* Louis Dreyfus Commodities full-year net income $640 mln
* Says margins better in H2 after tight grain supply hit H1
* Tropicals business hit by oversupply, notably in sugar
* Plans Azov Sea port in push in Black Sea grain region
(Writes through to add tropicals, quote, background)
By Gus Trompiz
PARIS, March 26 Global trading group Louis
Dreyfus Commodities B.V. posted a sharp drop in net
profit for 2013 after a U.S. drought disrupted grain markets and
as sugar and other soft commodities were hit by oversupply.
Net income for the full year fell to $640 million from a
record $970 million in 2012, the group said in a results
statement on Wednesday
Louis Dreyfus is the "D" of the so-called ABCD majors that
dominate agricultural commodities, alongside Archer Daniels
Midland, Bunge and Cargill.
The worst drought in half a century in the United States in
2012 curbed global grain output the following year and sent
prices soaring, cutting volumes and processing margins for
traders such as Louis Dreyfus that do business all along the
agricultural supply chain.
The trading firm was more upbeat about the latter part of
2013, saying a rebound in grain supply pushed up margins,
echoing comments made by its rivals in recent earnings reports.
Second-half profits were in line with the average of
2009-2011, excluding spun-off Brazilian unit Biosev, it said.
But the consequences of the U.S. drought on grains and
oilseeds in the first half and the difficult conditions in some
soft commodities kept profits well below the record levels of
"There were solid performances from the Proteins and Other
Products segments, while the Tropicals segment faced challenging
conditions - including oversupply and unusual Brazilian weather
conditions, which resulted in a lower performance," Louis
Dreyfus said in its results document.
Dreyfus said its Proteins business, which includes grains
and oilseeds, posted operating profit of $1.1 billion, down from
$1.3 billion in 2012.
Operating profit from the Tropicals arm, which includes
products such as sugar, orange juice and cotton, fell to $437
million from $844 million in 2012, or $698 million excluding
Its other activities, including metals and dairy businesses,
reported $211 million in operating profit, up from $156 million,
helped by Chinese demand for dairy products.
Last year proved tough for many commodity trading firms as
margins narrowed and competition stiffened.
Top oil trader Vitol this week reported flat full-year
revenues despite higher crude and product volumes, pointing to
competition from new entrants.
Dreyfus said its full-year net sales rose to $63.6 billion
from $57.1 billion in 2012, supported by a 10 percent increase
in shipped volumes.
The 163-year-old group, still controlled by the founding
family, is grappling with a fast-changing commodity trading
world and is stepping up investment.
Capital expenditures increased to $689 million last year
from $652 million in 2012.
Dreyfus started raising funds in the bond market recently
but has opted against making any headline acquisitions or a
stock market listing, avenues pursued by other traders.
It completed a 500 million euro ($678 million) bond issue in
December, marking the trading firm's third foray into bond
markets in just over a year.
The group last year changed its top management. But in a
reshuffle that suggested continuity, former head trader Ciro
Echesortu became chief executive, succeeding Serge Schoen who
was named supervisory board chairman with a strategy role.
Schoen said last year the group might need to go public in
the next five years to get more access to capital.
But Margarita Louis-Dreyfus has stressed her family trust,
Akira, wants to raise its stake further by buying shares from
minority family shareholders.
The company has made a series of investments along its
supply chain in the past year, including the creation of a joint
venture to develop a commodity port terminal in major grain
The annual review also mentioned the group was developing a
port on the Azov Sea, which is bordered by Russia and Ukraine
and skirts the disputed region of Crimea, for an expected launch
in 2015. The company declined to say where the port would be or
provide any other details.
(Reporting by Gus Trompiz; Editing by Veronica Brown and Jane