Record high settlement prices to cooperative owners of Danish Crown Beef
In the first half of 2022, beef prices set one record after the other. Since the summer period, however, inflation and rising consumer prices have caused a slump in demand, but Danish Crown Beef emerged from the 2021/22 financial year in excellent shape, enabling the company to raise the supplementary payment for owners’ supplies of cattle from DKK 1.30 to DKK 1.35 per kilo.
Revenue was up by 28 per cent to DKK 6 billion, against DKK 4.7 billion the previous year. The increase was driven by strong demand for Danish beef and low overall supply across European markets.
“We are in a stronger position than we have been for a long time. In all parts of the organisation, our employees delivered a tremendous effort throughout the year. We have a fruitful cooperation with our largest customers both in Denmark and abroad. We need to build on this cooperation through continuing innovation to help us ensure competitive settlement prices for our cooperative owners,” says Finn Klostermann, CEO of Danish Crown Beef.
Throughout the year, we experienced strong and satisfactory operations across Danish Crown Beef’s abattoirs in Holsted and Aalborg and at our German locations in Husum and Teterow.
Our processing facility at Sdr. Felding launched a range of new products for exports and for the domestic Danish market, and the Burger Boost success continued with sales nearly doubling during the past 12 months.
The hides producer Scan-Hide maintained earnings at a high level, contributing throughout the year to the record-high settlement prices for cattle, while also investing heavily in branding and sustainability.
"During the first nine to ten months of the financial year, we were successful in everything we did, but over the course of the summer, we started to feel the effects of the elevated inflation by way of a slump in demand. Therefore, we now need to retain the market position we have built in recent years – among other things owing to a high degree of innovation and new products, but also our dedication to sustainability and animal welfare. We have a very strong foundation but need to remain competitive every day to prevent the competition from taking our place," says Finn Klostermann.
For our cooperative owners, the persistent demand resulted in a record-high average settlement price, which landed at DKK 30.50 per kilo at the end of the financial year, which was DKK 8.70 per kilo more than last year. Danish Crown Beef thus lifted the settlement price for the Danish cooperative owners by 40 per cent. In August, Danish Crown Beef’s average settlement price across the categories peaked at DKK 36.90 per kilo.
Driven by strong operations at the German abattoirs and at Scan-Hide and stable financial performance in the jointly owned companies, Sweden-based KLS, the trading company ESS-Food and Sokolów in Poland, supplementary payments for the 2021/22 financial year were DKK 0.05 higher per kilo than in the previous year.
"Looking back on the past year, Danish Crown Beef has performed extremely well. Settlement cattle prices have never been higher, the animals are collected on time, while abattoir operations are stable and efficient. It is close to impossible to predict how demand will unfold in 2023, but at Danish Crown we have great things underway," says Karsten Willumsen, chairman of Beef Forum, who highlights the concepts ‘Dansk Kalv’ with a high level of animal welfare, Premium Kvier with a focus on eating quality, and Friland Naturpleje, which aims to protect Danish biodiversity.
"These concepts are tailored to both the retail business and the foodservice market, and they are aligned with consumer wishes and producer circumstances. Danish Crown’s principal duty is to ensure as high a settlement price for its cooperative owners as possible - which we, along with the all the cooperative owners, will work hard to also achieve in 2023."
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