Danish Crown: Solid performance delivered despite a challenging half-year

Danish Crown concludes the first half of the 2024/25 financial year with steady progress. The net result is improving, and the competitiveness of the Danish pig price has strengthened over the period - though the goal is still far from reached.

logo The first half of the 2024/25 financial year has been shaped by the recovery plan launched in autumn 2024. The plan has driven changes across the group, and especially in the core business, where organisational structures and costs have been adjusted. These improvements are now reflected in the financial results.

As a result of focused initiatives and the restructuring of the core business, distribution and administrative costs have decreased by DKK 94 million, despite incurring approximately DKK 100 million in one-off expenses related to organisational adjustments.

Earnings (EBIT) increased from DKK 1,281 million in 2023/24 to DKK 1,310 million - a rise of 2.3 percent, despite the extraordinary restructuring costs.

Group CEO Niels Duedahl commented on the half-year report:

“Improved earnings, a positive free cash flow, and reduced debt confirm that we are moving in the right direction. It has been crucial for us to gain clarity and take control of the business, but we remain focused on restoring profitability, and we are far from reaching our target in terms of competitiveness in pig pricing.”

“We’ve made important progress in the areas of the business that were loss-making last year. Our abattoir in Essen, Germany contributed positively to our earnings in the most recent quarter, and production at our plant in Pinghu, China, has been discontinued. We have now entered into a conditional sale agreement for the facility.”

Improved result

Compared to the first half of 2023/24, revenue declined from DKK 33,519 million to DKK 32,436 million - a drop of 3.2 percent. This was partly due to lower pork prices globally and a decline in the number of pigs delivered to Danish Crown abattoirs in Denmark.

However, through a focused effort, margins have increased, and normalised operating costs have also declined. As a result, net profit rose by DKK 47 million from DKK 764 million to DKK 811 million - an improvement of 6.2 percent.

“Financially, we are in a stronger position than last year, which is crucial for our efforts to restore our competitiveness in the settlement price for pigs in Denmark. Our financial gearing at the end of the half-year was 3.0 compared to 3.6 a year ago. This improvement is driven by higher earnings, reduced net working capital, and a balanced level of investment. Consequently, we have reduced our net debt by 12 percent (DKK 1.7 billion),” says Group CFO Anders Aakær Jensen and adds:

“Toward the end of the half-year, we’ve seen pork prices rise globally. Combined with the relative improvement in our earnings and a decision to target a residual payment to our owners of DKK 0.70 across all categories, we are now offering a more competitive settlement price in Denmark. For our Danish pig suppliers, this means we have reached a level where it is once again profitable to deliver pigs to Danish Crown.”

Higher Settlements for Cattle

Since January, there has been a strong demand for beef in Europe. This is reflected in higher settlement prices for Danish farmers supplying cattle to Danish Crown. They have been paid, on average, 13 percent more for their animals than last year. Danish Crown Beef continues to focus on increasing the value-added processing of Danish beef and getting closer to consumers. This effort has been successful, although the two German cattle slaughterhouses and Scan-Hide— which processes cattle hides into raw leather—have not delivered satisfactory earnings.

The group’s portfolio companies are overall performing at a solid level. The Polish company Sokołów is showing growth, while Swedish KLS and ESS-FOOD continue to deliver strong results. However, DAT-Schaub's earnings have been impacted by a weak global demand for heparin.

“Overall, our subsidiaries must continue to improve profitability, and we are working closely with the management of the four companies to achieve this. We do also see opportunities to improve earnings in our core business further. At the end of the half-year, we chose to split our core business into three units, to enable our organisation to work more systematically and purposefully to realise our full potential,” says Niels Duedahl.

The three units are Danish Crown Industry, which operates the slaughterhouses and sells pork to industrial customers, Danish Crown Foods, responsible for production and sales to retail and food service customers, and Danish Crown UK, which produces and sells to customers in the United Kingdom.