Denmark-based meat co-operative Danish Crown has warned that rising commodity costs could weigh on profits during the second half of its fiscal year.

The note of caution came as Danish Crown booked increased first-half profits for its 2010/11 financial year on Monday (9 May). Net profit reached DKK742m (US$141.7m), compared to DKK661m a year ago. Turnover climbed 13.3% to DKK24.7bn.

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Danish Crown said “competitive prices” had meant an increased supply of slaughter animals, which was a “major contibution” to the higher revenue and volumes.

However, CEO Kjeld Johannesen said rising prices may hit Danish Crown’s processing activities, which make up 40% of revenue.

Flemming Enevoldsen, CEO of Danish Crown’s processing arm Tulip Food Co., said the co-operative’s processing units had generated “good results” in the first half of the financial year.

He explained that increased raw-material prices “may temporarily put a dampener on earnings in the second half”.

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Enevoldsen added: “Like virtually all other food production companies, we have seen significant price increases in respect of raw materials as well as packaging and transport in 2011. Together with a strong Danish krone, this will result in higher consumer prices, which all in all will add to the pressure on Danish food production.”

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