Danish Crown has decided to stop operations at its processed meat factory in Pinghu in China and is in talks to sell the facility.
The plant, which opened in 2019 and is located near Shanghai, was put up for sale by the company last month.
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In a statement, Danish Crown said the factory has not reached the “intended profitability” due to “ongoing challenges”. Attempts to address the issue have been “unsuccessful”, it added.
Danish Crown CFO Anders Aakær Jensen said: “It is clear to us that the operations in Pinghu is not the right strategic fit for Danish Crown.
“To carry on our current set-up in Pinghu is no longer a viable option, and therefore we have decided that the time is right to bring those operations to an end while we work diligently to reach a final decision about the future of the factory itself.”
Jensen confirmed the meat co-operative has signed a letter of intent with a “preferred buyer and agreed terms for a divestment”.
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By GlobalData“While these talks are promising, we expect they will still take a few months to conclude,” Jensen added.
The pork giant said the end of operations in Pinghu could result in 112 redundancies.
The company intends to “repurpose the quality equipment” from the site elsewhere in its global supply chain.
Danish Crown has a casings business, DAT-Schaub, with operations in China that will continue.
“The closure and sale of the factory in Pinghu will have a minor effect on our business in China,” a Danish Crown spokesperson told Just Food. “In the financial year 2023/24 we had a turnover in China of DKr2.8bn ($390.4m), mostly from the export of Danish pork meat to China. We expect a turnover at the same level this financial year.”
Last month, Danish Crown announced it had decided to stop selling retail-packed fresh meat in Germany as part of efforts to improve its profitability.
The decision will lead to the winding down of the Oldenburg Convenience division in Oldenburg in north-west Germany by the end of February.
