Pork giant Danish Crown has hailed the “strong end” to its financial year after posting a 21% increase in year-on-year profits.
Despite a challenging start to the reporting period, the meat processor and farming co-op saw operating profits before special items grow from DKK 2.1bn (£239.3m) in 2017/18 to DKK 2.5bn (£288.6m) according to 2018/19 results published today (21 November).
Citing “dramatic changes” to the global pork market fuelled by the global rise of African swine fever, the business – which sold its UK division Tulip to Moy Park owner Pilgrim’s Pride in August – also saw a sharp rise in revenue, from DKK 53.6bn (£6.1bn) in 2017/18 to DKK 56.5bn (£6.5bn) equating to growth of 6% year on year.
The effects of the ASF pandemic contributed to an increase in the raw material price of pork, which was up by more than 40% during the second half of the financial year. However, the business also saw total pork sales to China rise 29%, when measured in kilos, while total exports values rose 63%.
“These are solid financial results,” said Danish Crown CEO Jais Valeur. “We’re seeing a positive development in our processing companies as well as record increases in the price of pork,” he added.
What does Tulip’s takeover mean for the UK pig sector?
A supplementary DKK 1.05 (12p) per kg payment would be made to the company’s pig producers – who will continue to supply pork to Tulip under the terms of its sale. This supplement equated to additional payments of approximately DKK 700,000 (£80,101) for an average supplier of pigs.
“Supplying pigs to Danish Crown has been good business in the second half,” Valeur added. “The past two to three months have been really good, so it’s now a question of keeping up the good work.”
Danish Crown President Erik Bredholt said: “For us as owners, the past year has been a bit of an emotional rollercoaster. From a deep crisis to good prices for pork.
“We must now maintain the positive momentum and develop Danish Crown in a way which strengthens the foundations for the Danish production of slaughter pigs with the clear purpose of safeguarding our production in Denmark as well as jobs at our abattoirs.”
The boost in revenue and profits marks a turnaround for the business, with Valeur warning a year ago that “ongoing problems” at Tulip were “impacting Danish Crown’s earnings”.
Earlier this week, Danish Crown reported Tulip lost DKK 210m (£24m) in its final year under its ownership, with DKK 575m (£65.7m) of goodwill written down ahead of its sale to Pilgrim’s Pride.
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