Most of the job losses will be in the United Kingdom, and the impact on employees in Denmark will be “relatively limited,” the company said.
“We have, in recent months, won several important contracts in the United Kingdom, so things are moving in the right direction sales-wise,” CEO Jais Valeur said via a press statement on Wednesday.
“But that does not change the fact that our costs are still too high, so job losses will occur as part of a thorough reorganisation of [British daughter company] Tulip Ltd,” Valeur added.
Brexit is one of a number of factors contributing to challenges faced by the company, Valeur told Ritzau on Wednesday.
“There are difficulties on the British market. Last week, Tesco, the largest supermarket (in the UK), announced 9,000 job losses. When our customers are forced to do that, it tells you something about the pressure we as suppliers are also feeling,” he said.
Consumer confidence in the UK has fallen as a direct result of uncertainty over the country’s impending exit from the European Union, according to the Danish Crown CEO.
A no-deal Brexit, in which the UK would leave the union on March 29th without a withdrawal agreement, is still a possible outcome. That could delay traffic between the UK and the EU in the initial period following Brexit, resulting in logistical chaos for importers and exporters.
Valeur said reduced consumer confidence in the UK was a “direct derivative of Brexit”.
“We are just as confused as consumers about what will happen [with Brexit] and are looking on with amazement at what’s going on,” he said.
“We send 33,000 containers or transport vehicles to the United Kingdom every year. If there is no deal, each one will need customs documents and inspection by veterinarians. That will require a completely incredible amount of documents,” the CEO told Ritzau.
The Danish Crown boss said he believed London would have to come to some form of agreement regarding food imports.
“Great Britain has not been self-sufficient on food for 100 years, and around 40 percent of the food they eat comes from abroad.
“So I believe that some solutions will be found, so Danish products can reach the market. But it will be more expensive and more complicated than it is today,” he said.
The announcement follows results from the first quarter of the company’s current business year, which showed signs of difficulties on a number of fronts, not least British daughter company Tulip Ltd.
Danish Crown is also facing challenges in a number of other markets, related to tough competition and difficulty meeting targets, according to Tuesday’s statement.
“Right now, we don’t have the competitive strength we are looking for in relation to the EU index,” Valeur said.
“That is, first and foremost, due to our own difficulties, particularly in Great Britain, but the tough battle over pork in Germany and growth of Spanish producers have not made things easier,” he continued.
Additionally, prices are being kept low by fears over the spread of African swine flu, he also noted.
Danish Crown employs around 29,000 people globally, of which 9,000 are in Denmark and 7,000 in the UK.