Source: Ukragroconsult (Ukraine)
On Wednesday, Louis Dreyfus Company (LDC) announced a decrease in its annual profits, attributed to minimal price growth for key crops in the previous year, influenced by robust harvests and reduced demand from China, according to Reuters.
The firm, which competes with ADM, Bunge, and Cargill, reported a profit of $1.88 billion, marking a 15% decline compared to 2023. Its net income experienced a more significant drop of 28%, falling to $726 million.
Despite the profit reduction, net sales held steady at $50.6 billion, bolstered by a 17% increase in volume.
LDC’s grains and oilseeds sector saw a fall in operating profit following strong performances in 2023. In its annual report, the company highlighted that its operations in corn and soybeans faced challenges due to low market volatility.
Similar to its industry peers, LDC pointed to decreasing oilseed processing margins in both China and the United States, where the biofuels policy uncertainty adversely affected the market.
In the previous year, global prices for corn, wheat, and soybeans dropped to their lowest since 2020, driven by increased supply and indicators of slowing demand from China, contrasting sharply with the elevated prices seen after Russia’s invasion of Ukraine in 2022.
LDC noted that its coffee division experienced profit growth, thanks to improved margins and sales volumes amid weather-related challenges in crop production, while its sugar segment saw a decline in revenue due to decreased price volatility from year to year.
To lessen its dependence on commodity trading, LDC has partially refocused its end-user approach within the food supply chain.
In the past year, the company took over the ingredients business from BASF, launched a juice brand, and established a unit dedicated to trading pulses, such as beans, lentils, and peas.
Additionally, LDC reported a significant rise in capital expenditures last year, reaching $1 billion, a notable increase from $636 million in 2023.
