Annual Report 2020

Message From Our CEO

Our Transformation Sustained

In a year marked by an unprecedented global crisis, LDC’s reach, expertise and adaptability proved more important than ever, enabling us to keep essential supply chains active in a challenging context, while delivering strong results and pursuing our transformational plans.

The Covid-19 pandemic that swept the world in 2020 caused a crisis of global proportions – a health and economic crisis, but also a food crisis, posing logistics, labor and commercial challenges that disrupted food production and delivery chains globally. These events underlined the key role of global merchants and processors of agricultural products, keeping customers and consumers supplied with essential food, feed and ingredients.

Fulfilling LDC’s mission to bring the right products to the right place, at the right time, we worked closely with partners and local governments throughout the year to keep our operations running, while reinforcing already stringent safety and hygiene measures.

Our efforts in this uncertain and challenging environment were fruitful. We protected our people, our operations proceeded with minimal interruptions and we delivered solid financial results, all while pursuing our transformational journey.

Year in Perspective

The global impacts of Covid-19 combined with drought in the southern hemisphere and currency fluctuations in Latin America combined to produce a highly volatile environment for agri-commodities in 2020.

In this context, our teams relied on market and risk management expertise, and the agility inherent to LDC’s entrepreneurial DNA, to navigate a successful course in an uncertain context and capture good origination and sales margins, supported by our global presence and extensive asset network.

Demand remained resilient for most products commercialized by LDC, and easing US-China trade tensions and hog herd recovery in China drove improved operational performance in Grains & Oilseeds in particular. Cotton and bioenergy caught up in the second half of the year, after Covid-19 impacted demand in the textile and energy sectors in the first semester, while the Juice Platform’s performance was impacted by delayed vessel deliveries, also due to the pandemic.

Both business segments contributed to a 63.1% year-on-year increase in Segment Operating Results at US$1,559 million for 2020, delivering EBITDA of US$1,324 million and income before tax of US$620 million, both from continuing operations, respectively up 58.4% and 110.2% year-on-year.

At the same time, we advanced with our four-pillar strategy to become an increasingly integrated food, feed, fibers and ingredients company, pursuing moves downstream, diversifying revenue streams, and embracing innovation and technology to drive new business, efficiency and sustainability across our activities – individually and with partners.

Strategy in Action

Recognizing the growing need for strong data analytics to support fundamental trading expertise, we continued to invest in both data science capabilities and training programs, bringing our Trading Academy online in a Covid-19 environment.

We also sustained investment in our operational capabilities. We completed and continued construction of new facilities, and enhanced existing assets with additional storage, processing and logistic capacity and infrastructure, as well as operational and safety upgrades.

Pursuing our plans to move further downstream in our value chains, we signed an agreement to enhance our refined oil production capacity in China, launched new, high-end, Mastergold-branded cooking oils in the country, and formed partnerships with leading e-commerce companies to distribute these to Chinese consumers.

In North America, we invested in our processing facility in Claypool, Indiana, US, adding new packaged glycerin options and initiating investments to expand our product offer with processed lecithin and packaged canola oil.

We also repositioned our Kowalski brand as a key partner for food, feed and pet food manufacturers in Brazil, enlarging our client base and delivering improved results year-on-year, invested in our specialty coffee business Zephyr, set up a new instant coffee trading unit and formed a joint venture distribution operation with Kunshan Yiguo to grow our coffee business in China.

Continuing to work with like-minded regional partners to address new trends and meet evolving needs, we formed a research partnership with Asian partners to develop optimal aquatic feed formulations and signed an agreement with Chinese partners to build a food industrial park in Nansha, Guangzhou, that will encompass feed protein processing, high-tech ecological aquaculture, grains trading, food innovation and plant-based clean energy production.

We also leveraged innovation to drive increased operational efficiency and sustainability, integrating state-of-the-art eco-efficient vessels for the transportation of citrus juices and by-products, and embracing cutting edge technologies for industrial safety and efficiency in China.

Meanwhile, our LDC Innovations corporate venture capital program, launched in 2020, began investing in early stage companies exploring innovations and technologies with the potential to transform food and agricultural production and shape a sustainable future of food.

Sustainable Strides

Although Covid-19 delayed some projects due to safety measures and restrictions, creating fair and sustainable value remains at the heart of our purpose as a company, and we continued work to drive sustainable practices across our supply chains and activities.

Among many key initiatives, LDC became a founding signatory of the Sea Cargo Charter in 2020, a multi-stakeholder initiative to align chartering activities in the pursuit of shipping industry decarbonization. With growing climate challenges making global, industry-wide action increasingly urgent, we believe that collaborative efforts like this one are key to scale up efforts and drive real and sustainable changes.

We also advanced supply chain traceability, particularly for palm in Southeast Asia and soy in Brazil, Argentina and Paraguay, and continued to train and support thousands of farmers around the world in adopting more sustainable agricultural practices.

Foundations for the Future

Our investments and progress in 2020 reinforce LDC’s leading position as a key industry participant for the future. If that future is to be safe and sustainable, as LDC’s vision intends, it must be built on foundations of financial strength and long-term perspective.

In this sense, the strategic partnership signed in November with ADQ was a crucial step, bringing long-term investors into our shareholder group with a shared vision for the future, reinforcing our investment potential and ultimately accelerating the pursuit of our transformative growth plans.

Looking back on the extremely challenging year that was 2020, I want to thank LDC employees everywhere for their flexibility and resilience in a difficult and uncertain environment – their dedication, commitment and relentless efforts kept our operations running smoothly and reliably, our customers supplied and our performance strong. I would also like to thank our business partners and stakeholders around the world for their continued support and collaboration, as we continue to work with them toward a prosperous and sustainable future for all.

Michael Gelchie
Chief Executive Officer