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Danish Crown Stronger after Turbulent Year

by 5m Editor
14 November 2008, at 8:14am

DENMARK - It was a stronger Danish Crown which yesterday presented its financial statements after what has been a very turbulent year.

Despite many challenges, the company’s global growth continued, and both the processing and the fresh meat sectors stand strengthened at the start of a new financial year. In a year which saw a decline in Danish meat production, Danish Crown’s revenue increased by 6 per cent, among other things thanks to acquisitions abroad.

The year brought considerable challenges, especially with regard to capacity – where shortages at the beginning of the year due to last year’s fires were followed by surplus capacity due to a decline in the production of pigs for slaughter.

On several occasions during the year, Danish Crown demonstrated its ability to make responsible decisions as and when such decisions are called for even though they come with difficult consequences. "This year, we said goodbye to about 1,600 employees to ensure that the company is geared to the current market situation," says CEO Kjeld Johannesen.

The year saw a strong focus on reducing costs, partly due to a dramatic increase in veterinary costs.

Up 40 per cent on the year before, veterinary costs seriously challenged Danish Crown’s competitiveness in the global market. Moreover, the global market saw considerable changes. Danish Crown’s primary high-price markets came under substantial pressure, among other things due to falling exchange rates, Kjeld Johannesen explains.

"The committed efforts of both employees and management in tackling these challenges are commendable, and at the beginning of the new financial year, we stand strengthened," says Kjeld Johannesen. "Considerable costs were expensed in the financial year as a result of closures and redundancy payments, and Danish Crown is again being favoured by market developments."

In a year where economic developments did not favour the international meat industry, Danish Crown demonstrated its ability to tackle the situation and to generate reasonable results nevertheless. The group’s companies in the UK contributed significant robustness in a year of market unrest.

The supplementary payments of DKK 0.60 for pigs, DKK 0.65 for sows and DKK 0.70 for cattle reflect the very tight pricing policy which was pursued during the year due to the financial challenges in the primary production.

A lack of environmental approvals together with faster structural changes spurred by the economic situation led to a fall in the production of pigs for slaughter. It was a very hard year for Danish Crown’s owners, and the company did what it could during the year to compensate for this. This is also reflected in the supplementary payments, says Chairman of the Board Niels Mikkelsen.

The financial crisis which came to dominate the end of the financial year is having a severe impact on the company’s owners, but at the same time the crisis has shown that the cooperative system is a strong and lasting ownership structure.

"Our finance strategy is robust, and thanks to the ownership structure, Danish Crown’s owners are guaranteed a high degree of stability and security," says Niels Mikkelsen.