Danish Crown: Massive demand for beef boosts revenue
It is the combination of a lower supply of beef in Europe and stable consumption that has pushed prices up significantly in the first six months of the financial year. Revenue in Danish Crown Beef was 3.2 billion kroner. This is an increase of nine percent compared to the same period last year.
"We have had a long period of increasing payments to farmers, and this trend continues. The price has taken some bigger jumps than it did in the same period last year. The market for beef is red hot, and we are of course paying close attention to following it, because we are seeing the first signs that we have reached the maximum of what the market can bear", says Finn Klostermann, CEO of Danish Crown Beef.
The explanation for the increasing turnover and earnings is not only found in the red-hot market for beef. Danish Crown Beef has a strategic focus on raising the value of slaughtered animals. This is reflected in an increase in the proportion of raw materials that are processed, which is two percent higher than the same period last year. It is the sale of own-branded products in particular - i.e. products under the company's own logo - that has been growing with an increase of as much as 75 percent on the back of a strong development throughout the 2023/24 financial year.
In March, a new settlement model was introduced, where the farmer is rewarded for better eating quality with a special marbling supplement.
"It is a significant change in our way of settling payments. In general, we are experiencing massive demand for high-quality Danish beef, not least in Italy and Spain, so we want to put an ever-increasing focus on quality. Therefore, it makes sense that the farmer gets a better settlement the higher the quality that is delivered", says Finn Klostermann.
While the Danish business has increased its current earnings, the two German cattle slaughterhouses and the hide company Scan-Hide have not delivered as expected. In Germany, the cattle population is declining, which is driving up the prices of live animals. Together with lower efficiency due to fewer slaughters, this is costing earnings. Lower supplies of cattle hides are also one of Scan-Hide's challenges, but this is overshadowed by weak demand for leather from both the automotive and furniture industries due to geopolitical unrest.
In general, Danish Crown Beef has intensified its work on creating more value from the meat rather than focusing solely on volume, which is also in line with the overall strategy for quality and sustainability.
"We have long worked towards increasing the quality and value we get from our raw materials. We see this as the right way to go in a market where there is increasing competition for raw materials, and it also fits well with our ambitions in the area of sustainability", says Finn Klostermann.
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