PARIS, France (Reuters) — Louis Dreyfus Co. has posted higher first-half sales volumes and a drop in profit as the commodity group faces rising supply and lower prices of some major crops.
LDC, one of the world’s largest crop traders and processors, said its core earnings were US$1.057 billion in the first six months of 2024, down from $1.169 billion a year earlier.
Net sales fell to $25.6 billion from $25.8 billion but shipped volumes rose 19.4 per cent, the company 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 chief executive officer Michael Gelchie.
Global prices of corn, wheat and soybeans have slipped to their lowest level 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.
Archer Daniels Midland 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 the company’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 the Red Sea shipping disruption.
It did not give an outlook for its full-year.
LDC has partly shifted its focus toward the consumer end of the food chain to become less reliant on commodity trading. It has launched its own juice brand and established a pulse unit to support expansion into plant-based protein products.
The group, privately controlled by Margarita Louis-Dreyfus via the family trust Akira, said it paid a $507 million dividend to shareholders during the first half of the year.
