A strong demand for pork in China and other Asian markets is the main reason why Danish Crown has been able to maintain a competitive settlement for its owners in the past year.

- The Chinese appetite for imported pork was exactly what was needed to lift prices in Europe. This was obviously positive for Danish Crown's sales, but what pleases me most is the fact that the higher prices have led to renewed optimism among the company’s owners, says Danish Crown’s Group CEO Jais Valeur.

Despite decreasing foreign exchange rates in some of the group’s main markets, Danish Crown’s sales for the first time topped DKK 60 billion, greatly helped by a Swedish acquisition in the beginning of the year, as well as generally increasing prices for pork.
A net profit of DKK 1.6 billion was posted for the year, compared to DKK 1.8 billion for the prior-year period. Erik Bredholt, Chairman of Danish Crown’s Board of Directors, considers the overall result to be satisfactory:

- It highlights the strength of being a group that rests on several legs, as we have had a year with declining earnings in the important UK market, which has, however, to a large extent been offset by increased earnings in other parts of the group.

The Board of Directors is recommending total supplementary payments of almost DKK 1.3 billion to the owners. This corresponds to DKK 1.00 per kg of pork, while the cooperative members supplying sows and cattle will receive DKK 0.80 and DKK 1.30 per kg, respectively. At the same time, a total of DKK 102 million is being credited to the owners’ personal members’ accounts. Pig and sow members are being paid DKK 0.075 per kg, while cooperative members supplying cattle are being paid DKK 0.015 per kg.  

This is down on last year, but Erik Bredholt says that it should be seen in the light of a year with special challenges:

- The prices we are paying are still above those being paid in Germany and are also above the new European index which we introduced in connection with the new strategy plan. Because of the challenges faced by the group in the UK market, the price difference between Denmark and Germany is slightly smaller than last year, says Erik Bredholt – with reference to the fact that UK subsidiary Tulip Ltd has experienced significant losses of competitiveness and earnings, resulting in a change of leadership and structure.

2015/16 is the first financial year with Group CEO Jais Valeur at the helm. He has just launched the company’s comprehensive five-year strategy plan under the title ‘4WD’. The plan includes a promise that, by the end of the strategy period, the settlement paid to owners will be DKK 0.60 higher than the EU pig price index.

- Both internally and externally, Danish Crown appears to be a well-managed company in which sound investments have been made, but FY 2016/2017 will still present challenges. As a supplier to the highly competitive retail business, raising prices to reflect rising raw materials prices is hard. At the same time, we are still facing challenges in our UK subsidiary, says Group CEO Jais Valeur.

Looking at the balance sheet, Danish Crown emerged strengthened from the year with an increased solvency ratio. A strong and positive cash flow – including a substantial reduction in inventories – is contributing to reducing the balance sheet total and thus create a robust financial foundation for the group’s further development.

Danish Crown Group – financial highlights

mDKK	2014/15	2015/16
Revenue	59,556	60,038
EBITDA	3,976	3,619
Operating profit (EBIT)	2,471	2,167
Net profit for the year	1,821	1,639
Total assets	26,779	25,257
Equity	7,172	6,897
No. of cooperative members	8,020	7,605
No. of employees (end of year)	25,792	25,977
Supplementary payments
Pig suppliers, DKK per kg supplied	1.05	1.00
Sow suppliers, DKK per kg supplied	0.90	0.80
Cattle suppliers, DKK per kg supplied	1.55	1.30
Supplementary payments, mDKK	1,425	1,295
Credited to personal subordinated accounts
Pig suppliers, DKK per kg supplied	0.08	0.075
Sow suppliers, DKK per kg supplied	0.08	0.075
Cattle suppliers, DKK per kg supplied	0.17	0.150
Credited to personal subordinated accounts, mDKK	113	102
Total allocation for supplementary payments and personalsubordinated   accounts, mDKK	1,538	1,397
Supplies by members, million kg	1,330	1,283