Louis Dreyfus Santos Brazil
Shipping volumes were up 5% compared to the previous year.
Photos courtesy of LDC.
ROTTERDAM, NETHERLANDS — Net income at Louis Dreyfus Co. (LDC) for the year ended Dec. 31, 2017, totaled $317 million, up 4% from $305 million in 2016.
Gonzalo Ramírez Martiarena LDC CEO
Gonzalo Ramírez Martiarena, CEO of LDC

“Ongoing industry challenges continue to prevail, but 2017 results remained sound, with shipping volumes up by 5% and net income, Group Share, up by 4% on the previous year,” said Gonzalo Ramírez Martiarena, chief executive officer of LDC. “This steady upward trend reflects the positive impact that our strategy has had on overall performance, a core element of which centers around keeping a focus on our core business areas. As a result, we concluded the sale of our Fertilizers and Inputs operations in Africa, signed on the sale of these operations in Australia, and we are in the process of selling our solid-performing Metals business. These sales will enable us to invest in and continue to build on the success of our core activities. Our investment focus will therefore remain predominantly on expanding our capacity and on adopting technological advancements that will improve efficiency and sustainability.”

Net sales for the year reached $43 billion, which compared with $40.6 billion the year before. LDC attributed the 5% growth to sustained sales from the company’s Oilseeds business, notably to China, as well as the deliveries of goods carried through year-end 2016 by the Cotton and Coffee platforms.

The Value Chain segment’s rise in net sales largely came from the company’s Oilseeds platform but the Grains, Freight and Rice also maintained good levels of activity.

“The Oilseeds platform delivered satisfactory — and improved — results despite operating in an environment of bearish fundamentals,” the company said. “Market conditions were primarily impacted by slow farmer selling in South America, enlarged worldwide acreage, continued growth in global crop sizes and substantial inventories. The results were generated by solid margins in crushing and logistics in the Americas and China, supported by increased sold volumes across the board.”

LDC noted the Grains Platform enduring the same market volatility.

Russia grain terminal
The Value Chain segment’s rise in net sales largely came from the company’s Oilseeds platform but the Grains, Freight and Rice also maintained good levels of activity.
“The Grains Platform recorded low results, enduring the same global context as Oilseeds, with large crops and stocks, low price volatility and slow farmer selling, notably in South America,” the company said. “Unlike Oilseeds however, industrial activities brought constrained margins in Brazil, the Black Sea and the U.S. The platform could only benefit from a limited extent from its value-added products such as ethanol.”

Commenting on the company’s operations, Margarita Louis-Dreyfus, chairperson of Louis Dreyfus Holding B.V., said, “Entrepreneurial know-how, combined with an ethos of customer-centricity and a strong sense of purpose, are the basis of our company culture, which has been central to Louis Dreyfus Company’s long-term growth. The continuing unpredictable environment of fluctuating market conditions and demands has created many challenges for our sector, but thanks to our strategic roadmap and experienced management team, we have been able to successfully navigate the business toward an improved performance in 2017.”

Finishing up the 2017 financial year with “improved performance” LDC has created four pillars to position the company to embrace trends and to seize new opportunities.

The first is optimizing its portfolio and investment.

“Our approach has two strands to optimizing the Group’s portfolio and investments,” the company said. “First, we are refocusing on activities where we already have core competences. Secondly, we are building our portfolio into connected products and sectors.”

The second pillar LDC is working on is innovating with food products.

“We are hoping that in coming years, innovation will take us into promising food-related sectors and lead us further downstream in our value chains,” LDC said. “The Group will go deeper into the ongoing food revolution. Our new, dedicated Food Innovation Project Team will add value to this revolution by selecting potential projects for further exploration or investment.”

With the third pillar LDC is looking to realign its geographical footprint.

“Global imbalances between supply and demand mean we must constantly reassess how we can move products from origin to destination in the most efficient manner,” LDC said. “It will be critical to selecting the flows with the potential to generate most value. Asia — especially China — offers the most promise in that respect and we will be ambitious about shifting our footprint to that area. We are exploring strategic alliances with key.”

Lastly, LDC wants to generate sustainable value.

“Sustainability is an absolute must,” the company said. “LDC constantly reviews policies and processes to make our products and businesses more sustainable. Oilseeds is one of the platforms actively working in this area, particularly in palm and soybeans origination. External partnerships to improve traceability and certification will also be crucial, as shown by the successful track records of our Coffee, Cotton and Juice platforms.”