Cargill earnings down despite food ingredients' strong quarter

by Jeff Gelski
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China corn
Build-up in global corn and soybean stocks affects results negatively.
 
MINNEAPOLIS, MINNESOTA, U.S. — Earnings in its Food Ingredients & Applications segment were up broadly for Cargill in the second quarter ended Nov. 30, but overall net earnings slipped.

Net earnings were $924 million, down 6% from $986 million in the previous year’s second quarter. Adjusted operating earnings of $948 million were down 8% from $1.03 billion. Revenues rose 8% to $29.2 billion. In the first half of the year, net earnings increased 3% to $1.9 billion.

David MacLennan
David MacLennan, chairman and chief executive officer.

“Even as conditions vary across our global markets, we continue to realize greater benefits from operating as an integrated company with a unique combination of talent, assets, insights and solutions,” said David MacLennan, chairman and chief executive officer of Minneapolis-based Cargill, when results were given Jan. 3.

In Food Ingredients & Applications, most geographic regions were led by cocoa and chocolate products; malts for brewers, distillers and food manufacturers; and sweeteners and starches for food and other applications. Salt results decreased from the prior year’s second quarter partly because of lower sales volume for de-icing products after two mild North American winters.

soybeans
 
In Origination & Processing, results were down moderately as another year of large U.S. corn and soybean crops added to the build-up in global stocks.

“Although global demand continues to grow, today’s abundant supplies have weighed on markets, diminishing volatility and trading opportunities,” Cargill said. “Even so, trading performance in North America was ahead of last year as was oilseed processing in Asia.”

In Animal Nutrition & Protein, adjusted operating earnings narrowly exceeded last year’s strong second quarter. Animal nutrition earnings rose across the global business as premix and feed additives led the improvement.

feed
Animal nutrition earnings rose across Cargill's global business.
 
Protein results in North America decreased slightly against a strong comparative quarter. As cattle costs increased, retail demand for beef and U.S. beef exports both remained brisk.

Pre-season marketing by the U.S. turkey business drove whole-bird sales in advance of the Thanksgiving holiday. The segment’s global poultry business trailed the results in the previous year’s second quarter as good performance in parts of Southeast Asia was offset by softer earnings elsewhere.

Results in Industrial & Financial Services were ahead of the previous year’s second quarter. Increased returns from asset management and improved profits in ocean transportation boosted results. Trade and structured finance was up slightly against a strong comparative period.

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