ROTTERDAM, NETHERLANDS – Louis Dreyfus Company (LDC) on Oct. 7 reported a 20% drop in first-half profits as it and other grain traders deal with global trade tensions and the spread of African swine fever in China and other parts of the world.

The company posted net income from continuing operations of $73 million in the six months to June, a drop from $91 million in the same period of 2018.

“LDC achieved sound results for the first half of 2019, in a particularly challenging environment,” said Ian McIntosh, LDC chief executive officer. “Global trade tensions, erratic weather conditions, the spread of African swine fever in Asia and a general context of oversupply made it difficult to analyze and act upon market fundamentals, underlining our achievement for the period. Our strategy of maintaining a diversified portfolio and broad geographic footprint was once again key to our performance, underpinned by solid risk management expertise.

“At the same time, we maintained our focus on implementing the transformative business strategy that is key for our view of the future, continuing to strengthen our edge in trading, pursuing our moves toward vertical integration and value added products, and investing in food and technological innovation. We see these adverse market conditions persisting during the second half of 2019 and expect a recovery in profitability in 2020 as we continue to implement our business plan.”

Volumes fell 6.5% in part because China bought fewer soybeans because of African swine fever, which has ravaged the country’s pig population.

LDC also has been affected by the higher volatility in agricultural prices caused by the U.S.-China trade war as well as chronic overcapacity, which has crimped margins across the industry.

LDC’s adjusted net debt was $3.2 billion or three times the company’s earnings before, interest, tax depreciation and amortization of the past 12 months. Its equity value fell to $4.63 billion, down from $4.98 billion, and its return on equity was 6.5%. However, the company generated $709 million of cash from operating activities in the first half of the year, against an outflow of $72 million a year ago, as its squeezed debtors and waited longer to pay bills.

In 2018, LDC reorganized its platforms between two segments. The Value Chain segment now includes Grains, Oilseeds and Juice along with Freight and Global Markets. The Merchandizing segment comprises the Sugar, Coffee, Cotton, Rice and Dairy platforms with more consumer-centric business models.

The company’s merchandising segment recorded operating results of $270 million, up 35% from $200 million for the first six months of 2018. All platforms performed well, with significant improvements in Coffee, Cotton and Rice, while Sugar maintained a healthy performance.

The Value Chain segment posted operating results of $225 million, down 29.9% from $321 million the previous year. The Oilseeds Platform’s performance remained resilient, largely thanks to its diversity of products, and despite trade tensions and the spread of African swine fever in Asia. The Grains Platform posted positive results, as a result of successful price risk management in the face of difficult weather conditions, particularly in the U.S. and Australia.

LDC paid a $428 million dividend to its owners in the first half, which it said was “distributed” in relation to 2018 results and the sale of its metal business. LDC is controlled is owned by Louis Dreyfus Holding, which in turn is 96.2% owned by Ms. Louis-Dreyfus, the Russian-born widow of Robert Louis-Dreyfus whose family founded the company in 1851.