Strong end to the year

In the past year, the world market for pork has undergone the most dramatic changes. At the same time, positive developments in the group’s processing activities have led to a 21 per cent increase in profit from ordinary operations, up from 2,091 million DKK in 2017/18 to 2,522 million DKK. Revenue is up from 53,551 million DKK to 56,506 million DKK, equating to growth of 6 per cent year-on-year.

- These are solid financial results. We’re seeing a positive development in our processing companies as well as record increases in the price of pork, so while the settlement paid to our owners was critically low in the first half of the year, supplying pigs to Danish Crown has been good business in the second half. The past two to three months have been really good, so it’s now a question of keeping up the good work, says Group CEO in Danish Crown Jais Valeur. 

Despite an increase in the raw material price of pork of more than 40 per cent in the second half of the year, our Polish business Sokolów has posted a 25 per cent increase in earnings, which is a historical high following the acquisition of the competitor Gzella. Danish Crown Foods has recorded solid earnings, with Baconspecialist Zandbergen and Danish Crown Toppings acquisitions returning particularly strong results, although the margins on, among other things, fresh meat and canned products remain under pressure. Finally, DAT-Schaub is again delivering record results.

The profit for the year from ongoing operations is 1,953 million DKK, which is on a par with 2017/18. The settlement for pigs was raised by an average 0.93 DKK per kg over the year, and supplementary payments of DKK 1.05 per kg will be made to our pig producers. All in all, this equates to additional payments of approximately 700,000 DKK for an average supplier of pigs.

The Board of Directors recommends that a total of 1,258 million DKK be distributed to the owners in the form of supplementary payments and return on the contributed capital. The supplementary payments for our sow and cattle suppliers will be 0.90 DKK and 0.80 DKK per kg, respectively.

- For us as owners, the past year has been a bit of an emotional roller coaster. From a deep crisis to good prices for pork. We must now maintain the positive momentum and develop Danish Crown in a way which strengthens the foundations for the Danish production of slaughter pigs with the clear purpose of safeguarding our production in Denmark as well as jobs at our abattoirs, says Danish Crown President Erik Bredholt

Our exports to Asia, especially China, which has been severely affected by African Swine Fever, were boosted significantly during the year. Total pork sales to China alone are up 29 per cent, when measured in kilograms, while the total value of exports is up 63 per cent.

- Our entire organisation – from sales, planning and logistics, to the employees at our abattoirs and cold storage facilities – deserves praise for their considerable adaptability and commendable efforts. For this reason, we’ve been able to make the most of the global market situation. We must now use the current momentum to build long-term positions not only in China, where we’ve opened our first factory near Shanghai, but also in South-east Asia and Japan, says Jais Valeur.

The earnings in Danish Crown Beef, which cover the group’s beef business in Denmark and Germany, have been under pressure. This is due first and foremost to a weak market for hides and by-products. On average, prices have decreased by 1.57 kr. per kg. A number of initiatives have therefore been launched to increase and restore earnings in Danish Crown Beef as soon as possible.

As part of a new direction for the business, in September, Danish Crown was re-launched as a brand with a refreshed logo, and our farmers have embarked on a sustainability certification programme. Developing the whole chain – from the crops grown in the field via our farms, abattoirs and processing facilities, to the products which consumers find in the supermarkets – involves much hard work. Concrete sustainability goals have been defined, and sustainability is now the key driver of the development of Danish Crown.

Financially, Danish Crown ends the year in a stronger position. Our net interest-bearing debt has been reduced by net DKK 800 million, which has strengthened the group’s balance sheet.

- Our focus is now on the projects that have been initiated to realise the goal set out in our 4WD strategy of being 0.60 DKK ahead of the European countries against which we benchmark ourselves. During the year, our competitiveness has been improved by 0.34 DKK. We still have some way to go, and we must further increase the value creation from our strong branded products and through organic growth in general, says Jais Valeur.

Group financial key figures for Danish Crown

* Numbers are restated in accordance with IFRS 5