Record earnings for Danish Crown during pandemic
Pork processor Danish Crown has reported earnings of more than DKK 60 billion (c.£7.2 billion) despite challenges caused by the Covid-19 pandemic, according to the company’s financial results for 2019/20.
Revenue for the company increased by 8% to DKK 60.8 billion, with operating profits also climbing to 13% to DKK 2.860 billion. Net profit for the firm was also a record-high DKK 2.141 billion (c.£166.7 billion).
Jais Valeur, Group CEO of Danish Crown, said: “This is a strong result. Our large exports to Asia, and China in particular, which has been affected by African Swine Fever, have secured high settlement prices of pork for our farmers.
“These developments reassure us that we made the right decision with our 4WD strategy of creating more processing across categories and markets, and we now have a stronger brand that may contribute to a more sustainable production.”
“We are on the right track in all parts of our business, but there are still benefits to gain from increased cooperation and greater integration across the group.”
Erik Bredholt, chairman of Danish Crown, added: “Our company is stronger than ever following a year in which we initially achieved a historically high payment for our pigs and then saw settlement prices decrease over the course of six months due to Covid- 19 and, most recently, the outbreak of African Swine Fever in Germany. These are external factors affecting the markets, but they have not derailed our business, which I consider a major strength.”
The global markets for pork and beef have been affected by the Covid-19 crisis since early spring. The company has since confirmed that the settlement price for its farmers’ supplies fell in the period from 1st March to 1st October by 28% for pigs, 53% for sows and 5% for cattle. Unlike for pigs, prices of beef and veal were already at a low level before Covid-19 toppled the markets.
Jais Valeur added: “Our employees have delivered a truly extraordinary performance during the Covid-19 crisis. We have demonstrated that we have a robust supply chain, even though a few of our factories during periods were challenged by Covid-19. This has helped strengthen our customer relationships, and consequently – despite a sharp decrease in sales to the foodservice segment in the second half of the financial year – we managed to maintain satisfactory earnings.”
From the DKK 2.141 billion profit, the company has confirmed that DKK 1.6 billion will be distributed to its owners. The supplementary payment for the supply of pigs will be DKK 1.35 per kg and DKK 1.20 per kg for sows, while cattle suppliers receive a supplementary payment of DKK 1.25 per kg. A further DKK 112 million will be deposited in the personal members’ accounts. For an owner supplying 10,000 pigs annually, this equates to about DKK 1.3 million (c.£ 155,829).
Jais Valeur concluded: “We are on the right track in all parts of our business, but there are still benefits to gain from increased cooperation and greater integration across the group. At the same time, we will make an even greater contribution to the sustainability debate by pursuing specific initiatives.
“We have launched an ambitious plan for the use of soy, and by the end of 2020, all Danish Crown’s Danish pig suppliers will be a part of the group’s sustainability programme, the Climate Track, which will provide us with a strong platform from which to launch new initiatives.”