Louis Dreyfus Profit Plunges to 10-Year Low on Less Volatility

March 21, 2016 06:17 AM
 
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Louis Dreyfus Co. said full-year profit fell 67 percent to the lowest in a decade as the world’s largest trader of rice and raw cotton was hit by lower prices, reduced volatility and an oversupply of agricultural commodities from wheat to soybeans.

Net income declined to $211 million in 2015 from $648 million the previous year, the Rotterdam-based company said in a statement Monday. That was the lowest since 2005, according to figures from previous annual reports and compares with a record profit of $1.05 billion in 2010. Sales dropped 14 percent to $55.7 billion last year.

It “was a difficult year for the entire industry, marked by geopolitical issues that contributed to an environment of reduced commercial opportunities, ” Gonzalo Ramirez who was appointed chief executive officer in September after an 18-month search, said in the statement. “Our results have shown our resilience under the circumstances.”

Amid the market downturn, billionaire Margarita Louis-Dreyfus, who controls the firm through a family trust, is considering selling a stake in the 165-year-old trading house to finance the buyout of remaining family shareholders. Louis Dreyfus is also seeking joint-venture partners for businesses including orange juice, dairy, metals and fertilizer, people familiar with the matter said in January.

The yield on Louis Dreyfus’s bonds maturing in 2020 narrowed to 6.78 percent on Monday, after widening to a record 9.26 percent on Feb. 11.

Shipped sales volumes grew by 1 percent to 81 million metric tons from 2014. Pretax profit fell by half to $416 million last year amid a lack of price volatility and supply disruptions, the company said.

The firm, formerly known as Louis Dreyfus Commodities BV, re-branded itself as Louis Dreyfus Co. with immediate effect.

Russian-born billionaire Margarita Louis-Dreyfus recently gave birth to twin girls, the company said in an earlier statement Monday.

The closely-held company paid its shareholders, including Louis-Dreyfus, a dividend of $205 million in 2015, down from $602 million the year before.

Louis Dreyfus accounts for about 10 percent of global agricultural commodity flows and operates in more than 100 countries.

Capital expenditures decreased to $420 million in 2015 from $592 million the year before, in response to the “bearish” environment, the company said.

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