Danish Crown ‘under pressure’ as profits fall

By Oscar Rousseau

- Last updated on GMT

Danish Crown said it faces weak demand for meat across much of Europe
Danish Crown said it faces weak demand for meat across much of Europe

Related tags Danish crown Meat Beef Lamb Pork Poultry Processing and packaging Innovation

Danish Crown’s profits declined in the first six months of the 2015-16 financial year due to an “extremely competitive” retail market. 

The meat processor is operational in over 130 countries, but the global retail market, increasingly monopolised by a small group of ever-expanding giants, has increased the pressure on pork producers to position the meat as a budget, commodity item.

This has led to increased demand from consumers for discount deals and lower prices on pork, resulting in a 3.87% fall in pre-tax profits.

The company posted €110m (DKK819m) in pre-tax profits, down from €114m (DKK852m) in the same period last year.

‘Strong headwinds’

Despite the slight dip in interim profits, Danish Crown’s recently-appointed CEO Jais Valeur​ was reasonably satisfied with the results.

[The retail market] is putting pressure both on livestock farmers and on the prices paid to farmers in general. Seen in this light, posting results which are marginally below those for the prior-year period is satisfactory,​” said Jais Valeur in a statement on Thursday 25 May.

The challenges facing Danish Crown on a daily basis include a weak demand for and an excess supply of meat in neighbouring European markets. The UK subsidiary Tulip UK has been battling particularly strong headwinds, and targeted efforts are being made to strengthen the company’s position,​” Valeur added.

‘Rapid change’

Danish Crown’s revenue of €3.95bn (DKK29.4bn) was relatively stagnant in comparison to last year’s €3.93bn (DKK29.2bn).

Fresh meat sales in Asia increased ahead of expectations early and provided some welcome respite from a shrinking market share in other regions of the world. With fierce competition in Asia’s retail market for imports of processed meat products like sausages and cold cuts, Danish Crown said it was pleased to maintain its earnings in the market.

Valeur said the interim financial results confirmed what he had predicted after he assumed leadership of the company in January 2016. He said the “well-managed and well-invested​” business was part of a wider food industry that was “under pressure and undergoing rapid change​”.

He called on the company to double up its efforts and apply industry and nous to maintain its “leading position​” as Europe’s biggest pork producer.

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