ROTTERDAM, NETHERLANDS — The Louis Dreyfus Co. BV (LDC) said it leveraged its diversified business portfolio and global network to weather global trade challenges and the Russia-Ukraine crisis to increase segment operating results by 56% to $1.375 billion for the six-month period ended June 30.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 50% to $1.17 billion. Net income, group share increased 97% to $662 million from $336 million in the same period a year earlier.
Net sales amounted to $30.3 billion for the six-month period, an increase of 27%.
“In the current turmoil impacting global agri-commodities markets, which added to pre-existing drivers of global market uncertainty such as continued port congestion, accelerating climate challenges and concerns over the resurgence of COVID-19, LDC’s mission to bring the right product to the right location, at the right time, was all the more critical,” said Michael Gelchie, chief executive officer of LDC. “In this challenging environment, our experienced and committed teams continued to work with business partners worldwide to keep key supply chains moving safely, reliably and responsibly, from farmers to end consumers.”
Both of LDC’s business segments contributed to the group’s segment operating results in a turbulent market and operating environment, as commercial teams captured origination and sales opportunities, secured purchases and successfully managed risks to meet customer demand in an uncertain and complex global trade environment, LDC said.
Operating results for the value chain segment, which includes the grains and oilseeds platform, were $945 million compared with $525 million in the same period a year ago.
The grains and oilseeds platform further increased operating results while volatility remained significant across all products merchandized by the platform. Existing drivers for significant and rapid market price moves, such as uncertain crop size prospects and concerns over ongoing supply chain logistic challenges, were amplified by doubts cast by the Russia-Ukraine crisis.
Grain and vegetable oil prices rose rapidly in the first four to five months of 2022, driven by concerns over global supply and demand imbalances for goods usually exported from the Black Sea, and over corn and soy supply shortages due to potential drought in Argentina and Brazil.
Prices began to decrease in June, on the back of global recession fears and ahead of the opening of a grains export corridor out of Ukraine. Operations in EMEA were negatively impacted by limited and costly logistics in the Black Sea. Globally, demand for grains (particularly corn, wheat and sorghum) remained strong throughout the period as destination countries secured supply.
Ethanol prices were bolstered by the rally in oil prices, as global demand for biofuels continued to grow to support carbon emission reductions.
Demand for vegetable oil remained resilient as prices reached record high levels toward the end of April. Despite increasing production costs due to inflation and high energy prices, processing activities contributed significantly to the platform’s performance and growth thanks to strong crushing and crack margins, particularly in the United States, Canada and Brazil.
In addition to delivering strong results, LDC continued to invest in core merchandizing operations, expansion and diversification downstream, as well as group-wide innovation and digitalization, in line with its strategic roadmap.
“In March 2022, we inaugurated our first R&D center as an important foundation ahead of LDC’s entry to the plant proteins market,” Gelchie said. “We also completed, and recently inaugurated, our new liquid soy lecithin plant in Claypool, Indiana, US, as part of our plans to consolidate our position in the plant-based ingredients market. In China, we celebrated the groundbreaking for Fuling Food Industrial Park in Nansha, Guangzhou — a development with Chinese partners that will enhance our feed protein processing capacity in the region from next year. Our initiative with industry peers, Covantis SA, also advanced, successfully expanding to the North American market and celebrating the first anniversary of the launch of this groundbreaking blockchain platform that is driving modernization, efficiency and traceability in post-trade transactions.”