Randers, 16 January 2014

This morning, Danish Crown’s Board of Directors has approved a comprehensive structural plan for the Danish part of the group. In the near future, a range of initiatives will be implemented to ensure that production in Denmark is competitive – and that slaughtering capacity is tailored to the number of pigs for slaughter produced.

- We have spent the past few months turning every stone to find out how we can responsibly solve the current challenge of surplus capacity while simultaneously keeping a close eye on costs in our Danish production, says Danish Crown’s Group CEO Kjeld Johannesen.

Among other things, the structural plan means that the Boards of Directors of Danish Crown and its subsidiary Tulip Food Company have recommended that Danish Crown’s deboning department in Faaborg and Tulip’s production of ready meals, also in Faaborg, be closed down, because the current production set-up is not competitive.

The two closures affect a total of approx. 470 employees, of whom more than 60 are employed in Tulip Food Company.
At the same time, the Board of Directors is recommending that negotiations be started with the employees and other stakeholders at the slaughterhouses in Skærbæk and on Bornholm on a more sustainable cost structure.

- It is no secret that the slaughterhouse on Bornholm has been in our sights for some time because, at the end of the day, each kilogramme of meat we produce on the island costs considerably more than elsewhere. However, we are also very aware of the importance of the local workplaces and of ensuring the shortest possible transport times to the slaughterhouse for the animals. Therefore, together with our employees and the politicians, we will look at whether it is possible to find alternative solutions to making production on Bornholm financially sustainable. In so doing, we hope to be able to preserve the slaughterhouse and the workplaces, says CEO for DC Pork Jesper Friis.

The slaughtering of sows in Denmark faces exactly the same challenges. Today, Danish Crown slaughters sows at its slaughterhouse in Sæby in northern Jutland, where the sows account for a small part of production, and in Skærbæk in southern Jutland, which is a pure sow slaughterhouse.

- We obviously need to be able to receive the members’ sows when they need to be slaughtered. However, especially in Skærbæk, sow slaughterings are costly and not competitive, and this needs to be looked at from a strategic point of view. Either we have to minimise the activities, or production has to be smarter and more streamlined, says Jesper Friis.

As part of the structural plan, capacity at the group’s Danish pig slaughterhouses must also be adjusted.

- Today, we have the capacity to slaughter more pigs than the numbers being delivered to the slaughterhouses, and this is not tenable, says Jesper Friis.

The capacity adjustments will affect approx. 350 employees at several production facilities.

- We have not decided in advance how we will adapt capacity, but we know that about 350 employees will be affected. Therefore, we are keen to enter into a constructive dialogue on how we can structure production to keep job losses to a minimum. There is a range of options open to us at the factories, which will be discussed with employees in the coming weeks, says Jesper Friis, while stressing that there will be a need for less slaughter capacity from February this year.

Over the past five years and more, the production of pigs for slaughter in Denmark has fallen by over 20 per cent. In December, the industry received a helping hand from the politicians in the form of a growth package. This proposes changes to, among other things, the tax rules if you invest in your own workplace.

- Unless we implement new initiatives, the trend will continue, and we will be facing further surplus capacity next year. Therefore, it is a good idea to resume discussions with our employees and look at whether, in the light of the new rules, we can boost the production of pigs for slaughter and thereby safeguard the remaining workplaces, says Jesper Friis.

- Danish Crown is a strong group, but its general financial strength cannot compensate for the fact that production in Denmark is economically weak. As we all know, a chain is no stronger than its weakest link, and in an industry characterised by fierce competition, we must think ahead, says Kjeld Johannesen.



Facts – Danish Crown Faaborg

• Danish Crown in Faaborg debones hams and produces backs (raw ingredients for sliced back bacon) and semi-finished ham products (MetaPress hams).
• The closure affects 409 employees, and Danish Crown is establishing a job bank to help employees move on in their working lives, either by taking a course, starting a study programme or finding a new job.
• The department will close by early 2016 at the latest.
• An analysis will now be conducted to decide whether to move production to Poland or Germany.

Facts – Tulip Faaborg

• Tulip in Faaborg produces refrigerated and frozen ready meals.
• The factory closure affects 63 employees, and Tulip is establishing a job bank to help employees move on in their working lives, either by taking a course, starting a study programme or finding a new job.
• The transfer of production from Tulip in Faaborg is taking place gradually, with the factory closing completely in September 2014.
• Approx. 70 per cent of production in Tulip in Faaborg is being transferred to Tulip in Aalborg, where the company is investing approx. DKK 30 million and creating new workplaces in the city.
• The remaining production is being distributed between the other factories.

Facts – Danish Crown Rønne

• Danish Crown in Rønne slaughters approx. 8,700 pigs a week and approx. 200 sows a week.
• The department has approx. 190 employees.
• It is necessary to implement annual cost savings at the factory to the tune of DKK 20-25 million to ensure profitable production.
• Danish Crown is now starting negotiations with employees, cooperative members and the authorities about the savings, and expects to conclude these negotiations by 1 June 2014 at the latest.

Facts – Danish Crown Skærbæk

• Danish Crown in Skærbæk only slaughters sows, approx. 4,400 sows a week.
• The department has approx. 85 employees.
• Negotiations will be initiated with the employees in Skærbæk to devise a financially sustainable strategy for slaughtering sows at the factory.
• The negotiations are expected to be concluded before 1 July 2014.

Facts – capacity adjustments at the pig slaughterhouses

• In the 2012/2013 financial year, Danish Crown slaughtered approx. 14.8 million pigs and sows in Denmark.
• DC Pork’s Danish slaughterhouse facilities employ approx. 5,200 workers.
• Over the past five years or more, the production of pigs for slaughter in Denmark has fallen by over 20 per cent.
  Danish Crown. This means surplus capacity at Danish Crown’s pig slaughterhouses, and so capacity needs to be adjusted to ensure a competitive production structure.
• Local negotiations with the slaughterhouse employees are therefore being initiated with a view to reducing capacity by the equivalent of approx. 20,000 pigs a week.
• Approx. 350 employees will be affected by the capacity adjustments.