Louis Dreyfus results to gauge turnaround effort, trade-war fallout
* Agricultural trader unveils 2018 results on March 25
* Report follows run of weak profits, shareholder saga
* Agriculture traders grapple with low margins, trade
* LDC controlling shareholder says options open for future
By Gus Trompiz
PARIS, March 22 (Reuters) - Louis Dreyfus Company will be in
the spotlight next week as its annual results indicate whether
it has recovered from a bruising period in agricultural
commodities and how well the firm has managed the fallout from a
U.S.-China trade dispute.
LDC, known as Dreyfus, is the 'D' of the
so-called ABCD quartet of global farming merchants alongside
Archer Daniels Midland, Bunge and Cargill
. They each handle tens of millions of tonnes of
crops every year.
Its three peers publish on a quarterly basis but LDC
discloses results twice a year, drawing extra interest to its
interim and annual reports. Its 2018 results are due on Monday.
Farm commodity merchants have been grappling with lower
margins in the sourcing and transporting of crops, prompting
cutbacks in trading teams and investment down the food chain.
Investor pressure has centred on Bunge, which has become a
takeover target. LDC is under less scrutiny as a private
company, but controlling shareholder Margarita Louis-Dreyfus has
left the door open to "strategic partnerships" to support future
The 168-year-old firm sees itself as back on track: its main
shareholder has concluded an acrimonious buyout of family
minority holdings, its new chief executive has pointed to a
stronger second half, while the group has brought in a food
LDC also promised to cut its adjusted debt/EBITDA earnings
ratio to 3.5-4.0 by the end of 2018, after it surged to 4.6 in
the first half from 3.3 at the end of 2017.
Investors seem reassured, with the group's bond yields
falling back from two-year highs during a turbulent autumn that
saw a change in CEO and chief financial officer followed by the
release of lower first-half profits.
The market will be watching for any surprises, however,
after LDC's interim results raised eyebrows with the disclosure
of a large dividend and an internal loan to cover a $1 billion
bailout of Brazilian sugar unit Biosev.
After taking over as CEO in late September, company veteran
Ian McIntosh said year-to-date results had "significantly
improved", suggesting an upturn after a first half sapped by a
soy price-hedging effect and emerging trade tensions.
The twists and turns of the tariff battle between Washington
and Beijing have added to headaches for traders in the past
A misstep for Bunge in managing soybean price fluctuations
in Brazil during the Sino-U.S. trade war contributed to its
The divestment of LDC's profitable metal trading unit has
put the onus on the group's agricultural businesses, which also
include cotton, cereals and coffee, to boost returns.
Excluding the now-sold metals business, 2017 group net
income was $225 million, close to 2015's decade low of $211
million and well below a record $1 billion in 2012.
(Reporting by Gus Trompiz; Editing by Dale Hudson)
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