Modest earnings for Danish Crown but a new strategy is announced
The financial results reported by Danish Crown in the first half of the Fiscal Year 2017/2018 are positive but still modest due to a decrease in prices, admitted Jais Valeur, Group CEO of Danish Crown. Earnings have increased by 1.5%, from 1,026 million DKK (€137.7 million) to 1,041 million DKK (€139.7 million). The same increase is reported in the number of pigs slaughtered in Denmark, announced the company. Nevertheless, the average price per kg paid to farmers was 0.76 DKK (€0.10) lower than last year.
"We're generally satisfied with our results, with all of our processing companies reporting growth. Soko?ów is doing well in Poland, Tulip Food Company is posting increased earnings on export, and things are moving in the right direction for Tulip Ltd. The aggregate results of the processing companies for the half-year are up 171 million DKK (€ 22.9 million) on the same period last year.
The decrease in the price paid to our owners is regrettable, as we're actually seeing satisfactory demand for our products. This decrease is first and foremost due to the low USD exchange rate, which has both eroded the prices received for our exports to Asia and strengthened the competitive power of the US abattoirs in China, Japan and Southeast Asia", declared Valeur.
However, the company has a strategy that can push up the price per kg of pork paid to farmers by approximately 0.60 DKK compared to an EU index. The focus is on developing the business in Danish Crown's four domestic markets in northern Europe and in Asia. In addition, the focus globally is on the categories of natural casings, bacon, canned products and pizza toppings.
The prices for Danish beef have been rising, and the average price per kg paid to farmers is approximately 10% higher than last year. However, earnings in Danish Crown Beef are being adversely affected by a general decrease in the number of slaughter animals in Denmark and a sluggish beef market in Germany.
One of the Danish Crown's subsidiaries who is having a significant growth in both revenue and earnings is DAT-Schaub, a processing company for natural casings for sausage production. Until 2021, DAT-Schaub plans to become a global leader in the supply of natural casings. "This area of our business has already been expanded to include activities in Spain and South America as well as production facilities in China, and more developments are on the way", added Jais Valeur.
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