Customers of Danish Crown in China have been informed that the company is discontinuing its business operations in Pinghu outside Shanghai following a strategic review. Likewise, the staff in production, sales and marketing at the processed meat factory have been informed about the decision, which will mean that 112 jobs could be made redundant.
The factory in Pinghu opened in 2019 as part of Danish Crown’s efforts to expand its business in China. However, due to ongoing challenges the operation in Pinghu has not achieved the intended profitability for Danish Crown, and subsequent efforts to correct this have been unsuccessful.
A strategic review was recently accelerated by Danish Crown’s new executive management team, concluding that the best options for the company are to either sell or close down its Pinghu operations.
“It is clear to us that the operations in Pinghu is not the right strategic fit for Danish Crown. Our preference is to divest the business, and we can confirm that we have signed a letter of intent with a preferred buyer and agreed terms for a divestment. While these talks are promising, we expect they will still take a few months to conclude,” says Danish Crown Group CFO, Anders Aakær Jensen.
“Our strategic review has delivered two clear options for us; to either divest or to close the site and repurpose the quality equipment elsewhere in our global supply chain. 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.”
Danish Crown expects to reach a final decision regarding its remaining facilities in Pinghu by early summer and will communicate in due course.