Danish Crown Reports 15% Increase in Payment for Pigs

DENMARK - In the first six months of the financial year 2016/2017 Danish Crown increased the payment for pigs supplied by the farmer owners by almost 15 per cent or DKK 600 million relative to the year before.
calendar icon 30 May 2017
clock icon 4 minute read

"It’s very positive to be able to pay our owners a fair price for their pigs. We have seen a strong demand for Danish pork in Asia alongside a decline in the production of pigs in northern Europe. These facts have been the key to increase the market price for fresh pork," says Danish Crown Group CEO Jais Valeur.

The raising pork prices, stable prices for beef and several minor acquisitions have lifted the Group’s revenue over the period by DKK 1,3 billion, seeing it surpassing DKK 30 billion for the first time in the Danish Crown history.

A good demand and a strong sales effort has ensured solid earnings from the fresh meat business, while the earnings in the groups processing companies have been hit by the rapid increase in the prices for raw materials. By keeping the costs down, Danish Crown has managed to secure an operating profit of DKK 1,026 million.

The net profit for the period was DKK 812 million, which is on a par with the year before, and deemed to be acceptable.

"This is not bad results at all. I am pleased with the significant improvement in the payments to our owners. Never the less I must admit the operating profit in our processing companies haven’t met our expectations. This is mainly due to a certain delay. When the pork price rises rapidly we need to increase the prices paid by the retailers and unfortunately it takes some months," explains Mr Valeur.

In the UK Tulip Ltd continues to face challenges. The local management has initiated a comprehensive turnaround plan to regain earnings in the largest company of the group.

Several projects have been launched, and in the second quarter improvements has been seen week by week.

Over the period Danish Crown Beef increased its market share of the cattle slaughtering in Denmark to 67 per cent. This has been achieved on the back of stable operations and an active innovation of the veal and beef product range.

DAT-Schaub, a globally market-leading supplier of natural casings for sausage production, successfully increased its earnings considerably. The prices of as well sheep and hog casings are rising, which makes the outlook for the rest of the year look promising.

In the past six months, Danish Crown has launched its strategy towards 2021, where the objective is to develop the business in the four main markets in northern Europe as well as in Asia. In addition, there will be a global focus on four selected categories.

"We have got off to a good start in our efforts to implement the strategy. We have sold our US subsidiary with a profit of more than DKK 0.5 billion, which will be included in the financial statement of the year, and we have acquired three smaller companies. In my opinion we have defined the direction for the future of Danish Crown, but there is still a lot of work to be done if we are to deliver on the ambitious commitment we have given our owners," says Mr Valeur.

The target during the strategy period is to increase the settlement price paid to the cooperative members by DKK 0.60 relative to an index showing the price of pork in other four EU countries with significant pork exports.

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