Crop giant Louis Dreyfus posts lower profit as volatility eases
Louis Dreyfus Company (LDC), one of the world’s largest crop merchants, on Monday said its first-half net profit and sales fell from a year earlier, when results were boosted by upheaval linked to the war in Ukraine.
LDC, whose rivals include ADM ADM.N, Bunge BG.N and Cargill, reported a group net profit of $568 million for the first half of 2023, against$662 million in the year-earlier period.
Net sales fell to $25.8 billion from $30.3 billion, reflecting a decline in prices as well as a 4.7% year-on-year decrease in volumes shipped, LDC said.
Volatility in most of its markets eased compared with the previous year while prices fell except for robusta coffee, sugar, rice and citrus juices, LDC said in a financial report.
Volatility fuelled by Russia’s invasion of fellow grain exporter Ukraine had buoyed profits for crop merchants last year as they used global networks to manage supply disruptions and meet firm food demand.
ADM and Bunge reported a drop in second-quarter profits from record year-earlier levels, though they raised full-year earnings guidance, with a bumper Brazilian soybeanharvest supporting processing margins.
LDC similarly cited big Brazilian soy and corncrops, plus strong Chinese demand, as helping its grain and oilseed business drivefirst-half performance.
In Russia, LDC stopped exporting Russian grain from July 1 as planned and was continuing to study options to transfer its Russian business and grain assets to new owners, it said.
The group recorded, as of June 30, $32 million in assets and $5 million in liabilities as held for sale in Russia, it added.
In Ukraine, war disruption increased transport costs, LDC said, reporting total assets and liabilities in the country as of June 30 at $152 million and $125 million respectively.
LDC said its cotton business used multiple origins to maintain profits in the face of lower volumes linked to inflation pressures on consumers.
While its sugar business, excluding divested Imperial Sugar in the United States, improved as it successfully hedged against high volatility. Operating profit from rice remained strong despite weakening global demand.
LDC is majority-owned by Margarita Louis-Dreyfus via family trust Akira. The rest of the capital is controlled by Abu Dhabi holding firm ADQ, whose entry two years ago helped to resolve tensions over debt and family minorities.
LDC paid a $503 million dividend to shareholders during the first half.
Source: Reuters (Reporting by Gus Trompiz; Editing by Kirsten Donovan and Sharon Singleton)