Dreyfus’ commodities business posts higher 2014 profit


Paris | Reuters — Global trading group Louis Dreyfus Commodities reported a rise in full-year profit on Thursday as increased volumes and healthy processing margins helped offset lower market prices.

Louis Dreyfus is one of the “ABCD” quartet of companies, alongside Archer Daniels Midland, Bunge and Cargill, that dominates agricultural commodity trading.

The 164-year-old family-owned firm is in the midst of a corporate shakeup and has been searching since last year for a new chief executive to lead the trading house into a potential share listing or merger deal.

Dreyfus did not comment on the CEO search in its results statement. Its previously-announced plan to hire ex-Viterra CEO Mayo Schmidt for the position fell through in December.

Dreyfus’ net income, group share, reached $648 million last year, up from $640 million in 2013, while net sales rose to $64.7 billion from $63.6 billion, supported by a four per cent increase in shipped volumes to 80 million tonnes, the company said (all figures US$).

The group’s value chain division, comprising integrated activities in oilseeds, grains, juice, fertilizers, livestock feed and stock, posted a 19 per cent rise in its operating result as ample crop supply benefited processing activities, Louis Dreyfus said.

One exception was the juice unit, which suffered from lower consumption and high inventory levels in global juice markets.

ADM and Cargill have also pointed in their most recent financial results to a margin boost from more abundant, cheaper supplies of grain.

Dreyfus’ merchandising division, grouping cotton, sugar, coffee, rice, dairy, metals and finance businesses with more of a trading focus, saw its operating result fall 13 per cent as it faced declining commodity prices and large inventory levels.

The group was also affected by instability last year in Ukraine and Russia, two leading grain producers and exporters, although the impact was limited, it said.

“Good preparation”

In Canada, Dreyfus maintains a Calgary office and operates 10 inland terminals — four in Saskatchewan, three in Alberta, two in Manitoba and one at Dawson Creek, B.C. — plus a major canola crushing plant at Yorkton, Sask.

Dreyfus on Thursday described 2014 as a “very fruitful year” for the Yorkton plant, citing the previous year’s expansions to its capacity, the Prairies’ record canola harvest, and “good preparation for the weather-related transportation problems that arose.”

The plant was forced offline for several weeks, however, after an explosion and fire in its canola meal storage facility in late October.

Dreyfus on Thursday also reported maintaining “good margins” in its 2014 exports from its Prairie elevators, as well as its corn ethanol crushing business and in arbitrage “in circumstances where some local wheat crops were of poor quality.”

Dreyfus’ capital investment last year was $592 million, down from $689 million in 2013, with acting CEO Claude Ehlinger citing a “granular approach — focused primarily on logistics.”

At the Yorkton crush plant, for example, Dreyfus said its “large additional investments in logistics” have allowed the operation to become “fully self-sufficient” in moving its outputs to North American markets.

Reporting for Reuters by Gus Trompiz in Paris. Includes files from AGCanada.com Network staff.

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