LDC “endures global challenges” in H1, but net sales decrease

28 Sep 2020 --- The Louis Dreyfus Company has reported a strong first-half performance, enduring global challenges and navigating market uncertainty, while ensuring essential food and feed supply chain continuity during the ongoing COVID-19 pandemic.

Highlights for the six-month period ended June 30, 2020, include net sales of US$16.3 billion, versus US$17.5 billion for the first half of 2019. Net sales decreased as both prices and volumes shipped fell year-on-year, the company has revealed. 

Segment operating results at US$799 million, versus US$495 million at June 30, 2019. 

Click to EnlargeThe Merchandizing Segment saw improved performance across the board, as Coffee leveraged its global footprint to address shifting coffee consumption patterns.

The agricultural commodities trader delivered EBITDA of US$634 million in the first half of the year, up 49.9 percent compared to the same period in 2019, despite the adverse impact of the change in fair value of Luckin Coffee shares.

Income before tax from continuing operations share grew 260 percent year-on-year, settling at US$306 million for the semester. 

Segment Operating Results increased by 61.4 percent to US$799 million, as LDC captured profitable origination and sales margins in most business lines. 

The group also maintained its prudent risk management approach and secured a solid balance sheet through a large cash position, while ensuring access to liquidity with available committed bank lines.

“In H1, LDC achieved strong results while continuing to deliver essential products and ingredients to customers and consumers around the world, in the context of operational challenges posed by COVID-19 and despite continued trade tensions,” says Ian McIntosh, LDC’s CEO. 

“Our diversified portfolio, global geographic footprint and risk management expertise remained crucial to our performance and agility in this environment,”  he adds.

Sustainable future of food
Both of LDC’s business segments contributed to the group’s improved operational performance in a complex market and operating environment. 

In the Value Chain Segment, where operating results more than doubled year-on-year, the Grains & Oilseeds Platform captured profitable commercial opportunities, while Freight and Global Markets anticipated and adjusted to evolving market trends, offsetting challenges faced by Juice as a result of global lockdowns. 

Click to Enlarge

Sugar increased sales and capitalized on favorable market conditions while Rice secured profitable flows and Cotton maintained a resilient performance despite decreased demand.

The Merchandizing Segment saw improved performance across the board, as Coffee leveraged its global footprint to address shifting coffee consumption patterns.

Sugar increased sales and capitalized on favorable market conditions while Rice secured profitable flows and Cotton maintained a resilient performance despite decreased demand.

“The results put LDC in a strong position from which to advance its ambitious growth plans,” adds Michael Gelchie, LDC’s Deputy CEO.

“We pursued our transformative strategy in the first half of the year, through continued investments to strengthen our core trading activities, to advance the use of new technologies for greater efficiency and traceability in the industry, and to accelerate innovation toward a sustainable future of food.”

LDC’s investments 
Moreover, the group invested in aquatic feed research with Temasek Life Sciences Laboratory and Barramundi Asia, and in the creation of Covantis S.A., a technology company co-founded with industry peers to digitize agri-commodities trade. 

The group also launched LDC Innovations, its venture capital program to invest in early-stage companies with the potential to transform the food and agricultural industries. At the time of the launch, LDC pledged to invest in early-stage companies with the potential to transform the food and agriculture industries. 

“As the world adjusts to restrictions and uncertainty resulting from the COVID-19 pandemic, our role in providing sustenance for a growing population has proved all the more important,” continues McIntosh.

“We have risen to the challenge of ensuring continued food security while protecting people’s health and safety as a priority, thanks to the commitment of LDC teams around the world,” he concludes.

Edited by Gaynor Selby

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