DC Positive development behind satisfactory results
The increase is delivered by the group's processing companies and the ingredients company DAT-Schaub, which is posting good results.
The global market for pork was challenging during the first half of FY 2017/18, and prices have been declining. Nevertheless, Danish Crown has managed to grow earnings before special items from 1,026 DKK to 1,041 million DKK, representing an increase of 1.5% year-on-year.
In Denmark, the number of pigs slaughtered by the group was up 1.5 per cent for the half-year. This is less than expected, but still a positive trend at a time when pork prices have been under pressure. The average price per kg paid to farmers was 0.76 DKK lower than last year.
“The decrease in 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.” explains Jais Valeur, Group CEO of Danish Crown.
Revenue is down from 30.7 bn. DKK to 30.1 bn. DKK for the period under report. This is mainly the result of the divestment of Plumrose in the US, which accounted for revenue of 1.7 bn. DKK during the same period last year. However, the effect of the divestment is partly offset by the acquisition of the foodservice company Overberg in South Africa, the ingredients company Agrimares with activities in Spain and South America, and the Danish pepperoni specialist DK-Foods towards the end of the half-year.
DAT-Schaub, Danish Crown's sales and processing company for natural casings for sausage production, had a good half-year and posted significant growth in both revenue and earnings.
Since the start of the year in the UK, Tulip Ltd hasn’t seen the expected growth in demand from the UK retail market, which remains very competitive. This has resulted in a setback for the turnaround process which Danish Crown has been working hard on since autumn 2016. A number of initiatives have been launched to strengthen sales in Tulip Ltd.
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.
Eighteen months ago, Danish Crown launched its strategy for the period up until 2021, and the goal is to improve 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.