* Trading group's first-half net profit edges up to $135 mln
* Volumes rise, lower costs curb impact of sales drop
* Group says Q2 speculative inflows added to tough
* Ample supply, tepid economy still weighing on commodities
(Writes through to add detail, analyst quote)
By Gus Trompiz
PARIS, Sept 29 Agricultural trading giant Louis
Dreyfus Company eked out a small rise in 2016
first-half net profit, saying steady shipped volumes helped it
weather another tough period in commodity markets.
Louis Dreyfus has been grappling with ample supply, lower
prices and slower economic growth that have cut margins, while
also going through a leadership shake-up under main shareholder
The privately owned company said on Thursday that net income
was $135 million compared with $130 million in the first half of
2015, with lower costs and tax offsetting weaker underlying
Operating profit for its business segments fell to $546
million from $638 million as net sales dropped to $23.5 billion
from $26.4 billion.
Unexpected capital inflows in commodities in the second
quarter added to the difficult trading conditions, it added.
"Posting reasonable results during such periods and a
context of continued oversupply illustrates our ability to
adjust to changing conditions," Chief Executive Officer Gonzalo
Ramirez Martiarena said in an interim results report.
It said shipped volumes rose 1 percent in the first half,
supported by grain and oilseed exports from South America and
healthy flows at its metals business.
"With a 1 percent increase in volumes they appear to be
keeping or slightly increasing market share," James
Dunsterville, analyst with Geneva-based Agflow, said.
"But there is no comment on the situation from July onwards
and I think the second half is proving very difficult for the
Autumn corn and soybean harvests in the United States,
expected to yield record volumes, will be a major factor for
trading firms in the second half of the year.
Recent rallies in sugar, coffee and juice could also
influence firms such as Louis Dreyfus that have wide exposure in
soft commodities. Sugar futures hit four-year highs this month.
Dreyfus, part of the so-called ABCD quartet of trading
giants alongside Archer Daniels Midland, Bunge
and Cargill, had previously reported a plunge in net
profit for 2015 and confirmed it was seeking partners to help
some businesses expand, starting with its fertiliser division.
It did not give any update on partnerships in the first-half
The unfavourable landscape has also led Louis Dreyfus'
rivals to reorganise. ADM said last month it was pulling back in
ethanol and exploring sales of corn dry mills that produce the
biofuel as weak ethanol results contributed to lower quarterly
In the first half, margins at Dreyfus' fertiliser business
remained hurt by weak demand from farmers, leading it to focus
on key markets including in Africa, it said.
But its juice platform, also earmarked for a joint venture
partner, posted improved results, helped by inventory cuts and
marketing changes, it said.
The group, which this year changed its name to Louis Dreyfus
Company from Louis Dreyfus Commodities, again restrained capital
expenditure. It came to $132 million, close to the $135 million
in the first half of 2015, with a focus on existing assets.
(Editing by Alexander Smith and David Evans)