On top of sharply rising production costs experienced worldwide, France’s poultry sector is battling to control devastating losses from highly pathogenic avian influenza (HPAI) for a third successive year.
Despite these considerable challenges, the country’s largest poultry company, LDC Group is reporting double-digit improvements in both turnover and profitability for the first half of the 2022-2023 financial year.
According to the results released recently, group turnover was 14.2% higher than in the same period of the previous year at almost EUR2.736 billion (US$2.85 billion). At EUR240.1 million, profitability (Earnings Before Interest, Taxes, Depreciation, and Amortization, EBITDA) was 21.1% higher year-on-year. Meanwhile, the volume of product sold was down 3.3% at 535,100 metric tons (mt).
The group operates its business in three divisions: Poultry, International and Catered Food.
LDC’s three contrasting divisions
For its Poultry division in France, LDC Group is reporting a year-on-year reduction of 5.5% in sales volume at 362,600mt for the latest six-month period. This was partly explained by reduced output as a result of HPAI. More than 7.5 million birds were transferred between sites in the Group, while LDC experienced reductions in volume of 10% in September, and 7% in October.
Despite these difficulties, turnover for this business was 11.5% higher than in the same period last year at almost EUR2.027 billion.
In the first half of the current financial year, LDC reports a 6.2% improvement in turnover for its Catered Food division to just under EUR372 million, while sales volume was 2.8% lower at 78,300mt.
For LDC’s International division, year-on-year growth for the half-year is reported for both sales volume and revenue. While the tonnage sold increase by 5.9% to 94,200mt, turnover was up by 47.2% at just under EUR337 million.
Of the total turnover within the International division, 67% was contributed by the LDC operation in Poland, 22% by Hungary, 6% by Belgium, and 4.5% by the United Kingdom (U.K.). In terms of product mix, chicken meat contributes 43%; ducks and geese, 19%; further processed products, 19%; free-range, 10%; and other poultry, 8%.
LDC set to raise poultry prices
Over the past 18 months, LDC has raised prices to its supermarket customers by 35%. This has largely covered the company’s increased costs, particularly of feed, reported European Supermarket Magazine.
According to LDC chief executive Philippe Gelin, these higher prices helped to boost overall group sales. This was despite the ongoing HPAI crisis affecting the French poultry sector particularly badly, he said.
To cover future expected rises in energy costs, Gelin said LDC would have to increase its product prices by a further 10% next year.
Looking ahead, LDC Group aims to pass EUR7 billion in sales within five years, reported Les Echos.
Ambition to become egg market leader
Among the top priorities set to receive more attention from the LDC Group in the coming months is a strategy to grow its egg businesses under the brands Loué and Matines. LDC reports its own brand Loué achieved sales of EUR125 million in 2021, while Matine’s turnover was EUR43 million.
Becoming the leading producer in France of free-range and organic eggs is among LDC’s ambitions for this business. It is aiming for a market share of 20-40%.
More on LDC Group
In July of this year, LDC Group acquired the French egg production business, Matines from agro-industrial company Avril Group. Matines is among the largest egg businesses in France.
A year ago, LDC finalized its acquisition of Capestone Organic Poultry of the U.K.
In its last annual report for the 2021-2022 financial year, LDC Group reported its sales had surpassed EUR5 billion, generating operating income of more than EUR200 million. These developments were the result of improvements in volume of sales for all three business divisions, as well as increased sales revenues and margins.
With annual slaughterings of more than 578 million birds, LDC Group is Europe’s largest poultry company, according to WATTPoultry.com’s Top Poultry Companies survey.
