beef market in Germany.”

Related topics: Financial, Denmark, Pork

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