* Operating profit, sales fall for 2nd year
* Net income rises, supported by tax effects
* High supplies curb agricultural trader's margins
* Dreyfus sees restructuring helping results in 2017 (Adds detail, bullet points)
By Gus Trompiz
PARIS, April 3 (Reuters) - Louis Dreyfus' core earnings fell for a second year in 2016 amid a persistent high supply of crops, but the agricultural commodity trader said a revamp of operations should help results this year.
Large inventories, low prices and limited volatility have curbed margins in the past two years for companies that buy, transport and process crops such as wheat, soybeans and rice.
The privately owned company, controlled by Margarita Louis-Dreyfus, said on Monday that 2016 core operating profit for its business segments fell to $1.2 billion from $1.4 billion in 2015 and $1.8 billion in 2014.
Net sales fell to $49.8 billion from $55.7 billion in 2015, while shipped volumes were stable at 81 million tonnes.
Net income, however, rose to $305 million from $211 million, supported by favourable tax effects.
"Market fundamentals, including oversupply and slow demand growth, are expected to remain similar to 2016," Chief Executive Officer Gonzalo Ramirez Martiarena said in an annual report.
"We expect our new strategy to really start showing in our financial performance in 2017."
Dreyfus is part of the so-called 'ABCD' quartet of trading giants alongside Archer Daniels Midland, Bunge and Cargill that dominate global flows of agricultural commodities.
Like its peers, it has been reorganising activities and last year said it would seek partners to invest in its fertiliser, metals, juice and dairy businesses.
It did not give an update on its partnership plans in its annual results.
Detailing operational performance, Louis Dreyfus said its fertiliser business continued to face losses linked to weak demand from farmers faced with low crop prices.
Its orange juice unit, which has been hit by consumer concern about sugar content, saw improved results, while the metals business saw a significant rise in profit, it said.
Dreyfus has also reined in capital investments, reducing these last year to $354 million from $420 million in 2015.
Rivals such as ADM and Cargill have seen earnings from trading activities decline too, although better performances at other units have helped boost their group profit.
In addition to the potential sale of stakes in non-core activities, Russian-born Margarita Louis-Dreyfus has previously raised the possibility of bringing in an outside investor at group level.
The exercising of a put option by minority family shareholders to sell most of their 20 percent stake in the group's holding firm has also fuelled speculation she will seek a new shareholder. (Reporting by Gus Trompiz; Editing by Sudip Kar-Gupta and David Evans)