Louis Dreyfus Boosts Profit, Helped by Large Harvests

DJones - Jacob Bunge And Leslie Josephs

     Agricultural trading firm Louis Dreyfus Commodities BV on Monday reported a slight increase in

earnings in the first half of 2014 as revenue rose 16% after large grain harvests.

     Louis Dreyfus said its sales volumes for crops and other products climbed 6% over the

year-earlier period, as the company expanded its shipping network for grains, oilseeds, coffee and

other crops.

     Net income rose to $260 million from $258 million, as revenue jumped to $33.7 billion from

$29.2 billion. The Netherlands-based company, founded in 1851, ranks among the world's largest

traders and processors of agricultural commodities.

     Louis Dreyfus and other major commodity trading houses are riding a boom in global crop

production that has replenished global stockpiles and provided processors cheaper supplies to turn

into food and other products. Driven by favorable weather, record-setting grain harvests are

expected in the U.S. and Europe this year, the International Grains Council said in a report last

week.

     "Price and volatility levels have been affected by substantial inventories for most of the

platforms and fast-growing supply," said Claude Ehlinger, interim chief executive and chief

financial officer for Louis Dreyfus.

     A surge in coffee prices, due to dry conditions in Brazil, provided opportunities for Louis

Dreyfus traders to capture profits in that market, while abundant corn improved margins for ethanol

operations. The company reported a $25 million impairment charge for an orange-processing plant in

Florida, which Louis Dreyfus said will process significantly lower volumes starting next year, as

farmers there have grappled with a bacterial disease that has crippled the state's orange groves.

     The rebound comes after Louis Dreyfus blamed lingering effects from a severe U.S. drought in

2012 for contributing to a sharp drop in 2013 earnings, which fell about 27% to $640 million last

year. Over the first six months of 2014, gross margins improved about 12%, the company said Monday.

     Louis Dreyfus has begun an effort to double revenues over the next four years alongside $4

billion in planned investments. But the company still is searching for a chief executive after Ciro

Echesortu, who led the firm for about a year, stepped down from the role in June.