More slaughtering in an uneven year for Danish Crown Beef
Despite fewer cattle being slaughtered overall in Denmark compared to the previous year, Danish Crown Beef increased their number of slaughtered cattle in the country by 1.5% compared to the 2022/23 fiscal year. Furthermore, Danish Crown Beef’s share of the total cattle slaughterings in Denmark also rose from 61.6% to 64%.
This happened in a year when strong cooperation with Danish retailers and attractive exports to Southern Europe secured stable demand for Danish beef. Conversely, the two German abattoirs contributed less than the previous year, and both Scan-Hide and Nordic Spoor ended the year with losses.
"It has been an uneven year with many bumps along the way. As a result, we are not delivering the payout to cooperative owners at the level we had hoped for. On the positive side, we have succeeded in strengthening the market position for Danish beef in our domestic market, but this is not enough for us to be satisfied with the financial results", said Finn Klostermann, CEO of Danish Crown Beef.
Revenue for the fiscal year fell from DKK 5.99 billion to DKK 5.90 billion, a decline of 1.5%. This is reflected in the average settlement price to cooperative owners, which dropped from DKK 31.17 per kilo in 2022/23 to DKK 28.22 per kilo in the past year.
The challenges for the two German abattoirs stem from a continued tough competition for cattle in Germany. While the market share increased from 9% to 10% of German slaughters, an increased focus on animal welfare in German retail narrowed profit margins, leading to a roughly 30% decrease in earnings compared to the previous year.
Scan-Hide and Nordic Spoor have been affected by the general economic downturn, driven in part by more cautious consumer spending. Scan-Hide processes and sells cattle hides for leather production, supplying major global luxury brands and Europe's largest car manufacturers. Nordic Spoor primarily sells premium leather to the furniture industry. Both companies faced weak demand and falling prices because of the economic climate.
"The leather market has been in a poor state, which is clearly reflected in the financial results of both leading luxury brands and major car manufacturers. As a result, we have faced lower settlement prices for cattle hides throughout the year and have written down the value of Scan-Hide’s inventory, leading to a negative result. However, it appears that hide prices have bottomed out, and we are confident that both companies will turn a profit in 2024/25", said Finn Klostermann.
In a year marked by several impairments, Danish Crown's Board of Directors has decided to make a distribution to cooperative owners from the undistributed equity. In addition to the proposed final payment of DKK 1.35 per kilo, cooperative owners will receive an additional DKK 0.11 per kilo for all deliveries over the past five years.
"This is a significant amount that many of our members will receive as an extra payout this year. It highlights the value of being a supplier to a cooperative. Looking ahead, I have no doubt that we will strengthen our competitiveness in the coming year. Both our own companies are expected to perform better, and the cost-saving and efficiency plan being implemented in Danish Crown’s core business will also positively impact earnings in Beef. Therefore, I am optimistic about progress in the coming year", said Karsten Willumsen, Chairman of the Cattle Forum at Danish Crown Beef.
Danish Crown Beef has, since the beginning of the new financial year on October 1, increased its payment by an average more than 2 DKK per kilo.
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