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By Gus Trompiz
PARIS Oct 12 Louis Dreyfus Company
does not need to turn to the stock market in the near term as it
moves ahead with plans to find partners to bolster certain
activities, starting with its fertiliser business, its CEO said
Louis Dreyfus, like its commodity trading peers, has been
grappling with ample supplies, lower prices and slower economic
growth, and the group confirmed earlier this year that it would
consider partnerships for some activities.
It is now in the process of selling its fertiliser business
in Africa and will seek fertiliser partners in other regions,
Chief Executive Officer Gonzalo Ramirez Martiarena told the
Reuters Commodities Summit.
"Based on what we are analysing for the short term for the
company, we wouldn't need to be listed because we are thinking
more of bringing in partners and doing joint ventures rather
than buying another company," he said.
The group has launched a sale process for its African
fertiliser business and expects to conclude a deal within six
months, he said, adding that the sale has attracted potential
buyers but not yet led to exclusive talks.
The company hopes to strike a good deal for what is a
profitable business but which does not fit its overall
fertiliser strategy of having multiple ties with farmers, he
To bolster its fertiliser activities in South America and
Australia, where Dreyfus buys a lot of grain from farmers but
where its fertiliser profits have lagged, it aims to find next
year "one or two miners" as joint venture partners to help bear
price risk, the CEO said.
The group's fertiliser division also encompasses
distribution of other crop inputs such as seeds and pesticides.
It does not publish figures on individual businesses but says it
is one of the largest distributors of fertilisers and inputs in
The group is also reviewing its metals, orange juice and
dairy businesses, with metals expected to be next up for joint
venture discussions starting in the second half of next year, he
Louis Dreyfus was going through an "introspective review"
like other major agricultural traders and did not foresee more
large-scale consolidation further to big deals by China's
state-owned COFCO International Ltd and diversified commodity
giant Glencore in recent years, he added.
Bond markets have also become a much more important source
of finance for commodity traders in recent years and Louis
Dreyfus, which made its first ever bond issues in 2012 and 2013,
will retain that as an option next year depending on conditions,
The company, which is controlled by Russian-born Margarita
Louis-Dreyfus through a family trust set up by her late husband
Robert, also wants to improve its return on equity ratio for its
shareholder, with a target to reach 10 percent as soon as
possible compared with 5.5 percent in the first half of this
year, he said.
Ramirez was promoted to the CEO post a year ago, after
previously being head of Asia, one of a series of leadership
changes made by Margarita Louis-Dreyfus.
Dreyfus, part of the so-called ABCD quartet of trading
giants alongside Archer Daniels Midland, Bunge
and Cargill, had reported a slight rise in net profit
for the first half, but saw sales and underlying profit decline
Weak prices for grain and oilseeds were likely to continue
in the next 6-12 months as hefty supplies offset brisk demand,
while soft commodities, particularly sugar, would remain
stronger because of tighter supply fundamentals, Ramirez said.
But the longer-term price outlook for all agricultural
commodities was favourable because of a structural need to
encourage farm production to keep up with rising food
consumption, he said.
Increasing food demand in China meant Louis Dreyfus did not
see overseas expansion by COFCO in grain trading as a threat,
with the scale of demand there creating opportunities for
foreign traders to continue supplying the country, he added.
(Reporting by Gus Trompiz; Editing by Veronica Brown and David
Evans; Follow Reuters Summits on Twitter @Reuters_Summits)