(News Bulletin 247) – The French poultry giant has raised its profitability target, after a quality first half. LDC, which owns the Loué or Marie brands, also declared benefiting from “good visibility” for the rest of the financial year.

Investors are scrutinizing LDC’s latest publication. The European leader in the poultry market has raised its objectives for its current financial year, after reporting half-year results above expectations, which fueled the 4% increase in the stock this Thursday on the Paris Stock Exchange.

In the first half of its staggered 2023-2024 financial year, i.e. the period covering the months of March to August, the company which owns the Loué or Marie brands saw its profitability significantly increase over one year. At the end of August, gross operating surplus (Ebitda) was up 21% year-on-year, to 290.1 ​​million euros compared to 240.1 million euros. The corresponding margin thus stands at 9.6% on the basis of a turnover, already published, of 3.022 billion euros. Which represents a clear improvement compared to the margin of 8.8% revealed last year.

A little further down, the current operating profit amounts to 193.4 million euros and in terms of the corresponding margin, the progression is also impressive. It increased by 2 percentage points to stand at 6.4% of turnover compared to 4.4% over the same period of the previous year.

The price increases obtained as well as the industrial and commercial performances have enabled LDC to sustain its profitability. “This remarkable performance was expected but the group is still doing a little better,” notes TP ICAP Midcap in its note devoted to the poultry producer’s half-year results.

Annual objectives raised

The group wishes to warn that the good performances of the semester must be assessed in light of the unprecedented context of the poultry sector. LDC explains that it benefited over the period from a particularly favorable basis of comparison with the return to more normal business conditions. Last year, the group had to face the unprecedented rise in raw materials, inflation in operating costs and an avian flu epidemic.

LDC adds that the performances of the period also benefited from the still “solid” dynamic internationally and from the price increases carried out at the end of the 2022-2023 financial year in its catering division which brings together the brands Marie, Traditions d’Italie, WW.

A little further down in the accounts, the group’s share of net income increased by 63% to millions of euros, at 153.2 million euros compared to 93.9 million euros for a comparable period.

Moving forward, the number one poultry company in Europe indicates that it has good visibility over the second part of its 2023-2024 financial year. LDC has the ambition to reach the milestone of 6 billion euros in turnover over one year “in accordance with its set objective”. Concerning the bottom of the income statement, the group is revising its initial objective upwards with now an expected current operating income greater than 350 million euros compared to the 300 million euros achieved in the previous financial year. An objective which remains “cautious” in the eyes of the design office.

For Florent Thy-tine, the objective announced by LDC assumes a current operating profit of 157 million euros in the second quarter, a level which is 20 million euros lower than the level achieved in the second half of the 2022 financial year. -2023. “Management’s prudence for the second half of the year is logical but we do not rule out pleasant surprises,” adds TP ICAP Midcap.

A strategy to win back consumers

LDC has implemented a strategy to win back consumers, which “should contribute to the success of the end-of-year holidays, a key moment of the year for LDC”.

The company thus “highlighted the return of a promotional volume in large and medium-sized stores of around 30%, price reductions following the drop in raw materials, marketing efforts to increase brand awareness and uncertainty over the Christmas period”, specifies the head of equity research at TP ICAP Midcap.

These elements lead the financial intermediary to revise downwards its estimate of current operating profit to 375 million euros (compared to a previous estimate of 400 million euros. “But we remain clearly above the group’s guidance and consensus expectations which were still significantly below 350 million euros,” he says.

LDC thus confirms all of the objectives set as part of its strategic plan, namely reaching the milestone of 7 billion euros in turnover within 5 years. This ambition must be accompanied by an increase in profitability with a target of nearly 560 million euros in Ebitda over the 2026-2027 financial year.

Achieving these objectives will require major acquisitions. Last year, LDC acquired Matines (and its business) and Ovoteam (with its industrial tools) in eggs. More recently, the French poultry giant entered into exclusive negotiations with a view to acquiring Indykpol, market leader for turkey in Poland, with a view to “enriching the range with fresh products, charcuterie and processed products made from turkey.

The targets favored by LDC’s management are companies with a turnover of 100 to 500 million, the company indicated in May 2022 to our Stock Exchange colleagues.