Optimistic Projections Following a Volatile First Half

The pork global market has seen an extraordinary recovery, significantly enhancing Danish Crown's earnings in the final weeks of the first half of 2018/19. The company reported a total profit from ongoing operations before special items of nearly 1.1 billion DKK, slightly better than the previous year. Despite a challenging six months, the company's comprehensive cost-cutting plan, which will reduce costs by 385 million DKK across the group, is beginning to show results. The market recovery has set things moving in the right direction, according to Jais Valeur, Group CEO of Danish Crown. Even with lower raw material prices for pork and beef, Danish Crown's revenue rose by 1.5 per cent from 30.1 to 30.6 billion DKK. This increase is attributed to several acquisitions, primarily in Denmark, the Netherlands, and Poland, all of which are contributing positively to earnings as anticipated. The UK business, Tulip Ltd, remains the biggest challenge. However, after capacity adjustments and a strong focus on cost, the business is now heading in the right direction. The company is focused on staying on course and winning new business to ensure that Tulip Ltd can once again start contributing positively to Danish Crown's earnings. Since the end of the first half-year, the pig price has risen by 2,30 DKK (+25 per cent), and Danish Crown expects the payment per kg paid to farmers to increase further over the summer. Despite posting strong results last year, earnings in DAT-Schaub have normalised. The current challenge is converting the dramatically increasing raw material prices for pork into higher consumer prices. The cattle price peaked in summer 2018, after which prices saw a declining trend in the first half-year 2018/19. Compared to the prior-year period, cattle are being traded at an average price of almost 2 DKK less per kg, which corresponds to a decrease of 8 per cent. The strategic decision to pool procurement across the group is contributing as planned despite external price increases for energy and transport, among other things. The Executive Board now includes a Chief Operating Officer (COO) who will focus on continuing this work as well as on realising Danish Crown’s sustainability strategy towards 2030. Operating profit for the full year is expected to be above last year’s result.