Louis Dreyfus profits jump boosted by trading arm

Louis Dreyfus Company, one of the world’s biggest traders of agricultural commodities, reported a sharp increase in half year profits on Thursday, boosted by a strong performance from its trading arm.

Pretax profits in the six months to June climbed by more than a third to $206m,
on sales up 18 per cent to $27.7bn. Net income came in at $159m, up from $136m a year earlier.

“The half year results, in what continues to be a fundamentally challenging market for the agricultural sector, show our ability to adapt,” LDC’s chief executive Gonzalo Ramírez Martiarena said in a statement.

LDC is one of a small group of companies that dominate global flows of crops and food stuffs. These include Archer Daniels Midland, Bunge, Cargill and Glencore.

Like its peers, the 166-year old company has struggled with tough conditions in its core grain and oilseeds market brought by bumper harvest and farmers hoarding supplies.

Thursday’s results showed that LDC’s “Value Chain business”, which houses its grain and oilseed operations, had recorded flat operating profits of $352m in the period.

But its ‘merchandizing”, or trading arm, saw operating profits rise to $250m, up from $195m, on the back of improved results in cotton.

“The cotton platform delivered substantial and improved results over the first half of 2017,” the company said. ” This was generated by a winning strategy, coupled with increased global trade.

LDC also said its metal business delivered a “satisfactory results”.

LDC is looking to sell a stake in the metals unit, which trades copper, lead and zinc, to help fund further growth and focus on grain and oilseeds, the historic core of the business.

As part of this strategy, the Geneva-based company, which is controlled by Russian-born billionaire Margarita Louis-Dreyfus, is also looking for partners to invest in its, dairy, and orange juice units.

“We are starting to see renewed optimism, most notably in Europe, but still recognize the need for flexibility to adjust our geographic and operational footprint,” said Mr Martiarena. “

“We have successfully begun a divestment process for some non-strategic assets and since closing the first half of the year, we have also entered into an agreement to sell our African fertilizers and inputs business.”

Thursday’s results showed total adjusted net debt fallen to $3bn, down from $3.6bn at the start of the year. The company handled 43.3m tonnes of commodities, a rise of 8 per cent year-on-year.

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