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LDC Expects Better Times in 2009

by 5m Editor
13 October 2008, at 7:58am

FRANCE - LDC, one of the country's biggest poultry processors expects sales to improve in 2009 as poultry becomes more competitive against pork.

LDC produces and processes poultry products, including both flagship brands Loue and Le Gaulois, as well as supermarket labels, which represent 25 to 30 percent of its sales in France, reports The Guardian in the UK.

"We think that in 2009 the market could turn back in favour of poultry," LDC's finance director, Andre Delion, told Reuters in an interview.

Poultry has this year lost ground to its main rival pork, but sooner or later pig breeders would have to pass on more of their costs and poultry would regain competitiveness, he argued.

Pork and poultry are direct competitors in the meat sector because they are cheaper than other products like beef or veal. "At the moment the consumer is tending to go more towards the cheapest item," Delion said in reference to weakening consumer spending in France.

In addition to its core French poultry division, LDC also manufactures delicatessen products like sandwiches and pizzas, and has international poultry operations in Spain and Poland.

The company is continuing to look at consolidation opportunities both in France and in Spain and expects to strike a joint venture deal in Spain by early 2009, Delion said, without giving additional details.

LDC reported last week that first-half sales rose 8.1 percent to €930 million, or up 7.9 percent on a like-for-like basis. In the year to February 2008, the group's total sales reached €1.8 million, a rise of 16 percent.

The company reported a 4 per cent fall in volume sales in France. During the first half to August, international volumes dropped by 17 percent but Mr Delion stressed that price rises had compensated for the drop in volume.

LDC recently cut its forecast for full-year profits, citing a slowdown in consumption in France and low prices in Spain and Poland. It now expects an operating profit in line with 2006/07's €60 million rather than its previous target of matching last year's €74 million.

In response to easing prices for maize and wheat - key components of poultry feed - Mr Delion said LDC may reduce its prices slightly in 2009 but he stressed that the scope for cuts was limited given that it had already absorbed some of the higher input costs over the past year.

"If we have to adjust our prices we will do so, but we'll proceed very cautiously," he said.

After reaching all-time records last year, grain prices have come off their highs, with wheat losing 35 percent over the last seven months and maize falling a similar percentage in just three months, mostly pressured by hefty supplies.

The company's shares closed on 7 October at €56.89 euros, down about a third since the start of the year, concludes the report in The Guardian.

5m Editor