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PARIS, March 22 (Reuters) – Louis Dreyfus Firm (LDC) might practically double annual investments within the coming years as rising earnings assist it pursue enlargement in its conventional crop buying and selling and newer food-ingredient actions, its CEO instructed Reuters.
The group on Wednesday reported a bounce in annual web revenue to $1 billion, becoming a member of different international crop retailers in benefitting from excessive costs and powerful demand in a yr marked by Russia’s invasion of fellow grain exporter Ukraine.
LDC desires to speed up capital expenditure, together with on “complementary” acquisitions, to between $800 million and $1 billion yearly throughout the remainder of this decade, Chief Government Michael Gelchie mentioned in an interview.
That compares with 2022 investments of $549 million, which already marked an increase from $372 million the prior yr.
“That may and ought to be within the type of greenfield or brownfield or M&A-type investments (…), whether or not that is core merchandising or in modern enterprise that actually diverisifies our portfolio,” Gelchie mentioned.
Final yr’s investments included the acquisition of Australia’s Emerald Grain. The deal worth was about $102 million, topic to closing changes, LDC mentioned in its annual report.
Improved outcomes and the sale of a stake in 2021 to Abu Dhabi holding agency ADQ have eased stress on LDC and principal shareholder Margarita Louis-Dreyfus after years of modest earnings and mounting debt.
Like its friends, LDC has been creating meals components actions, together with plant-based proteins, to faucet into client tendencies and be much less reliant on commodity markets.
The group introduced in December the creation of a meals and feed options division.
Gelchie declined to offer an outlook for LDC this yr however mentioned turmoil within the banking sector and rising rates of interest might enhance market volatility additional.
Increased rates of interest might dampen commodity demand and costs within the close to time period, although the longer-term outlook for commodities appeared bullish given an power transition that has already boosted oilseed crushing margins for renewable gas in North America, he added.
Concerning upheaval within the banking sector, Gelchie mentioned LDC had no publicity to Credit score Suisse and had “safe relationships” with its banks.
He declined to touch upon any publicity to Credit score Suisse for Chairperson Louis-Dreyfus, whose holding agency had a diminished mortgage association with Credit score Suisse price round $240 million as of September 2021.
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Reporting by Gus Trompiz Enhancing by Louise Heavens and Mark Potter
