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Louis Dreyfus sales slump on lower ag prices

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Sales and pre-tax profits at Louis Dreyfus Company, the agricultural trading giant, fell sharply in 2016, thanks to falling prices for grains and oilseeds, although post-tax profits rose.

And the privately-owned company warned that conditions are unlikely to improve in 2017.

Net sales fell by 10.6% year-on-year, to $49.8bn, due to lower prices, in the year to December 21 2016, Dreyfus said.

The company reported sales by volume "remaining stable compared to 2015".

The company reported consolidated pre-tax profits down 12.3% year-on-year, at $365m.

But consolidated net income rose by 45%, to $305m.

'Challenging market conditions'

"2016 was marked by strong supply and abundant inventories for some commodities, which led to challenging market conditions, worsened by volatility working against some market fundamentals," Louis Dreyfus said.

The company's trading arm, which covers grains, oilseeds and sugar, "posted decent logistics and processing margins".

But net sales were impacted by "marginally reduced activity levels<" as well as lower average selling prices for oilseeds and grains.

And Dreyfus' merchandising segment benefited from a strong contribution from its metals unit, for which the company

But net sales fell for the Merchandizing segment due to falling prices.

Difficulties to remain in place

And these pressures will remain in place this year, Dreyfus chief executive Gonzalo Ramirez Martiarena said.

Mr Ramirez said "oversupply, market shocks, geopolitical dynamics and adverse weather conditions were some of the difficulties that the agribusiness industry had to face during 2016".

"Market fundamentals are unlikely to be very different in 2017," said Mr Ramirez.

By William Clarke

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