Danish Crown reveals Tulip Limited losses
Ahead of the publication of its annual accounts for the 2018/19 financial year, Danish Crown reported that the last 12 months as owner of Tulip Limited resulted in a loss of DKK210m in the UK business unit.
Tulip Limited’s revenue fell from DKK7.3bn in the 2017/18 financial year to DKK7bn in 2018/19, while profit after tax and interest improved from a loss of DKK370m in 2017/18 to a loss of DKK210m in 2018/19. NOK575m was also written down on goodwill.
At the end of August, Danish Crown sold the British business unit Tulip Limited to US company Pilgrim’s Pride for DK2.4bn (£290m), with the sale completing in mid-October.
Tulip Limited was sold for DKK2.4bn, with Danish Crown stating that the company’s debt was DKK1.9bn, so despite the operating deficit in the financial year 2018/19 and the goodwill impairment, Danish Crown’s overall balance sheet had strengthened.
“The write-down is slightly larger than we expected at the end of August,” said Danish Crown group CFO Preben Sunke. “This is because we have chosen to make a provision for the usual seller guarantees we have made to the buyer in connection with the transaction. In this way, we hedge against negative surprises in the new financial year.”
Danish Crown publishes its annual accounts for the financial year 2018/19 next week and will present its accounts for the continuing business, while the overall result in Tulip Limited will only appear as a single line in the accounts.
The loss of Tulip Limited will of course still be included in Danish Crown’s accounts for 2018/19, but the write-down of goodwill is not included in the basis for the balance payment to Danish Crown’s owners.
“The balance payment to Danish Crown’s owners is determined on the basis of the earnings that Danish Crown has had in the last financial year,” added Sunke. “This means that it is solely this year’s operating deficit at Tulip Limited that is contributing negatively to the result that the board will have to make available next week.”
