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Billionaire Heiress Squeezes Louis Dreyfus for Cash as Trade War Hits Profit

Billionaire Heiress Squeezes Louis Dreyfus for Cash as Trade War Hits Profit

(Bloomberg) -- Billionaire heiress Margarita Louis-Dreyfus continued to squeeze agricultural trader Louis Dreyfus Co. for cash, even as global trade tensions saw first-half profit plunge.

The foodstuffs trader paid a dividend of $428 million during the first six months of the year, LDC said Monday. That’s the biggest dividend since 2014, when the company generated more than half a billion dollars in profit.

Billionaire Heiress Squeezes Louis Dreyfus for Cash as Trade War Hits Profit

The payout came as the U.S. trade war with China cut profit at the 168-year-old family business, with the spread of African swine fever in Asia hurting soybean trading results. Things won’t turn around until next year, the company said.

Louis-Dreyfus has been pulling cash out of the company to repay loans needed to fund the buyout of other family members. She secured another loan from Credit Suisse Group AG last year to buy a stake valued at about $900 million. The chairwoman now controls about 96% of the holding company that owns LDC. She’s also exploring selling minority stakes in the business to generate cash.

Billionaire Heiress Squeezes Louis Dreyfus for Cash as Trade War Hits Profit

The dividend payment cut the equity value of LDC, one of the world’s top agricultural commodities traders, to $4.6 billion from $4.9 billion at the end of last year. The trading house has struggled in recent years amid bumper crops and a lack of price volatility that has crimped trading profits.

Net income in the first six months fell to $71 million from a restated $128 million last year, LDC said. The company blamed global trade tensions, erratic weather, the spread of swine fever and oversupply that made it “difficult to analyze and act upon market fundamentals,” Chief Executive Officer Ian McIntosh said in a statement.

McIntosh, a three-decade company veteran, said the tough markets will persist for the rest of the year.

LDC expects “a recovery in profitability in 2020 as we continue to implement our business plan,” he said.

McIntosh and LDC have been seeking equity partners to help it expand into food products closer to the consumer in fast-growing markets such as Asia. LDC recently invested in China’s Luckin Coffee as well as a Malaysian poultry producer.

Key Numbers:

  • Net income from continuing operations fell to $73 million from $91 million
  • Sales fell 6.1% to $17.5 billion as shipped volumes declined 6.9%
  • Adjusted net debt was $3.2 billion, or about three times Ebitda
  • Financing costs fell 11% to $125 million
  • Net cash from operating activities jumped to $709 million from negative $72 million the year before

To contact the reporter on this story: Andy Hoffman in Geneva at ahoffman31@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Dylan Griffiths, Lynn Thomasson

©2019 Bloomberg L.P.