Danish Crown has seen a significant decline in its financial results in the 24/25 fiscal year. This is largely due to the company's revised payment system, which now includes a significant portion of the annual supplementary payment in the base price for pigs. In an explanation of the figures, the company further stated that, despite a significant decline in the number of pigs slaughtered, the restructuring is on track.
Danish Crown's revenue fell to the equivalent of €8,8 billion. In the 2023/2024 financial year, revenue was still €9,1 billion. According to the company, the supply of pigs for slaughter decreased by 10% in the broken financial year, meaning that revenue per kilo of product delivered actually increased. The bottom line was €106 million, significantly lower than the €167 million a year earlier.
Additional payment included in base price
The sharp decline in net profit is mainly due to a change in the payment system. This spring It was decided to incorporate part of the annual supplementary payment, which was typically around €0,13 per kilogram of slaughter weight, into the basic price. This caused Danish Crown's pig price to rise sharply, increasing the company's purchasing costs and thus impacting its results. The aim of this measure was to get liquidity onto the cooperative owners' farms as quickly as possible.
In addition to these measures, 500 office jobs were eliminated, a loss-making factory in China was sold, and a German processing site was closed. The plan aims to reduce the company's cost base. This will increase the company's competitiveness and ensure that the trend of a shrinking number of pigs delivered to Danish slaughterhouses is reversed. According to CEO Niels DueDahl, Danish Crown is now in a stronger position than a year ago, but much work remains to be done.
Price gap with Germany must be smaller
To secure sufficient pigs in the future, the CEO further indicates that the company's focus on competitiveness and, consequently, achieving a competitive listing must, at a minimum, ensure it can pay the same price as its competitors on the Danish market. This should also help close the gap to German slaughterhouse listings. Over the past year, the CEO claims, this difference in payout prices compared to the German market has already been reduced by almost half, and currently amounts to the equivalent of €0,18 per kilogram of slaughter weight.
Tönnies takes away market share
Although management believes the company's foundation has been strengthened, the decline in the number of slaughters appears to be unstoppable, according to figures provided to the Danish Pig Farmers' Union (Danske Svineproducenter). Although the total number of slaughters in Denmark has been significantly higher in recent months than last year, Danish Crown is slaughtering significantly fewer pigs this year. Through October, the company processed 7,5 million pigs, compared to 8,6 million in the same period last year. Its largest competitor, Tican A/S, appears to be benefiting from this. The company, part of the Premium Food Group (Tӧnnies), has significantly increased its market share and is slaughtering many more pigs than last year.