Denmark

Strong results in a turbulent year

Processing

Danish Crown records a profit of more than DKK 2.2 billion for the first time ever. The strong performance was achieved in a year when the group retained its competitive strength despite COVID-19 and massive price drop on pork in the second half of the financial year.

Posted on Nov 23 ,07:39

Strong results in a turbulent year

Our record-high profit in the 2020/21 financial year was achieved on the basis of a dedicated effort through several years. We have been focusing our work on strengthening the group’s domestic market positions in Northern Europe. Worldwide, we have dedicated resources to the bacon, pizza toppings and canned product categories and have invested in DAT-Schaub, which now ranks among the market leaders in the sale of products from hog casings for the food and pharmaceutical industries.

For the seventh consecutive year, DAT-Schaub has expanded its business volumes. The company has increased its EBIT nearly fivefold during the strategy period, reaching EBIT of DKK 1 billion for the first time. We also recorded strong progress in the processing activities in our domestic markets in Northern Europe. In 2020/21, these activities contributed EBIT of close to one billion kroner, which is 41 per cent more than at the beginning of the strategy period five years ago.

The strategic goal has been to lift earnings, allowing Danish Crown to increase the settlement for owners’ pork deliverables by at least DKK 0.60 per kilo compared with the European price index. This goal has now been achieved for two consecutive years.

“We are presenting a very strong financial report, and I am pleased to see that we have delivered on our 4WD strategy and the goals we set.  Our success in the past year shows how robust our business is. Our employees have made a tremendous effort, solving their tasks, working from home and taking thousands of rapid flow tests at our factories. At the same time, we have kept a steady hand on the helm and stayed on course, despite the fact that, during parts of the year, we were unable to export our products to China, and sales to cafés, restaurants and canteens were hard hit by COVID-19. We can be very proud of our performance,” says Jais Valeur, CEO of Danish Crown.

Danish Crown’s net profit increased by 5.3 per cent to DKK 2.255 billion. Due to significantly decreasing prices on the global pork market in the last third of the financial year, total revenue declined by 4.1 per cent to DKK 58.287 billion.

The supplementary payment to our cooperative owners for the supply of pigs will be DKK 1.30 per kg and DKK 1.10 per kg for sows, while cattle suppliers receive a supplementary payment of DKK 1.30 per kg. In addition, DKK 242 million will be deposited in the cooperative owner’ accounts. For an owner supplying 10,000 pigs annually, this equates to about DKK 1.3 million.

“For the 1,600 cooperative owners who supply pigs to Danish Crown, additional value was created again in 2020/21. Measured in terms of kilos, they supplied eight per cent more to the Danish abattoirs. As the record-profit is to be distributed on a higher number of kilos, the supplementary payment to the pig suppliers is slightly lower than last year. However, that does not alter the fact that it has been good business for the farmers to keep the pigs in Denmark instead of exporting them as weaners,” says Jais Valeur.

While the settlement price for pork plunged over the course of the summer, prices of beef and veal rose considerably. Danish Crown Beef is beginning to realise its potential and is showing good strength. Sales have improved both in the retail segment and to restaurants and the foodservice market, and our slaughter activities in Germany and Scan-Hide, which processes cattle hides for the leather industry, are both contributing strong earnings.

“There is momentum in our business right now, and we have a strong plan and strategy for the future. At the same time, we have maintained a good financial balance, and at 2.3 our gearing is well below our long-term target of 3.0. This gives us a strong starting point from which to make the strategic investments required for the continued development of Danish Crown,” said Jais Valeur.

In June, Danish Crown presented its strategy for the next five years. Named Feeding the Future, the strategy shifts the basic focus away from volume to value creation, with sustainability being pivotal in developing our business going forward.

Therefore, Danish Crown has, among other things, signed up to the Science Based Targets initiative and undertaken to define specific climate goals for the entire value chain from farm to fork. This supports our overall goal of reducing our CO2 emissions by 50 per cent by 2030.

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