RANDERS, DENMARK — European pork processor Danish Crown stated on Aug. 16 that it would look to improve earnings by DKK 1.5 billion ($220 million) within two years as it shifts the strategy of its core business.

The company explained that it would segment its sales effort and focus on customers prioritizing Danish pork and Danish Crown products.

“I would like to praise our owners for supporting the Danish value chain from farm to fork,” said Jais Valeur, group chief executive officer for Danish Crown. “That facilitates a much tighter production management process, enabling us to carry out an essential simplification and renewal of our business model. Despite the past year of headwinds, we have in fact managed to retain our market shares for products to retailers and the foodservice market. We now need to win volume business in order to shift our entire business over time.”

Another plan by the company was to reduce production costs by DKK 500 million ($73 million) with a more efficient and technological setup. Danish Crown noted that it would reduce annual costs for administrative and support functions by at least DKK 250 million ($36.5 million).

The company stated that it would look at profitability for German slaughter operations and the processing plant in China. It also expects to complete its investment in a new bacon factory in the UK soon to help with more savings.

Under current market conditions, Danish Crown stated that it’s seen a decline in exports to the key markets of China, Japan, the United States, Australia and South Korea. 

“Previously, Danish Crown has always been able to find alternative sales channels outside Europe during periods of declining sales in one or more of the attractive export markets,” the company said. “However, when prices of frozen pork in the global markets are much lower than prices of fresh pork in Europe, Danish Crown is unable to remain competitive because the high level of Danish wages makes the costs of slaughtering, cutting and deboning pigs more than DKK 1 per kilo higher in Denmark than in countries like Germany, Poland and Spain.” 

The company said it needed to redefine its business model and dedicate all resources to producing and selling products that will attract high prices to offset the higher production costs in Denmark.

“Meanwhile, it remains a fact that efficiency and optimum utilization of production facilities will pave the way for profitability in the food industry,” he stated. “This is not new to us, but since we aggregated our pig abattoirs and processing activities in one business unit two years ago, we have not been efficient enough, so that is what we are addressing now.”

During the first half of 2023, Danish Crown announced plans to close a slaughterhouse in Denmark and close another plant in Germany.