Competitive prices have meant an increased supply of slaughter animals, a major contribution to higher revenue and increased volume.
“Danish Crown’s current stability is extremely valuable to the group, and the results meet our expectations, when factoring in the acquisitions made in the past year,” said Kjeld Johannesen, CEO, who explained Danish Crown is currently slaughtering 21,000 more pigs a week in Denmark than during the same period last year, and this contributes to reducing direct costs in the Danish companies.
“We need to continue our hard work to ensure competitive prices for our owners, and the rising prices in the market may pose challenges for the company’s processing activities, which make up 40 percent of revenue,” he added.
Although the processing companies generated good results in H1, the increased raw material prices may temporarily put a damper on earnings in H2, warned Flemming Enevoldsen, CEO of Tulip Food Company. “Like virtually all other food production companies, we have seen significant price increases in respect of raw materials as well as packaging and transport in 2011,” he added. “Together with a strong Danish krone, this will result in higher consumer prices, which all in all will add to the pressure on Danish food production.”
Tulip Food Company’s acquisition of a major processing plant in Germany last year contributes to the positive results for the first six months.
Almost all parts of the group return satisfactory results – pork, beef, processing and trade are all posting the expected results, while DAT-Schaub is reporting excellent results. In Sweden, however, earnings were weaker in H1, according to the company.
During the period, Danish Crown acquired Germany’s fourth-largest pig slaughterhouse, and results from the first months provided a modest boost to consolidated results. H1 also saw marked growth in DC Beef. During the period, prices increased by 13 percent, which also means an increasing number of slaughter, which saw a 12 percent increase.
“It is highly positive that Danish Crown constitutes an attractive choice for Danish cattle producers,” said Lorenz Hansen, managing director of DC Beef. “In our line of business, volume is crucial for satisfactory cost levels, and the increase in prices we have been seeing reflects the current market.
As an international business, Danish Crown is constantly affected by external events, which may pose challenges and thus affect results.”
“We are operating in a sensitive market, and it is therefore important that we continuously adapt our expectations to the actual conditions,” said Kjeld Johannesen. “Right now, we are seeing exchange rate fluctuations, which in the longer term may impact results, but we will not be seeing the effect of this until after the end of H2.”