Billionaire heiress squeezes struggling Louis Dreyfus for cash
Margarita Louis-Dreyfus has been pulling cash out of the company to repay loans needed to fund the buyout of other family members
Geneva — Billionaire heiress Margarita Louis-Dreyfus continued to squeeze agricultural trader Louis Dreyfus for cash, even as global trade tensions saw first-half profit plunge.
The foodstuffs trader paid a dividend of $428m during the first six months of the year, Louis Dreyfus Company said Monday. That is the biggest dividend since 2014, when the company generated more than half a billion dollars in profit.
The payout came as the US 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 will not turn around until 2020, 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 in 2018 to buy a stake valued at about $900m. The chair now controls about 96% of the holding company that owns Louis Dreyfus. She is also exploring selling minority stakes in the business to generate cash.
The dividend payment cut the equity value of Louis Dreyfus, one of the world’s top agricultural commodities traders, to $4.6bn from $4.9bn at the end of 2018. 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 $71m from a restated $128m in 2018, Louis Dreyfus said. The company blamed global trade tensions, erratic weather, the spread of swine fever and oversupply that made it “difficult to analyse and act upon market fundamentals”, CEO Ian McIntosh said in a statement.
McIntosh, a three-decade company veteran, said the tough markets will persist for the rest of the year.
Louis Dreyfus expects “a recovery in profitability in 2020 as we continue to implement our business plan”, he said.
McIntosh and Louis Dreyfus have been seeking equity partners to help it expand into food products closer to the consumer in fast-growing markets such as Asia. It recently invested in China’s Luckin Coffee as well as a Malaysian poultry producer.