Danish Crown has announced plans to divest its facility in China, responding to a significant decline in pork demand within Northern Europe and China.
When pressed for further details, the spokesperson remarked, “It is a very, very small part of our business, which we have decided to divest as it didn’t develop in line with our expectations.”
This strategic decision stems from the leadership of Niels Duedahl, who was appointed as the company’s CEO last August.
Duedahl succeeded the former CEO, Jais Valeur, who unexpectedly stepped down in June.
Chairman Asger Krogsgaard indicated at that time that the company is embarking on a “new strategy period” and is at the beginning of a “significant transition.”
This divestment follows Danish Crown’s recent announcement that it will cease the sale of retail-packed fresh meat in Germany, part of a broader strategy to enhance profitability.
This strategic move will entail the discontinuation of the Oldenburg Convenience division in north-west Germany by the close of February.
Danish Crown’s 2023/2024 report identifies “significant market and geopolitical changes” impacting its operations, underscoring the urgent need for an adaptable approach.
For the financial year 2024/25, the company anticipates a “continued decrease in slaughter animal production across Europe.”
The pace of decline slowed in 2023/24, yet challenges persist. Management indicates: “These shifts in production may impact our supply chain and pricing strategies.”
Danish Crown observed a substantial reduction in the number of slaughtered animals in Northern Europe, triggered by several factors.
The sharp drop in pork demand from China, the emergence of African Swine Fever (ASF) in Germany, and escalating raw material costs resulting from the outbreak of war in Ukraine collectively necessitate substantial consolidation.
These factors have rendered operational efficiency in abattoirs increasingly challenging. Consequently, capacity adjustments have been made, leading to the closure of abattoirs in Sæby in 2023 and Ringsted in 2024.
Danish Crown’s financial results for 2024 reveal revenue of DKr67.8bn ($9.4bn), indicating stagnation compared to the previous year’s DKr67.6bn.
Moreover, net profits decreased by 28.5%, dropping from DKr1.4bn in 2023 to DKr1bn in 2024.
In 2020, the company terminated a manufacturing and distribution agreement with Alibaba in China due to insufficient pork production.
Previously, in 2019, Danish Crown secured a contract to supply pork to COFCO Meat Holdings, one of China’s largest agri-food firms, expected to yield $100 million by 2020.
Danish Crown maintains operations across Denmark, Sweden, Germany, the Netherlands, Poland, the UK, and France.