FDBusiness.com

Danish Crown’s last year as the owner of Tulip Ltd resulted in a loss of DKr210 million (€28 million) from the UK business unit. Additionally, the divestment of the 12 Tulip facilities in the UK required a DKr575 million (€77 million) write-down of goodwill.

Revenue in Tulip Ltd declined from DKr7.3 billion in the 2017/18 financial year to DKr7 billion in 2018/19, while the profit after tax and interest improved from a loss of DKr370 million in 2017/18 to a loss of DKr210 million in 2018/19. At the same time, DKr575 of goodwill has been written down.

“The write-down is slightly higher than what we expected at the end of August. This is because we’ve decided to make provisions for the usual seller guarantees issued to the buyer as part of the deal. This is a way of protecting the company against any negative surprises in the new financial year,”  says Preben Sunke, Group CFO of Danish Crown.

Tulip Ltd was sold for DKr2.4 billion. The company had debt of DKr1.9 billion, so despite the operating loss for the 2018/19 financial year and the write-down of goodwill, Danish Crown’s balance sheet is being strengthened.

The loss in Tulip Ltd will, of course, still be included in Danish Crown’s financial statements for 2018/19, but the write-down of goodwill will not affect the supplementary payments paid to Danish Crown’s owners.

“The supplementary payments to Danish Crown owners are based on Danish Crown’s earnings in the past financial year. This means that the only negative impact on the results distributed by the Board of Directors next week will be from the operating loss generated by Tulip Ltd for the year,”  explains Preben Sunke.