Louis Dreyfus reports half-year results: “Resilient performance,” company on track for solid 2018, says CEO

08 Oct 2018 --- Louis Dreyfus Company B.V. (LDC) has announced its consolidated financial results for the six-month period ended June 30, 2018. Net sales remained constant at US$18.8 billion, compared to the same period in 2017. A 6.3 percent decline in volumes shipped, partially attributable to the sale of the company’s African and Australian Fertilizers & Inputs businesses, was completely offset by price increases across the group’s main products.

The group’s consolidated Net income, Group Share, amounted to US$100 million, versus US$160 million for the same period the previous year.

According to LDC, the lower Net Income reflects a temporarily negative mark-to-market recognized by the Group as of June 30, attributable to its hedging strategy of locking in soy crush margins. This will ensure a high return from LCD’s crushing activities for the whole of 2018, as the company’s performance benefits for the remainder of the year. 

Financing costs increased due to the rise in Libor rates and increased working capital utilization.

“LDC’s performance remained resilient over the first half of 2018, with both business segments contributing positively to our H1 results,” says Ian McIntosh, CEO. “Notwithstanding a lower net income for the period, we have seen the expected reversal of the negative mark-to-market effect, as we execute our planned crush operations. As a result, at the end of September, year-to-date performance indicates that we are on track to deliver solid results for 2018 overall.”

“In an unpredictable global environment with many challenges, our renowned ability to adapt to changing conditions remained a key asset, together with a business strategy that once again proved its relevance. As part of that strategy, the group strengthened its soybean crushing capabilities in China, completing the acquisition of a crushing plant located in Tianjin, in April, and continued to refocus on core activities, including the profitable divestment of its global metals and Australian fertilizers and inputs operations.”

Both the Value Chain and Merchandizing segments posted a good operational performance with Segment Operating Results of US$493 million. The Value Chain segment recorded Operating Results of US$286 million, down from US$346 million a year earlier. 

The decrease was largely attributable to the strategy of locking in oilseed crush margins during the semester, securing future profits as volumes are processed during the second half of 2018 and into 2019. 

Overall, the Oilseeds Platform contributed consistently, with good processing margins over the period, while Grains recorded comparable results to the previous year. 

The Freight and Global Markets platforms posted strong results for the semester, while the Juice Platform’s processing margins are expected to come in during the high season in the second half of the year.

The Merchandising segment posted Operating Results of US$207 million, slightly up from US$196 million during the same period in 2017, supported by the sound performance of all the Segment’s platforms, except for Coffee, which posted lower profits year-on-year in a slow farmer selling environment.