November 18, 2019

Danish Crown closes Tulip Ltd account

Through its ownership of Tulip Ltd, pork producer Danish Crown has suffered a loss of kr.210 million (US$31.1 million) from the UK business unit.

Additionally, the divestment of its 12 facilities in the UK required in a kr.575 million (US$85.1 million) write-down of goodwill.

Revenue in Tulip Ltd declined from kr.7.3 billion (US$1.1 billion) in the 2017/18 financial year to kr.7 billion (US$1.03 billion) in 2018/19, while the profit after tax and interest improved from a loss of kr.370 million (US$55 million) in 2017/18 to a loss of kr.210 million (US$31.1 million) in 2018/19.

Danish Crown's write-down is slightly higher than what it expected at the end of August, the company noted.

"This is because we've decided to make provisions for the usual seller guarantees issued to the buyer as part of the deal. This is a way of protecting the company against any negative surprises in the new financial year," said Preben Sunke, group CFO of Danish Crown.

Tulip Ltd was sold for kr.2.4 billion (US$355.3 million). The company had debt of kr.1.9 billion (US$281.3 million). Despite the operating loss for the 2018/19 financial year and the write-down of goodwill, Danish Crown's balance sheet is being strengthened.

In a week's time, Danish Crown will be publishing its financial statements for the 2018/19 financial year, which will be based on the group's continuing operations, while the results of Tulip Ltd will feature as a single line in the accounts

The loss in Tulip Ltd will be included in Danish Crown's financial statements for 2018/19, but the write-down of goodwill will not affect the supplementary payments paid to Danish Crown's owners.

The supplementary payments to Danish Crown owners are based on Danish Crown's earnings in the past financial year. This means that the only negative impact on the results distributed by the board of directors will be from the operating loss generated by Tulip Ltd for the year, said Sunke.

Danish Crown will be publishing its financial statements on November 21.

- Danish Crown