Danish Crown has announced that its first quarter results fell below budget, meaning the business is having to reduce costs and cut between 300 and 400 jobs across the group.
Danish Crown has reported its earnings are being challenged by problems in the UK business, as well as under-performance in some other business units.
Due to this, the company has explained it is now necessary to initiate further cost savings across the group, and the target is to reduce the total costs by 350 million DKK this financial year.
Danish Crown has announced it is implementing various measures to keep itself on track to achieve the budgeted profit for the year, however this means cutting between 300 and 400 jobs across the group.
Jais Baleur, group CEO, said: “We’re maintaining the hiring freeze initiated in November 2018 as well as a freeze on the use of consultants for the time being and, while investment in the business continues, we are in the process of identifying projects that could be postponed.”
In November 2018, Danish Crown announced 150 immediate job losses, plus a 200 million DKK savings programme for Tulip Ltd in the 2018/19 financial year.
The group’s British subsidiary has proposals for further reductions in headcount as part of this savings programme, subject to the appropriate employee consultation.
In recent months, the company has won several important contracts in the UK, so in terms of sales, things appear to be moving in the right direction.
However, Valeur explains: “This does not change the fact that costs are still too high, so further reductions are being considered as part of a comprehensive programme to improve operational efficiencies at Tulip Ltd.”
Tulip Food Company in Denmark is also said to have been impacted by the fierce competition in the Danish retail sector, and earnings in the group’s largest business area, Danish Crown Pork, are not living up to expectations.
On the other hand, the companies that have been acquired in Denmark, Poland and the Netherlands are all performing above expectations.
Valeur concludes: “Right now, we don’t have the competitiveness that we’re striving to achieve compared to the EU index.
“This is primarily due to the particular challenges we’re facing in the UK, but the tough battle for pigs in Germany, and the advance of the Spanish abattoirs is not helping either.
“At the same time, we are faced with the fundamental challenge that costs in Denmark are significantly higher than in the countries we compete with. Therefore, all parts of our business must deliver in order to ensure competitive prices for our owners.”
Danish Crown still expects the settlement prices for the animals supplied by its owners to increase during the spring, but explains it is very difficult to say when the market will turn.
This story was originally published on a previous version of the Meat Management website and so there may be some missing images and formatting issues.
