Danish Crown: Record settlement for cattle owners
Revenue in Danish Crown Beef has increased by almost 15 percent from DKK 5,900 million to DKK 6,771 million. The increase is due to strong demand for Danish beef on both the domestic market and especially in Southern Europe, and this has ensured the unitholders a steadily increasing settlement during the year.
"We have experienced an exceptional market for beef and veal throughout Europe. Although prices have risen sharply, consumers still want burgers, lasagna and steaks. That is why we have actually gone through the year without lowering our prices once, and I think that has never happened before. This is primarily a result of a strong market, but it is also due to the impressive efforts of our employees at the Danish factories", says Finn Klostermann, CEO of Danish Crown Beef.
Declining number of cattle triggers higher prices
Across Europe, the number of cattle for slaughter has been decreasing. Therefore, strategic work has been done to create more value from the goods that have been available. The proportion of raw materials that are processed has increased, and sales of own-branded products have grown. This has ensured both better prices and higher quality in the products sold to the Danish retail trade. For the large export markets in Southern Europe, the focus has been on the marbled, high-quality goods.
"During the year, we have introduced a marbling supplement that can give our unit owners up to one and a half kroner per kilo. They have received it very well, and especially in the last months of the financial year it gave us exactly the right products for the southern European markets, and customers have responded by paying record high prices. There is generally a really good atmosphere among our unit owners, and we must maintain this through continued strong settlement, because that is the way to keep the number of cattle in Denmark at the current level", says Finn Klostermann.
The raw material base is not only positive
While the Danish business has delivered record numbers, the two German cattle slaughterhouses and the hide company Scan-Hide have not delivered as expected. In Germany, the number of slaughters has fallen by almost nine percent nationwide, and Danish Crown's two slaughterhouses have declined accordingly. This has driven up the prices of live animals and made it almost impossible to make a profit from running a cattle slaughterhouse.
The fewer cattle slaughters are also one of Scan-Hide's challenges, because the fewer raw materials result in lower capacity utilization. The weak operating economy, however, is overshadowed by a declining demand for leather, especially from both the automotive and furniture industries due to geopolitical unrest.
"We are on the ball to improve operations at both our German slaughterhouses and in Scan-Hide. Concrete plans have been made to reverse the trend, and we are already seeing the first improvements. The work that is being done to streamline all cross-cutting processes in Danish Crown will also benefit the shareholders in Danish Crown Beef. At the same time, we are putting efforts into establishing the factory that will start supplying burger patties to McDonalds next summer, so the strong settlement does not make us relax, quite the opposite", says Finn Klostermann.
In mid-August, Danish Crown Beef announced an agreement to supply burger patties to McDonald's restaurants in Denmark, Sweden and Finland. The burger patties will be produced at a newly established factory in Vejen.
The board of directors proposes a balance payment to the cattle shareholders in Danish Crown of 110 øre per kilo delivered in the financial year. This must be approved by the board of representatives at the meeting on 28 November.
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