More expensive pigs pressure profit of Danish Crown

Danish Crown has clearly seen a decline in financial results in the broken financial year 24/25. This is entirely related to the modified payment system of the company, where a significant portion of the annual settlement is now included in the base price for pigs. The company further indicates in an explanation of the figures that, despite a significant decrease in the number of pigs slaughtered, the reorganization is on track. The revenue of Danish Crown decreased to approximately €8.8 billion. In the year 2023/2024, the revenue was still at €9.1 billion. According to the company, the supply of slaughter pigs in the broken financial year decreased by 10%, which means that the revenue per kilo of delivered product has indeed increased. At the bottom line, a result of €106 million remained, significantly lower than the €167 million a year earlier. Annual settlement included in base price The significant decline in net income primarily results from a changed payment system. This spring, it was decided to include part of the annual settlement, which was typically around €0.13 per kilo of slaughter weight, in the base pricing. As a result, the pig price from Danish Crown rose sharply, which increased the purchasing costs for the company and thus currently affects the result. The purpose of the measure was to get liquidity as quickly as possible to the farms of the cooperative owners. In addition to these measures, 500 office jobs were eliminated, a loss-making factory in China was sold, and a processing site in Germany was closed. The plan aims to reduce the company's cost base. This increases the company's competitiveness and should help stop the trend of a shrinking number of slaughter pigs supplied to Danish slaughterhouses. According to CEO Niels DueDahl, Danish Crown is now better positioned than a year ago, but there is still much work to be done. Price gap with Germany must be smaller To also secure enough pigs in the future, the CEO further indicates that the focus on the company's competitiveness and thereby achieving a competitive price must at least ensure that it can pay as high a price as competitors in the Danish market. And that the gap to German slaughterhouse prices is thus reduced. Over the past year, this difference in payment prices compared to the German market has reportedly been reduced by almost half and now amounts to approximately €0.18 per kilo of slaughter weight. Tönnies takes market share Although according to management the foundation of the company has been strengthened, the decline in the number of slaughterings has not yet stopped, as evidenced by figures from the Danish Pig Producers Union (Danske Svineproducenter). Although the total number of slaughterings in Denmark over the past months is significantly higher than last year, Danish Crown is slaughtering significantly fewer pigs this year. Up to October, the company processed 7.5 million pigs. Last year, there were still 8.6 million during the same period. Especially the largest competitor Tican A/S seems to be benefiting from this. The company, part of the Premium Food Group (Tönnies), is significantly increasing its market share and is slaughtering many more pigs than last year.