Louis Dreyfus Company ditches dairy
The move is in line with the company’s strategy over the past three years to exit non-core areas and refocus on its core businesses, including investments in origination markets and expansion along the value chain in its key product lines.
Federico Cerisoli, chief financial officer, said, “LDC’s Dairy Platform was identified as non-core in 2017 due to its lack of critical mass within the company’s portfolio.
“The business accounted for roughly 1% of our revenues in 2018 and demanded substantial working capital resources. LDC has been evaluating the best way to exit the business, either through an orderly wind down or a sale to potential buyers - these efforts are continuing and an exit will be implemented by the middle of this year.”
Cerisoli said the decision will have practically no impact on global sales, which continue to grow overall, and is expected to have a slight positive effect on working capital from 2019 onwards.
Jean-Marc Foucher, head of LDC’s dairy platform, said, “We worked hard to separate the business from the rest of LDC’s portfolio and will be working equally hard with our customers and suppliers over the coming months to ensure a smooth exit by mid-2019.
“Following the exit, LDC’s only exposure to dairy will be a non-controlling stake in a dairy processing plant in Australia, operated by a joint venture partner.”
Growth in core areas
LDC has been in the dairy business since 2009, originating from suppliers in North America, Europe, Oceania and South America. It delivers mainly milk powders, lactose and whey products to demand markets, including Asia, Mexico, North America, the Middle East and Africa.
As part of its strategy to exit non-core areas, LDC has divested both its fertilizers & inputs and its metals platforms in the past 18 months. The company said this leaves it well positioned to grow in core business areas.
LDC’s growth plans for the future include continued investments in origination and destination markets, further vertical and horizontal development downstream toward the end consumer, and expansion in food innovation, with the aim of sustainably meeting the needs of a growing population.
