ARCHER-DANIELS-MIDLAND COMPANY Along with its peers, Louis Dreyfus has been overhauling its businesses as margins for buying, selling and shipping agricultural goods have been eroded by large stockpiles and reduced price volatility.
The trading house reported on Thursday group first-half net profits of $160 million (119.74 million pounds), up from $135 million a year ago, while its segment operating profits also rose to $602 million, from $546 million last year.
Net sales advanced 18 percent to $27.7 billion, supported by an 8 percent rise in volumes that reflected the release of inventory from 2016, it added.
An improving economic climate and restructuring at its business units had helped, although markets were still burdened with high inventories while there was a relatively weak performance at its grain division, Louis Dreyfus said.
"We are starting to see renewed optimism, most notably in Europe, but still recognise the need for flexibility to adjust our geographic and operational footprint," chief executive Gonzalo Ramirez Martiarena said in a results statement.
The group cited generally good profitability, driven by its 'Merchandising' segment that saw operating profits rise to $250 million from $195 million, including improved profits in cotton.
Its so-called 'Value Chain' branch saw stable operating profits, at $352 million against $351 million a year earlier. Better results in oilseeds and rice contrasted with a weak performance in grains, lower results in juice and a slow start to the year in sugar due to unclear market trends, it said.
Louis Dreyfus, which in April said it expected restructuring to help results in 2017 after a two-year drop in core profits, did not give an outlook for the rest of the year.
It recently sold its African fertiliser activity and plans to sell stakes in several other businesses.
The group also reported a $30 million gain from the sale of a stake in Brazilian joint venture, which boosted overall first-half net income.
The struggling grain division has seen a shakeup in personnel, with global head David Ohayon resigning last month together with several other traders in Europe.
Louis Dreyfus is part of the so-called 'ABCD' quartet of global grain trading giants, which also includes Archer Daniels Midland (>> Archer Daniels Midland Company), Bunge Ltd (>> Bunge Ltd) and Cargill [CARG.UL].
On Wednesday, Cargill reported a 14 percent rise in quarterly profit, as strong demand for beef helped offset weaker results for grain origination and processing. [nL4N1M8474]
(Reporting by Gus Trompiz; Editing by Sudip Kar-Gupta)
By Gus Trompiz
