Danish Crown has reported a decline in profits for the first six months of its 2015/16 financial year, with its UK subsidiary, Tulip UK Ltd., being described as “battling particularly strong headwinds”.
Despite operating profits of DDK1,104m (£112.5m) for the report period falling below the DDK1,154m (£117.6m) reported in the previous financial year, the company’s president and CEO, Jais Valeur, said the board was “reasonably satisfied” with the results.
“The retail market is extremely competitive, is dominated by ever-larger chains and is characterised by an increasing focus on discount products and a constant demand from consumers for lower prices,” he said. “This is putting pressure both on livestock farmers and on the prices paid to farmers in general.”
The company added that the challenges facing Danish Crown, on a daily basis, include a weak demand for, and an excess supply of, meat in neighbouring European markets.
“The UK subsidiary Tulip UK Ltd has been battling particularly strong headwinds, and targeted efforts are being made to strengthen the company’s position,” it stated.
“However, positive market developments are also being seen. Sales in Asia, in particular, are increasing, and Danish Crown’s fresh meat activities have actually succeeded in increasing earnings in this part of the world through dedicated sales efforts.
“Despite fierce competition in the retail market for processed products such as sausages, cold cuts, canned products and soups, Danish Crown Foods has maintained earnings.”
Overall, this has added up to a “flat development in revenue” with the group generating a total revenue of DKK 29.4 billion (£3bn).
“Altogether, the interim results confirm what I have been saying since taking over as president and group CEO in mid-January, namely that Danish Crown is a well-managed and well-invested business,” said Mr Valeur (pictured above).
“However, we are also part of a food sector which is under pressure and undergoing rapid change. For Danish Crown to maintain its leading position in the market, we must become even better and work even harder to create value for our 8,000 owners and suppliers.”