Analysis Insights
Danish Crown expecting a lot from big sport events
The Danish cooperative meat company Danish Crown saw its revenue and profit decline further in the fiscal year 2023/24, compared to the same period last year when earnings already took a significant hit. The company is more optimistic for the second half of this year, partly due to the sports events scheduled for this summer.
The revenue in the first half of the fiscal year (running from July to December) decreased to 33.5 billion Danish kroner, equivalent to €4.8 billion. The revenue decline is mainly due to a further decrease in slaughter numbers, resulting in less volume being produced. The profit fell by 15% to €104 million. Although significantly lower, a net profit margin of over 2% is something that slaughterhouses in the Netherlands cannot match.
Danish Crown appears reasonably satisfied in its own commentary on the figures. Sales to retail and foodservice increased, and the company claims to have strengthened its market shares in those channels. The production apparatus has also become more efficient. This is related to a reorganization that led to the closure of several factories.
Cheaper Sausages
It is noteworthy that subsidiary DAT-Schaub, which sells animal products to the pharmaceutical industry, is no longer the profit driver it used to be. The company is affected by higher interest rates, causing growth in results to stagnate. Inflation is also taking its toll. The company supplies casings for often more expensive sausages, but due to high inflation, consumers are opting more for products made from cheaper artificial casings. Danish Crown CEO Jais Valeur speaks of an unfortunate combination of circumstances overshadowing the group's results.
Sports Summer
The CEO is optimistic for the second half of this year. It is positive for the meat markets that the inflation peak is behind us. Additionally, the meat company is looking forward to the summer period with sports events such as the Olympic Games in Paris and the European Football Championship in Germany. This is likely to have a positive impact on meat sales.
