“During the past two years, Cargill has invested $8.1 billion to better serve our customers all around the world,” said Greg Page, Cargill chairman and chief executive officer. “By investing steadily, we’ve been able to significantly boost the breadth and depth of the products and services we offer our customers. And that has strengthened the balance, diversification and resilience we strive for in our business.”
Three additional factors contributed to Cargill’s performance. Results were balanced, with improved earnings across all five business segments. There were no significant losses in any one business unit, the latter a factor that affected the year-ago period. The company benefited from the considerable time and energy invested during the past 12 months to lower costs, simplify and streamline processes, and ensure capital expenditures were being directed to where they mattered most to customers.
The impact of the U.S. drought and weather events in other crop-growing areas such as the Black Sea region is still unfolding. A key variable is how food and feed demand worldwide will adjust in the coming months if prices remain high.
“Now more than ever Cargill is using our knowledge and market insight to help customers manage in this time of tighter supplies, higher prices and more volatile markets,” said Page. “We are reaching out to customers and tapping the full resources of Cargill to create solutions that address their needs.”
In addition to providing hedging solutions to agricultural producers, feed and food makers and energy users, Cargill works with customers in a variety of ways. The company finds alternative sources of supply and provides supply assurance. It helps customers reduce or stabilize their input costs and make them more predictable. Using its logistics expertise, Cargill assists customers to obtain better freight rates, routing or timing, or avoid costly delays. It offers storage solutions that help customers preserve product quality, minimize shrinkage or reduce working capital. The company also serves customers’ informational needs, whether through advisory agreements or more informally through crop tours, seminars and site visits.
The impact of the drought on Cargill’s business has been mixed and will continue to be so in the months ahead. The weather has altered the normal distribution of raw materials around the world, and that is pushing more international buyers to non-U.S. origins. As a result, Cargill expects more atypical trade flows – a condition that calls upon its capabilities in market analytics, risk management and logistics. Cargill’s North American grain handling volumes for exports are anticipated to be lower than pre-drought expectations, and it may be a challenging year for the company’s animal protein businesses globally.