Meat giant Danish Crown has announced a raft of cost-cutting measures as it attempts to compensate for the under-performance of its UK packaged meat subsidiary Tulip.
They involve reducing its workforce by some 300 to 400 employees and postponing planned projects.
The company has not revealed the location of the planned lay-offs.
The Denmark-based co-op’s chief executive officer, Jan Valeur, said: “We’re implementing measures now to keep us on track to achieve the budgeted profit for the year. Unfortunately, this means that we’re having to cut between 300 and 400 jobs across the group. We’re maintaining the hiring freeze initiated in November 2018 as well as a freeze on the use of consultants for the time being and, while investment in the business continues, we are in the process of identifying projects that could be postponed.”
Today, after a first-quarter result that fell below budget, the company said its earnings are “still challenged by problems in the UK business as well as under-performance in some other business units”.
It added: “This means that it is now necessary to initiate further cost savings across the group. The target is to reduce the total costs by DKK350m (US$53.6m) this financial year.”
In November 2018, Danish Crown announced 150 immediate job losses, plus a DKK200m savings programme for Tulip in the 2018/19 financial year.
The group’s British subsidiary has proposals for further reductions in headcount as part of this savings programme, Danish Crown said.
Valeur added: “In recent months, we have won several important contracts in the UK, so in terms of sales, things are moving in the right direction. However, this does not change the fact that our costs are still too high, so further reductions are being considered as part of a comprehensive programme to improve operational efficiencies at Tulip Ltd.
“Tulip Food Company in Denmark is also being impacted by the fierce competition in the Danish retail sector, and earnings in the group’s largest business area, Danish Crown Pork, are not living up to expectations. On the other hand, the companies which have been acquired in Denmark, Poland and the Netherlands are all performing above expectations.
“Right now, we don’t have the competitiveness that we’re striving to achieve compared to the EU index. This is primarily due to the particular challenges we’re facing in the UK, but the tough battle for pigs in Germany, and the advance of the Spanish abattoirs is not helping either.
“At the same time, we are faced with the fundamental challenge that costs in Denmark are significantly higher than in the countries we compete with. Therefore, all parts of our business must deliver in order to ensure competitive prices for our owners.”
Danish Crown has 29,000 employees globally, of which 9,000 are based in Denmark and 7,000 in the UK.