SAO PAULO, PARIS, (Reuters) — Louis Dreyfus Co. is making sweeping cost cuts, starting with travel, entertainment, hiring and salaries, as the 168-year-old agricultural commodities firm tries to revive dwindling profits.
Global trade tensions and the African swine fever epidemic in Asia have piled pressure on grain trading firms as they try to emerge from a period of falling margins.
Family-owned LDC, known as Dreyfus, is the “D” of the “ABCD” quartet of global traders that also includes Archer Daniels Midland Co., Bunge Ltd. and Cargill Inc.
LDC said an in an internal memo seen by Reuters news agency that five senior executives would lead a review to achieve “cost and productivity gains.”
The group is also introducing temporary “measures on travel and entertainment, hiring and salary restrictions,” said the memo, which was sent to employees.
A spokesperson confirmed the plan in an email, saying LDC aimed to optimize its cost base in a challenging external environment.
LDC said last month that international trade tensions and the spread of a deadly pig disease in China would continue to weigh on profit. It paid out a US$428 million dividend, the highest since 2014, even as first-half earnings slid.
Losses at Brazilian sugar and ethanol unit Biosev SA and an acrimonious buyout of minority family interests by its main shareholder and chair Margarita Louis-Dreyfus have taken their toll on LDC.
The company said this year it may look at selling a stake to a regional player, adding to speculation about consolidation after takeover approaches for U.S.-based Bunge.
Diversified commodity group Glencore made an approach for Bunge two years ago and has said the sector needs consolidating.
COFCO International, the trading arm of Chinese-owned food group COFCO, has also been seen as a potential bidder for other trading firms as it seeks to continue expanding overseas.