Louis Dreyfus Company reports drop in group net income and sales decline
23 Mar 2020 --- Agricultural commodity giant Louis Dreyfus Company (LDC) has reported “resilient consolidated financial results” for the year ended December 31, 2019, despite significant global challenges including African swine fever, geopolitical instability, continued US-China trade tensions and general market oversupply. Group net income for 2019 fell to US$230 million from US$364 million a year earlier while sales declined to US$33.6 billion from US$36 billion last year. Amid current pandemic concerns, the company says that it is “too early” to say how the coronavirus will impact its 2020 performance.
Net sales came in at US$33.6 billion, with an increase in shipped volumes of 1.3 percent, but lower prices. EBITDA from continuing operations reached US$836 million, while net income Group Share came in at US$230 million. Segment Operating Results came in at US$956 million, compared to US$1,314 million the previous year, says the company.
In the Value Chain Segment, the Grains & Oilseeds Platform delivered a decent year despite African swine fever and trade tensions due to its global presence and product portfolio. The Merchandizing Segment’s performance was driven by the improved results in Coffee and a resilient performance from Sugar and Rice in low price and volatility markets.
“2019 proved to be one of the most challenging years in recent times and witnessed some of the fundamental shifts taking place in the world and within our sector,” says Margarita Louis-Dreyfus, Chairperson of Louis Dreyfus Holding. “Our new reality is one of higher global volatility, political unpredictability, changing consumer trends and a ticking clock on environmental issues on a planetary scale. LDC is embracing this new reality with a stronger and more urgent ambition than ever. It is within this context that LDC’s transformative business strategy made strong progress in 2019 and the company posted resilient financial results. This is a very positive performance overall,” she says.
“While overall results were lower than in 2018, we put in a solid performance, confirming our strategic decisions and took steps to adjust our cost base, without losing focus on our transformation plans and future growth trajectory,” adds Ian McIntosh, LDC’s CEO.
“We have the right strategy and it is on track, as we move to become more of the value chain, integrating transparency, sustainability and traceability at all stages of our activities.”
LDC focused on implementing its transformative business strategy in 2019, with selective capital expenditure of US$413 million for the year, up from US$329 million in 2018.
It invested in new partnerships with Leong Hup International in Malaysia and Luckin Coffee in China, laying the foundations for joint ventures to build a coffee roasting plant and establish a juice business with the latter.
The Luckin Coffee partnership sees LDC produce not from concentrate (NFC) orange, lemon and apple juices, while Luckin stores will contribute as sales outlets as well as market the juices via other channels.
LDC also developed essential operating capacity along the value chain, including rail cars to facilitate grain exports in Ukraine, a warehousing joint venture for corn in China, expanded crushing plant storage and logistics in the US, and new eco-efficient vessels in its Juice and Freight businesses.
“Our strategic transformation is fundamental and remains our focus even in the most challenging of times,” McIntosh adds. “Looking forward, while the year started well, it is too early to say what impact the new coronavirus may have on our 2020 performance, but we are working hard with our employees, customers and suppliers to ensure their health and safety, and prevent further spread of the virus, even as we strive to fulfill our mission of providing essential products, like food and feed, to customers and consumers around the world – safely, responsibly and reliably.”
Edited by Gaynor Selby
