The Rotterdam, Netherlands headquartered agri-commodities giant announced its consolidated financial results for the six-month period ended June 30, 2019.
Net income from continuing operations amounted to US$73m, compared to US$91m last year. Its segment operating results, which represent gross profit plus income from associates and joint ventures, came in at US$495m – that was 5% lower than the equivalent in the six months to June 30, 2018. LDC’s net sales for the period were down 6.1% at US$17.5bn.
“LDC achieved sound results for the first half of 2019, in a particularly challenging environment,” said Ian McIntosh, CEO of LDC. He cited difficulties in the period such as global trade tensions, erratic weather conditions, the African Swine Fever (ASF) crisis in Asia and the general context of oversupply.
“We see these adverse market conditions persisting during the second half of 2019 and expect a recovery in profitability in 2020 as we continue to implement our business plan.”
Along with trade war volatility and the ASF crisis, its oilseeds business was also pressured by the absence of a US biodiesel credit awarded the previous year, LDC said. Its grains division posted positive results, due to successful price risk management in the face of difficult weather conditions, particularly in the US and Australia, the company reported.
Investments in China and Malaysia
LDC also documented how it is continuing to transform the business for future resilience, with recent developments including:
- Investment in the IPO of Leong Hup International, an integrated poultry, eggs and livestock feed company, on the Malaysian stock exchange, Bursa Malaysia,
- The start of construction work on the new feed mill for high-end aquatic feeds in Tianjin, China, a partnership that will be operated by a joint venture between LDC and Guangdong HAID Group, one of the world’s largest aqua feed producers. The company said this step marked its first step into the "fast-growing" aqua feed market, as part of its drive to meet demand for protein alternatives.
In September, Glencore Agriculture Ltd announced it was to join an industry-wide initiative to modernize global agriculture commodity trade operations that includes LDC along with traders ADM, Bunge and Cargill. The collation intends to look at new technologies – such as blockchain and artificial intelligence – to automate grain and oilseed post-trade execution processes. Their idea is to reduce the costs involved in shifting agricultural and food products around the globe.