Photo courtesy of LDC.
“Despite another challenging year, the results for 2016 remained resilient,” said Gonzalo Ramírez Martiarena, chief executive officer (CEO) of Louis Dreyfus Co. “Oversupply, market shocks, geopolitical dynamics and adverse weather conditions were some of the difficulties that the agribusiness industry had to face during 2016. Nonetheless, our shipping volumes remained constant and net income, Group Share, increased by 45% on the previous year, demonstrating the effectiveness of our business model and strategy, with a renewed focus on innovation and research in order to leverage new technologies, and an increasingly customer-centric approach.”
Volumes shipped to destination of 81 million tons, remained stable.
In 2015, LDC began implementing its new strategy with a focus on optimizing its organizational model, asset network and increasing the company’s business portfolio.
|Gonzalo Ramírez Martiarena, CEO of Louis Dreyfus Co.|
“This means that we increasingly concentrate on highly selective, strategic investments that will facilitate future growth and profitability,” Ramírez Martiarena said. “We continue to work for greater regional integration to increase synergies and reduce operational costs.”
The company created a two segment plan, the Value Chain segment and the Merchandizing segment that includes 12 platforms. LDC does not expect to see its new strategy occurring or impacting the financial performance until 2017.
Last year was marked by strong supply and abundant inventories for some commodities, which led to challenging market conditions, worsened by volatility working against some market fundamentals. Nevertheless, both segments generated profits on their origination and destination activities. The Value Chain segment posted decent logistics and processing margins, and the Merchandizing segment achieved higher sold volumes compared to 2015, due to a strong contribution from Metals, LDC said. Net sales fell slightly for the Merchandizing segment due to lower average prices, while in the Value Chain segment, marginally reduced activity levels and lower average selling prices on Oilseeds and Grains impacted net sales.
Photo courtesy of Louis Dreyfus/Mark Wilson.
“First, rapid population growth will continue in emerging markets over the next few decades,” he said. “Secondly, that will be combined with the continued urbanization and income growth of these populations. These trends will continue to accelerate demand for not only more food, but particularly for more animal protein, which of course requires large volumes of vegetable protein. That means there will be a continuous increase in demand for many agri-commodities.
“We are convinced that current oversupply in agri-commodities markets will adjust to lower price levels and that volatility from physical disruptions will reappear.”
As part of its new strategy, LDC focused on origination and logistics for its grains and oilseeds platform. The company is currently working to complete the upgrade of its grains sampling facility in Odessa, Ukraine.
LDC’s high volumes of oilseeds allowed the company to further invest in its origination and value-added products such as food-grade lecithin, refined glycerin and biodiesel. During 2016, LDC began construction of barges and pushers to operate its river export terminal in Brazil’s Para State. In the United States, it started operations at a river terminal in St. Louis, Missouri, and its new 800,000-bushel truck-to-barge loading facility in West Memphis, Arkansas.
LDC’s joint bid with another agri-commodities company will allow LDC to continue to operate a solid bulk terminal at the Port of Santos in Brazil. The terminal is expected to have annual capacity of 4.1 million tons.