Danish Crown: Solid result in a challenging half-year
In Danish Crown, the first half of the 2024/25 financial year has been characterized by the recovery plan that was launched in the fall of 2024. Across the group and especially in the core business, the organization and costs have been adjusted, and this can be seen in the financial statements.
As a result of a number of focused initiatives and the restructuring of the core business, distribution and administrative costs decreased by DKK 94 million, although there were extraordinary one-off costs of approximately DKK 100 million in connection with the organizational adjustment during the period.
Earnings (EBIT) during the period increased from DKK 1,281 million in 2023/24 to DKK 1,310 million. This is an increase of 2.3 percent despite the extraordinary restructuring costs.
Group CEO Niels Duedahl says about the half-year financial statements:
"Strengthened earnings, positive free cash flow and reduced debt confirm to us that we have taken steps in the right direction. It is crucial that we have created an overview and taken control of the company, but we are still focused on restoring earnings, and we are far from reaching our goal when it comes to our competitiveness on the listing".
"We have taken important steps forward in the parts of the business that were in deficit last year. Our slaughterhouse in Essen has contributed positive earnings in the last quarter. We have closed our factory in Pinghu, China, and entered into a conditional agreement to sell the factory.
Progress on the bottom line
Compared to the first half of the 2023/24 financial year, revenue decreased from DKK 33,519 million to DKK 32,436 million – a decrease of 3.2 percent. This is partly due to lower global pork prices and partly to a decrease in pig supplies to Danish Crown's Danish slaughterhouses.
However, through focused efforts, margins have been increased, and normalized operating costs have been decreasing. As a result, net profit has been increased by DKK 47 million from DKK 764 million to DKK 811 million, which is an increase of 6.2 percent.
"Financially, we are in a better position than last year, which is important for the work of restoring our competitiveness on the listing. The financial leverage at the end of the first half of the year is 3.0 compared to 3.6 a year ago. The improvement comes through both increased earnings, reduced working capital and a balanced investment level. Therefore, we have reduced our net debt by 12 percent (1.7 billion kroner)", says Group CFO Anders Aakær Jensen and continues:
"Towards the end of the half-year, we have seen increasing selling prices for pork globally. Combined with the relative earnings improvement and a decision to aim for a residual payment of 70 øre for all categories, we are now paying a more competitive price to our owners. For the suppliers of pigs, the current price means that we have reached a level where it is once again a profitable business to supply pigs to Danish Crown".
Higher settlement for cattle
In Europe, there has been strong demand for beef since the New Year. This is reflected in the payments to the Danish farmers who supply cattle to Danish Crown. They have received an average of 13 percent more for their animals than last year. Danish Crown Beef has a continuous focus on raising the degree of processing of Danish beef and on getting closer to consumers. This has been successful, but on the other hand, the German cattle slaughterhouses and Scan-Hide, which processes cattle hides into raw leather, have not delivered satisfactory earnings.
The group's portfolio companies are delivering on a solid level overall. There is progress in the Polish company Sokołów, while Swedish KLS and ESS-FOOD are performing stably. DAT-Schaub's earnings, on the other hand, are affected by a weak global market for heparin.
"Overall, the subsidiaries must continue to raise earnings, and we are working on this purposefully together with the management of the four companies. We see opportunities to improve earnings in our core business. At the end of the first half of the year, we chose to divide our core business into the three units so that we can work systematically and purposefully to unleash our full potential", says Niels Duedahl.
The three units are Danish Crown Industry, which operates the slaughterhouses and sells pork to industrial customers, Danish Crown Foods, which is responsible for production and sales to retail and foodservice customers, and Danish Crown UK, which produces and sells to customers in the UK. The Danish Crown Group employs a total of 24,500 people.
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