Strategy Refinement at Danish Crown

Nearly two years have passed since Danish Crown unveiled its 4WD strategy, aiming to increase the price paid for pigs supplied by its owners by 0.60 DKK per kg compared to an EU index. Almost all of the new initiatives announced in November 2016 are currently in progress, prompting the Danish Crown management to advance further in several areas. - We regularly reassess our strategy, and have chosen to intensify our efforts in three specific areas, as we believe this will be advantageous for the group in both the short and long term. However, these decisions are not easy, as it involves letting go of several employees across the organization. Simultaneously, we are delaying the construction of our new headquarters, which will likely disappoint our employees in Randers, states Group CEO Jais Valeur. The proposal for a shared headquarters for Danish Crown and Tulip Food Company was revealed a year ago. The plan was to convert the old sausage factory in Randers into a contemporary office building with 23,000 square meters of floor space, but these plans are now on hold. - The reality is that the gap between the cost of pig production and the selling price is being squeezed by low pig prices. Consequently, we don't believe it's the right time to proceed with this project. The idea of Danish Crown and Tulip Food Company sharing a space still makes sense, but it won't happen at the start of 2020 as initially planned, says Jais Valeur. Until now, the goal was to cut the costs of procuring everything except raw materials from Danish Crown’s owners by 500 million DKK by the end of the 2020/21 fiscal year. This goal has now been increased to 650 million DKK. - We've set up a new procurement organization, and our experts have identified much higher potential savings than initially estimated in our strategy process. These savings won't be realized immediately, but the process has validated our decision to invest in new procurement expertise, which is why we're increasing our goal, explains Group CFO Preben Sunke. As part of the 4WD strategy, Danish Crown will consolidate, standardize, and automate several administrative functions in a new Global Business Services center in Poland over the next few years. The first step is the relocation of about 50 jobs from Randers to Krakow in Poland. - This will result in benefits for our customers and specific savings. However, it's a complex operation, and it's crucial for us to implement the project at a pace that won't negatively impact our business. The entire process is expected to take two to three years, says Preben Sunke. Once fully operational, the transfer is projected to yield annual savings of around 40 million DKK, contributing to achieving our strategic goal. The employees affected in each business unit will be notified as the decisions to transfer tasks are made. The affected employees in Randers were informed about the plans on Thursday. We will now initiate a dialogue to discuss potential relocations, and assist those employees whose tasks are being moved to Poland in finding new jobs.