Sao Paulo | Reuters — Agricultural commodities giant Louis Dreyfus Co. (LDC) has launched a cost-cutting and reorganization drive in the face of difficulties confronting global trading houses, according to an internal memo seen by Reuters on Wednesday.
LDC confirmed the memo’s authenticity in a statement, saying the company aimed to optimize its cost base in view of a challenging external environment.
Global trade tensions and a deadly swine fever in Asia have weakened demand for soybeans and other grains, hurting results at trading firms such as LDC this year.
The memo, which LDC said was sent to employees on Wednesday, alludes to an announcement made by LDC’s chairperson Margarita Louis-Dreyfus last week regarding the need to rise to the sector’s challenges.
Five executives who signed the memo, including the group’s chief operating officer and chief financial officer, will make up an oversight group conducting a “detailed review” that has already started with senior managers, they said.
“The aim is to become a stronger organization, with greater empowerment and accountability, structural simplification, the right levels of service and costs,” the executives wrote, adding: “Our strategy does not change.”
LDC “aims to increase revenue today and for the future,” according to the memo, which detailed “temporary measures … on travel and entertainment, hiring and salary restrictions.”
In the statement, LDC said any decisions on further actions would be the result of in-depth reviews and part of the company’s internal processes.
The proposed reorganization follows a Nov. 18 management overhaul on the heels of poor financial results.
In Brazil, LDC has struggled for years to get sugar and ethanol unit Biosev SA back on its feet.
In Canada, Dreyfus in September announced it would sell its network of 10 Prairie grain elevators to another privately-held grain firm, Parrish and Heimbecker, but will keep its canola crush plant and a St. Lawrence Seaway grain terminal.
— Reporting for Reuters by Ana Mano in Sao Paulo.Tagged cost cutting, Louis Dreyfus, memo, Parrish and Heimbecker, reorganization, review