Louis Dreyfus first half profit drops as grain supply swells

Paris | Reuters—Louis Dreyfus Company (LDC) posted higher first-half sales volumes and a drop in profit on Friday as the commodity group faced rising supply and lower prices of some major crops.

LDC, one of the world’s largest crop traders and processors whose competitors include ADM, Bunge and Cargill, said its core earnings (EBITDA) were $1.057 billion (C$1.434 billion) in the first six months of 2024, against $1.169 billion (C$1.586 billion) a year earlier.

Net sales fell to $25.6 billion (C$34.7 billion) from $25.8 billion (C$34.0 billion) but shipped volumes rose 19.4 per cent, LDC said in a statement.

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“Our diverse and global business activities allowed us to deliver strong results … as an overall recovery in crop sizes and ample stocks globally put pressure on prices and resulted in less volatile market dynamics,” said CEO Michael Gelchie.

Global prices of corn, wheat and soybeans have slipped to their lowest since 2020 amid rising supplies and signs of slowing demand from China, a turnaround from surging prices two years ago after Russia’s invasion of Ukraine.

ADM and Bunge both posted lower than expected second-quarter profits in July, reflecting leaner margins for oilseed crushing.

LDC also cited weaker processing margins in North America and slow farmer selling in Brazil.

Operating profits fell at LDC’s grain and oilseeds business and also at its cotton business, in the face of slow global demand, and at its sugar unit as volumes fell, it said.

LDC said profits improved for its coffee business due to higher volumes and better origination margins, particularly in Brazil, adding it had successfully hedged risk during volatility linked to crop setbacks and Red Sea shipping disruption.

It did not give an outlook for its full-year.

LDC has partly shifted its focus towards the consumer end of the food chain to become less reliant on commodity trading. It has launched its own juice brand and established a pulses unit to support expansion into plant-based protein products.

The group, privately controlled by Margarita Louis-Dreyfus via family trust Akira, said it paid a $507 million dividend to shareholders during the first half.

—Reporting for Reuters by Gus Trompiz and Tassilo Hummel