FDBusiness.com

Despite the divestment of Plumrose in the US and falling exchange rates in some of its main markets, Danish Crown, Europe’s largest meat processor, posted record revenue of DKr62.024 billion (€8.33 billion) for the 2016/17 financial year. The earnings for the year were adversely affected by the challenges faced by Tulip Ltd in the UK as well as increasing raw material prices for the group’s processing companies, but the proceeds from the divestment of Plumrose ensure a record profit of DKr2.022 billion.

Danish Crown is the world’s largest pork exporter and Europe’s largest pork processor. Danish Crown Beef is a significant player in the European beef market.

“I’m very satisfied with the way Danish Crown is developing. Each and every day, our 25,000 employees deliver a solid performance to create the necessary foundation for the growth we must achieve, despite the fact that the year has also brought new challenges. Our earnings are not what we’d like them to be. This is primarily due to the problems in Tulip Ltd. However, I’m pleased to confirm that we have very quickly completed a successful turnaround, and that towards the end of the financial year Tulip Ltd was back in the black,” says Jais Valeur, group chief executive of Danish Crown.

Jais Valeur.

The Supervisory Board is recommending total payment of almost DKr1.45 billion to the co-operative’s owners. Supplementary payments of just under DKr1.2 billion will be disbursed, which corresponds to DKr0.95 per kg of pork, while the co-operative members supplying sows and cattle will receive DKr0.80 and DKr1.30 per kg, respectively. At the same time, a total of DKr55 million is being credited to the owners’ personal subordinated accounts.

Following the divestment of Plumrose, DKr250 million of the proceeds are being paid out to the owners. The payments are based on what the owners have supplied to Danish Crown during the last five financial years.

“We are today a financially strong company. This is largely due to the confidence which Danish Crown’s cooperative members have shown in the company for a number of years. Therefore, the Supervisory Board has felt all along that some of the proceeds from the divestment of Plumrose should be paid out to our loyal co-operative members to encourage new investments,” says Erik Bredholt, chairman of Danish Crown.

The total payments made to our owners for the pork they have supplied over the year are DKr835 million higher than the year before, equating to DKr1.22 more per kg. However, the higher prices for pigs have impacted earnings in the group’s processing companies, which have only to a certain extent been able to increase prices.

“The results in Tulip Food Company and Sokołów are not as expected, as it has taken time to recoup the increasing raw material prices through price increases. On the other hand, DAT-Schaub has posted record earnings from sales of natural casings for sausage production. The company is one of the largest in the industry globally, and I see a lot of potential for continued growth within this important business area, either in the form of organic growth, or through playing an active role in the consolidation of the industry,” says Jais Valeur.

During the year, Danish Crown Beef acquired Teterower Fleisch in Germany. The company has now been successfully integrated, and is already making a positive contribution to the bottom line. Danish Crown Beef now slaughters more than two out of three Danish cattle. Overall, Danish Crown is now the fifth-largest player in the European beef market.

Friland is again seeing record exports of organic meat, with more than half of the company’s revenue now being generated outside Denmark. The company is the world’s leading supplier of organic beef and pork.

During the year, a number of acquisitions have been made – right across the Danish Crown Group’s eight business units.

“We knew that the 2016/17 financial year would bring us challenges, so against this background I’m happy with the results, even though we have lost ground relative to our benchmark. I’m pleased to note the targeted efforts being devoted to our 4WD strategy across the whole group, and we are therefore sticking with our strategic target of raising the price paid to our owners by DKr0.60 per kg by 2021,” says Jais Valeur.