Agricultural commodity trader Louis Dreyfus will sell or wind down its dairy business by the middle of this year as part of a strategy to exit non-core areas.
The company is looking to refocus on its key businesses through “investments in origination markets and expansion along the value chain in its key product lines”.
Louis Dreyfus has been in the dairy business since 2009, delivering mainly milk powders, lactose and whey products to markets such as Asia, Mexico, North America, the Middle East and Africa.
As part of its strategy to exit non-core areas, the firm has divested both its fertilizers and inputs and its metals platforms in the past 18 months.
Rotterdam-headquartered Louis Dreyfus said it is pursuing “ambitious growth plans for the future”, including investments in food innovation, with the aim of sustainably meeting the needs of a growing population.
Federico Cerisoli, Louis Dreyfus Company (LDC) 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.
“The exit will have practically no impact on our global sales, which continue to grow overall, and is expected to have a slight positive effect on our 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.”
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