Danish Crown: cuts needed to restore competitiveness
Danish pork processor Danish Crown has announced further cuts in its operations in order to restore competitiveness. That was the message of the new CEO Niels Duedahl at the presentation of the 2023/24 annual report in Randers this November.
The underlying message was clear as well: the processor would be “in crisis.” Duedahl, who started at September 1, said, “At the moment, we are facing a further decline in pig supply of around 5% this financial year. This is a negative spiral and we are doing everything we can to restore our competitiveness.”
All in all, in the financial year 2023-24, which ended in September, Danish Crown’s net profit fell by 29% to almost €140 million (DKK 1 billion) compared to 2022/23.
In terms of sales, Danish Crown achieved €9.09 billion (DKK 67.8 billion), a 0.3% rise compared to the previous year. Earnings before interest and taxes (EBIT) increased by 1.2% to €325 million (DKK 2.4 billion). Financial expenses increased by 27% to €143 million, but so did the costs for extraordinary expenses, by 133% to €63 million. That is despite the proceedings from the sale of Agri-Norcold.
Vast changes in meat markets
One major reason for the disappointing results is related to vast changes in the meat markets, the reduction of the pig population being the major reason. In Denmark, this dropped by over 9% on top of almost 18% in previous years. All in all, Danish Crown processed 5% fewer pigs over the last year.
Prices for producers have been unsatisfactory as well, in comparison to the European averages. Prices averaged around €0.36 lower (DKK 2.72) than other processors – a difference that has even grown last year. Duedahl concluded that Danish Crown was beaten in its own country – as of the 30 million pigs born in Denmark, over 50% got exported or processed by competitors as Danish Crown failed to pay competitive prices.
Restructuring and cost-cutting
To reduce financial pressures, the processor already announced a restructuring and comprehensive cost-cutting plan. Slaughter plants in slaughterhouses in Saeby and Ringsted were and the cooperative set-up got changed. Now, non-pig farmers are now allowed to hold preferred shares in the company.
For the coming year, Danish Crown foresees further decreases in livestock, although the contraction is somewhat slower. Thanks to price increases, financially stable sales are anticipated. Further cuts are anticipated.
