Crispy Food A/S

In the fiscal year 2023, Crispy Food achieved a positive after-tax result of DKK 0.7 million, a decrease from the previous year's figure of DKK 4.1 million in 2022. While the outcome is below the projections outlined in the 2022 annual report (expected profit before tax in the range of DKK 5 – 10 million), we acknowledge that it falls short of our desired level. This is, however, anticipated given the challenging market conditions experienced in 2023, marked by ongoing geopolitical uncertainties, recession risks, and the impact of heightened interest rates, compounded by the persistent challenges presented by the prevalent effects of high inflation.
The supply chain continued to encounter complexities due to the ongoing conflict in Ukraine, leading to disruptions in the availability of raw materials, energy, and freight. Despite these challenges, Crispy Food remained resilient, actively addressing these issues to ensure a consistent and high-quality delivery performance to our valued customers.
Economic challenges persist with high inflation affecting purchasing power and hampering consumption growth across Crispy Food's operating markets. In 2023, inflation levels persisted, having peaked at 10.6% in October 2022 for the Eurozone and subsequently declining at slow pace to 2.9% by the 2023. Despite the decrease from the peak, inflation continued to remain elevated.
As of December 31, 2023, the equity ratio stands at 33,9 % (compared to 31,7 % in 2022), with total equity reaching DKK 74 million. The equity capital adequacy is assessed as robust in relation to the Company's planned activities and investments.
Risks
General risks
The Company's growth, acquisitions and market positioning over recent years have largely eliminated the operational risk associated with retaining a few but relatively large customers in the Company’s customer base.
Credit risks
The Company's primary credit risk is that customers fail to pay amounts payable for products and services provided to them by the Company. Crispy Food's customers are predominantly large, international food companies with robust credit ratings, high solvency ratios, spread across several geographies within Europe. This provides a natural hedge against credit risk.
To further mitigate the credit risks, the Company's credit policy includes guidelines and rules for assessing credit risk for new customers, payment terms and procedures, and processes for handling outstanding receivables. All sales orders where some credit risk is expected will be covered by prepayments and/or other collateral.

Currency risks
The Company sells its products on the European market and invoices mainly in EUR and DKK. Furthermore, the Company has significant receivables and payables in these currencies. The Company is therefore exposed to currency movements between EUR/DKK. The Company benefits to a certain extent from natural hedges due to EUR denominated costs. Management assesses hedging of currency exposures on a case-by-case basis, while EUR exchange rate risk is considered to be low due to Denmark's fixed exchange rate policy against the EUR.
Interest rate risks
To hedge against significant interest rate fluctuations, interest rate swaps have been concluded whereby variable interest rates are converted into fixed interest rates. However, the sharp increase in leading interest rates seen during 2023, was not fully hedged and thus, this development impacted our financial result negatively.
Special risks
The continued war in Ukraine, political instability in various regions, such as the escalation of the Israeli-Palestinian Conflict, pose significant risks to Crispy Food A/S. These factors present direct threats to our ability to source the materials and components necessary for our operations. Furthermore, the geopolitical tensions create an indirect risk by potentially influencing the global economy and impacting our customers' demand for products and new launches.
The escalation of the Israeli-Palestinian Conflict and similar geopolitical challenges can disrupt global commodity supplies and lead to fluctuations in prices, further impacting our supply chain. This volatility introduces a level of uncertainty that increases risk, particularly in our operations. Additionally, the security of supply from our suppliers and subcontractors is at risk in the face of ongoing geopolitical and pandemic-related challenges.