Danish Crown says Chinese tariffs drag down annual profit
Company reports lower earnings as duties hit pork exports
CHINA – Danish Crown says its annual profit has fallen sharply as Chinese import tariffs continue to strain the earnings of Danish pig farmers.
The company reported net profit of about US$122 million (788 million Danish kroner) for the year ended September 30, down more than 21% from the previous period.
The meat processor said its gross profit has been dented by Beijing’s anti-dumping duties on pork from Europe, which have also led to smaller payouts for shareholders.
Chief executive Niels Duedahl told Reuters that the group has little choice but to absorb the roughly 30 percent tariff and attempt to pass part of the added cost on to buyers in China.
He added that the financial impact ultimately lands with the farmers who supply Danish Crown and hold ownership stakes in the business.
The import duties, introduced in early September and widely interpreted as a response to European Union tariffs on Chinese electric vehicles, have affected a large share of Danish Crown’s shipments to China.
Much of the company’s China bound volume consists of offal that cannot command comparable prices in European or African markets, which has amplified the hit to earnings.
Beef Division Records Strong Sales
In a separate update from November, Danish Crown said revenue from its beef operations climbed from roughly US$915 million to about US$1.05 billion over the financial year as demand strengthened in Denmark and Southern Europe.
The company stated that the average payment to cattle suppliers rose by 28 percent per kilo from last year, while end of year cattle prices were 48 percent higher than at the beginning of the period.
According to the processor, reduced cattle availability across Europe pushed up returns and encouraged the business to increase the share of processed products and expand its range of branded beef.
Danish Crown introduced a marbling incentive of up to US$0.23 per kilo for premium grade beef, a move aimed at serving Southern European markets that favor higher marble cuts.
Operational Strains in Germany
Despite stronger beef performance in Denmark, the company acknowledged that its two German slaughterhouses and its Scan Hide leather unit recorded weaker results due to fewer slaughter animals and a slowdown in demand for automotive and furniture leather.
A nearly 9 percent nationwide drop in German cattle slaughter reduced factory throughput and limited raw materials for Scan Hide, putting pressure on profitability.
The company says it has begun implementing measures to improve its German operations and adjust cross border workflows to maintain supply continuity and support settlements with cattle owners.
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