Danish Crown: Significant progress in turnover despite challenges
A setback for the export of Danish pork to the high-price markets outside Europe, high inflation, rising interest rates, as well as one-off costs for adjusting production capacity leave their mark on Danish Crown's annual accounts for 2022/23. Conversely, revenue has risen by five percent from DKK 64.2 to DKK 67.6 billion ( 1 DKK = 0,13 EUR) and the average settlement for the unit owners' deliveries of pigs has been the highest for almost 40 years.
"It was a poisonous cocktail that hit us, but we have reacted consistently and taken the necessary decisions. We cannot be satisfied with the accounts, but it is important to maintain that we have, after all, been able to pay a price for the unit owners' deliveries of slaughter animals, which has ensured them a reasonable income. However, this does not change the fact that our settlement for pigs in a European perspective has not been competitive, and we must have corrected that", says Jais Valeur, Group CEO of Danish Crown.
Danish Crown's operating earnings (EBIT) fall from DKK 2,885 million to 2,398 million. At the same time, interest expenses have increased by DKK 310 million and shutting down two factories in Sæby and German Boizenburg, respectively, costs DKK 200 million. In contrast, the tax payment falls by DKK 286 million, so the net result comes to DKK 1,469 million compared to DKK 2,180 million in 2021/22.
The board proposes a residual payment of DKK 1.10/kg for pigs and sows and DKK 1.30/kg for cattle, so that just over DKK 1.2 billion is sent back to the unit owners. For a farmer who annually delivers 10,000 pigs to Danish Crown, this corresponds to approximately one million kroner.
On average, the settlement to the owners increased by 24 per cent for pigs, 56 per cent for sows and two per cent for cattle, compared to the financial year 2021/22.
The supply of pigs to Danish Crown's Danish slaughterhouses has, however, fallen by 17 percent compared to the previous year. As a consequence of the declining raw material base, as well as a targeted adaptation and simplification in everything from production to sales efforts to administration, by the end of the calendar year 2023, Danish Crown will have said goodbye to around 1,500 production employees and more than 200 white-collar workers in the core business.
"We have launched a savings and improvement program which, over a two-year period, will raise earnings by DKK 1.5 billion. As a consequence, we have unfortunately said goodbye to over 1,700 colleagues in our core business in the past year. Already, however, we are seeing significant progress, which is positive for both Danish Crown's owners and the group's more than 25,000 employees. We owe them thanks for their efforts in a year marked by turmoil. I am full of respect for the commitment they meet every single day", says Jais Valeur.
Danish Crown Beef delivers a stable turnover and earnings on beef and veal. Strong concepts such as Burger BOOST have been successfully developed for the Danish domestic market. At the same time, there is satisfactory earnings in the two German cattle slaughterhouses and the hide company Scan-Hide, which continues the development of Nordic SPOOR, which sells high-quality leather primarily to the furniture and fashion industries.
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