FDBusiness.com

Danish Crown has posted strong results for the 2018/19 financial year despite major challenges in the first half of the year under review. Record exports to Asia and satisfactory results by the group’s processing companies have generated DKr500 million (€66.9 million) more for the group’s owners – Danish farmers.

In the past year, the world market for pork has undergone the most dramatic changes. At the same time, positive developments in the group’s processing activities have led to a 21% increase in profit from ordinary operations toDKr2.52 billion. Revenue rose by 6% year-on-year to DKr56.506 billion.

“These are solid financial results. We’re seeing a positive development in our processing companies as well as record increases in the price of pork, so while the settlement paid to our owners was critically low in the first half of the year, supplying pigs to Danish Crown has been good business in the second half. The past two to three months have been really good, so it’s now a question of keeping up the good work,” says Jais Valeur, chief executive of Danish Crown.

Despite an increase in the raw material price of pork of more than 40% in the second half of the year, Danish Crown’s Polish business Sokolów posted a 25% increase in earnings, which is a historical high following the acquisition of the competitor Gzella. Danish Crown Foods recorded solid earnings, with bacon specialist Zandbergen and Danish Crown Toppings acquisitions returning particularly strong results, although the margins on, among other things, fresh meat and canned products remain under pressure. Finally, DAT-Schaub is again delivering record results.

The profit for the year from ongoing operations is DKr1.953 billion, which is on a par with 2017/18. The settlement for pigs was raised by an average DKr0.9 per kg over the year, and supplementary payments of DKr1.05 per kg will be made to pig producers. All in all, this equates to additional payments of approximately 700,000 DKK for an average supplier of pigs.

The board of directors has recommended that a total of DKr1.258 billion be distributed to the owners in the form of supplementary payments and return on the contributed capital.

“For us as owners, the past year has been a bit of an emotional roller coaster. From a deep crisis to good prices for pork. We must now maintain the positive momentum and develop Danish Crown in a way which strengthens the foundations for the Danish production of slaughter pigs with the clear purpose of safeguarding our production in Denmark as well as jobs at our abattoirs,” says Erik Bredholt, president of Danish Crown,

The earnings in Danish Crown Beef, which cover the group’s beef business in Denmark and Germany, have been under pressure. This is due first and foremost to a weak market for hides and by-products.

As part of a new direction for the group, in September, Danish Crown was re-launched as a brand with a refreshed logo, and the group’s farmers have embarked on a sustainability certification programme.

Financially, Danish Crown ends the year in a stronger position with net interest-bearing debt having beeb reduced by net DKr800 million, which has strengthened the group’s balance sheet.