DENMARK, Randers. Surging production and distribution costs of nearly EUR 68 million and inflationary pressure greatly impacted meat processing giant Danish Crown’s first half of the 2021/22 financial year.
After 2½ years of huge demand from China, in particular, sales and production capabilities have been redirected to meet demand in Europa and from countries such as the USA, Australia and Japan, Danish Crown reports.
“Let it be no secret that the transition has been a challenging task because it coincided with a growing supply of pigs from our cooperative owners. Our employees have delivered a tremendous effort, working their way through the challenges, and that enables us to report solid and acceptable financial results today,” said Jais Valeur, Group CEO of Danish Crown.
Danish Crown recorded a 3.6% increase in revenue in the first half of the financial year from DKK 28.9 billion to DKK 29.9 billion. However, as costs of production and distribution rose by 4.8% to DKK 27.7 billion, profit after tax was reduced from DKK 1.3 billion to DKK 1.1 billion. At the same time, the inflationary pressure currently at the top of the global economic agenda and also impacting on Danish Crown has proven to be far greater than expected throughout the half-year period. Costs of primarily transport, packaging and energy have increased by close to half a billion Danish kroner.
“The combination of rising costs and sluggish markets was the reality we faced during the initial months of the financial year. Obviously, this made it difficult for us to effect the necessary price increases. While this has gradually changed with COVID-19 pressures easing across Europe, we still have some way to go because more or less all costs moved another notch higher after Russia’s invasion of Ukraine,” said Jais Valeur.
While earnings in Danish Crown’s processing companies were reduced due to rising costs of raw materials, packaging, transport and energy, the company continues its record progress in DAT-Schaub, which processes parts of the pig for food ingredients and raw materials for the pharmaceutical industry, the company reported.
The price of beef rose considerably during the half-year period, with positive operational developments and a low supply of beef in Europe driving prices higher. Positive developments for the two cattle abattoirs in Germany and for Scan-Hide, which processes cattle hides for the leather industry, contributed to a strong overall performance, the company reported.
Source: Danish Crown