March 23, 2020 / 9:23 AM / 16 days ago

Louis Dreyfus posts 2019 profit slide, says no virus hit so far

PARIS (Reuters) - Commodity trader Louis Dreyfus Company (LDC) reported a sharp drop in 2019 profits, confirming tough conditions on agricultural markets last year while saying it had not yet seen a major impact on its business from the coronavirus crisis.

Louis Dreyfus said on Monday that group net income for 2019 had fallen to $230 million (198.4 million pounds) from restated 2018 income of $364 million, bringing its bottom line close to a decade low of $211 million recorded in 2015.

The company cited low prices along with the continuing effects of a U.S.-Chinese trade war and the swine fever epidemic in China as a drag on its results, while pointing to resilient overall performance helped by strong earnings in cotton and freight.

The 169-year-old family-owned group had warned in October that international trade tensions and African Swine Fever would continue to weigh on its activities in the rest of 2019 after pushing down first-half profit.

“2019 proved to be one of the most challenging years in recent times,” Margarita Louis-Dreyfus, chairwoman and majority shareholder of LDC, said in a statement.

The group said in a separate annual report that the coronavirus epidemic, which started in China and has spread rapidly around the world, had not had a significant impact on its activities or performance as of March 20, but it was too early to anticipate effects on its future performance.

The coronavirus has crippled economic activity in China, a key market for LDC and other commodity firms, and is now causing shutdowns in other countries.

The annual profit fall and uncertainty created by coronavirus come as LDC seeks to emerge from a period of weak margins for buying and selling staple crops.

Like its peers, it has restructured operations and focussed more on food processing, notably in Asia.

A cost-cutting programme, announced internally in November, would bring first benefits this year, Margarita Louis-Dreyfus said in the annual report.

The chairwoman reiterated the group was looking to engage with strategic investors, after a buyout of family minorities was finalised last year, but said there was no timeline.

Russian-born Louis-Dreyfus had told Reuters in January that LDC was prepared to open its capital but would wait for investors that could improve the business.

The buyout of other family shareholders during a period of lean profits for LDC have increased financial pressure on 57-year-old Louis-Dreyfus.

The chairwoman took out a $1 billion loan from Credit Suisse to cover a share buyout concluded a year ago, against which she pledged her majority stake in LDC.

Louis-Dreyfus has also drawn dividends from LDC, including her share of a $428 million payout last year that led to LDC’s equity falling to $4.8 billion by Dec. 31 compared with $5 billion a year earlier.

Reporting by Gus Trompiz and Sudip Kar-Gupta; Editing by Jon Boyle, Veronica Brown and Ed Osmond

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