Cargill's earnings double in second-quarter

by World Grain Staff
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MINNEAPOLIS, MINNESOTA, U.S. — Cargill reported on Jan. 12 net earnings of $1.49 billion in the fiscal 2011 second quarter ended Nov. 30, compared with $489 million in the same period a year ago. Excluding earnings from its majority investment in The Mosaic Company, Cargill earned $832 million, nearly double last year's $420 million.

In the first six months, Cargill earned $2.37 billion, up from $1.01 billion a year ago. Excluding Mosaic, Cargill's first-half earnings were $1.53 billion, a 74% increase from $878 million a year ago.

Consolidated revenues in the second quarter rose 16% to $31.1 billion, bringing the total through the first half to $58.9 billion.

"Cargill generated strong results across the breadth of our businesses," said Greg Page, Cargill chairman and chief executive officer. "The diversity and balance built into the mix provides the company with a great deal of resilience. By tapping the connectivity among our businesses, we also put more knowledge and insight to work on behalf of customers. Increasingly, they look to Cargill for innovation that supports their growth objectives."

Four of Cargill's five business segments posted increased earnings in the second quarter. Results were led by the origination and processing segment, which developed an early and accurate read on the first quarter's weather events and subsequent shifts in trade flows and supply-and-demand dynamics. This enabled the segment to serve import-dependent customers with grain rerouted from alternate origins while handling substantial volatility across agricultural commodity markets.

Second-quarter earnings also rose in agricultural services, aided by the bigger grain handling volumes made possible by the large North American harvest.

Results in food ingredients were mixed, with some units benefited by better volumes and gains from risk management activities and others pressured by higher raw material costs. On a combined basis, segment earnings increased moderately from the second quarter a year ago.

Industrial results were lifted by the increase in earnings from Cargill's majority investment in The Mosaic Company. Earnings decreased in the risk management and financial segment, reflecting sluggish demand in range-bound energy markets.

During the second quarter, Cargill agreed to acquire Unilever's shelf-stable condiments business in Brazil. The purchase includes leading brands in tomato sauce and paste, and a processing facility in the state of Goiás. The acquisition, which is expected to be completed in the first quarter of calendar 2011, would add to Cargill's stable of well-known brands of cooking oils, mayonnaise, olive oils, olives and pasta sold today in Brazilian supermarkets.

In December, the company announced agreements related to two additional acquisitions:

Cargill agreed to acquire a majority share position in PT Sorini Agro Asia Corporindo Tbk. Based in Indonesia, the company produces a wide range of starch and starch-based products used in food, beverage, cosmetic, personal care and pharmaceutical applications. The acquisition, which is expected to be completed in the first quarter of calendar 2011, would be an anchor for the future growth of Cargill’s food ingredients business in Asia, particularly in Indonesia and Southeast Asia.

Cargill also reached an agreement with Calgary-based Agrium to acquire its AWB commodity management business. Cargill said the business fits well with its existing operations in Australia. It should help us meet growing food demand in Asia Pacific and around the world and allow us more opportunity to help Australian producers manage their grain marketing price risk and expand their access to global markets. Subject to various approvals, Cargill aims to complete the transaction in the first half of calendar 2011.
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