Danish Crown Rides out Market Turbulence

DENMARK - Despite market disruption caused by the political situation in Russia, Danish Crown Group says it has posted satisfactory results for the year.
calendar icon 25 November 2014
clock icon 3 minute read

In the past financial year, Danish Crown posted revenue of DKK58 billion, which is on a par with the previous financial year. The operating profit was DKK1,995 million, slightly below last year’s profit of DKK2,018 million.

The Board of Directors has recommended supplementary payments to the company’s owners of DKK0.90 per kilo for slaughter pigs, DKK0.80 per kilo for sows and DKK1.40 per kilo for calves and cattle. In total, DKK1,218 million will be disbursed to the owners.

Chairman of Danish Crown’s Board of Directors, Erik Bredholt, commented: "The past year has been very challenging due to the situation in Russia, and it is having an impact on our owners. For the slaughter pig producers, the year started with high hopes for reasonable earnings. However, the situation in Russia has meant a dramatic fall in the quotation in the course of the year, which is having extreme financial repercussions for farmers.

"Despite the considerable challenges thrown up by Russia’s ban on first pork and then basically all EU foods, we have maintained earnings in the group. At the same time, we have successfully kept costs under control, so I think we should be satisfied with the results."

Internationally, a significant fall in the production of pork in the US resulting from a deadly virus among weaners has contributed to shifting the balance in basically all markets.

Danish Crown Group CEO, Kjeld Johannesen, explained: "When global markets are affected to this extent, it increases the risk of being wrong-footed. I therefore see the results for the year as confirmation of the strength of the Danish Crown Group’s business model with the role it plays in large parts of the value chain and its significant geographical spread."

He stressed that earnings from the Danish slaughterhouse activities are still unsatisfactory, and that the robust results can be ascribed to the group’s international structure.

The changing market conditions internationally have led to considerable variations in the results across the group. On the other hand, the group’s geographical spread means that the challenges encountered in the US are more than offset by the European processing companies in DC Foods.

DC Foods has in fact been further strengthened in the past year through the acquisition of the remaining 50 per cent of the shares in the Polish company, Soko?ów.

Mr Johannesen said: "We are now guaranteed full access to the Polish market, and our efforts to create synergies across the group look promising within all business areas."

In relation to cattle, DC Beef has seen an influx of cooperative members in the past year. In addition, the running-in of the world’s most advanced cattle slaughterhouse has been a key focus area for the company.

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