Chief executive officer says Asian country’s economic rebalancing shouldn’t affect its demand for agricultural products
PARIS (Reuters) — Louis Dreyfus Company remains positive about Chinese demand as a source of growth for agricultural markets, despite rebalancing in other parts of the Asian nation’s economy, the chief executive officer of the global commodity merchant said March 21.
China is the world’s biggest buyer of farm goods, but slowing economic growth and a real estate crisis have raised doubts about its commodity demand.
“China has a level of rebalancing going on at this point, predominantly in other sectors. But as related to the agricultural sector, we’re still quite confident and bullish China,” Michael Gelchie said in an interview after the release of LDC’s annual results.
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Cereal and oilseed imports in China will remain near record highs this year, encouraged by lower global prices and a domestic crop shortfall, according to traders and analysts.
China has been a focus of investments for LDC as the company looks to combine bulk handling of staple crops with a greater presence in food manufacturing.
LDC’s profits last year held close to bumper 2022 levels despite falling commodity prices. Gelchie declined to give a financial outlook for this year, but said the group was in a “solid position” to continue expansion.
The company’s 2023 core earnings dipped to $2.22 billion from $2.35 billion a year before, while its net income remained stable at $1.01 billion.
Sales fell more sharply, to $50.6 billion from $59.9 billion in 2022, reflecting a fall in prices and volumes.
While markets were less chaotic than in 2022, when the start of Russia’s full-scale invasion of Ukraine pushed global food commodity prices to a record high, the war and weather setbacks continued to disrupt supply and let LDC use its global network to generate profitable trade, it said.
Demand for Brazilian crops in China helped drive stronger results at its grain and oilseed business, it added.
LDC had previously reported a drop in first-half earnings.
In Russia, where the group stopped sourcing grain as did other multinational merchants last year, it booked a $60 million loss for the deconsolidation of its local business.
Last year’s earnings helped push up LDC’s equity value to a new record of $6.7 billion as of Dec. 31, 2023, up from a previous high of $6.1 billion a year earlier.
Improved results and the entry of Abu Dhabi holding firm ADQ as a shareholder in 2021 helped resolve tensions over debt and ownership at the group, which is controlled by Margarita Louis-Dreyfus via family trust Akira.
