MINNEAPOLIS, MINNESOTA, U.S. — Cargill reported on Jan. 8 net earnings of $784 million in the fiscal 2015 second quarter ended Nov. 30, up 41% from $556 million in the year-ago period.
First-half earnings were $1.21 billion, a 7% increase from $1.13 billion a year ago. Second-quarter revenues decreased 8% to $30.3 billion, which brought first-half revenues to $63.6 billion.
“With first-rate performance in our agricultural, animal nutrition and meat businesses, Cargill posted strong results, outpacing recent quarters by a good margin,” said David MacLennan, Cargill’s president and chief executive officer. “Just as last quarter’s focus was on getting ready for North America’s big harvest, the current quarter was all about execution. Our team did an excellent job serving farmer customers and fully utilizing our supply chains to meet domestic and export demand.”
MacLennan also said the company drew on the diversity of its animal nutrition and protein businesses around the world to help animal and livestock producers make the most of favorable demand fundamentals and satisfy consumers’ growing interest in adding more protein to their diets.
“We’re pleased to kick off Cargill’s 150th year in business with these positive results,” he said. “We look forward to many more years of serving the changing needs of our customers and stakeholders.”
The Origination & Processing segment was the largest contributor to Cargill’s second-quarter results, with earnings up considerably from the year-earlier period. Record corn and soybean harvests in the U.S., combined with strong domestic and export demand, boosted soybean origination, crush volumes, and bean and meal exports. Grain origination and exports via the U.S. Gulf of Mexico also were robust.
Canadian performance stayed strong, bolstered by the country’s 2014 harvest, the carryover from 2013’s record crops and a steady export pull. Recent years’ capital investments in grain-handling capacity and efficiency, and an expanded portfolio of agronomic, grain marketing and risk management solutions for farmer customers also enhanced Cargill’s North American-based earnings. Results in South America were curbed by the challenging macroeconomic environment, including the effects of delayed farmer selling on supply chains in Argentina and Brazil.
Animal Nutrition & Protein earnings rose significantly from the year-ago period. Within the segment, animal nutrition results increased moderately, with lower raw material costs and applied expertise in micronutrients and other specialty ingredients contributing to the uptick. A broad-based performance put the segment’s animal protein businesses well ahead of last year. Results were led by Australian beef processing, and U.S. cattle feeding and pork processing. The U.S. turkey business enjoyed one of its best holiday seasons. Actions taken to refresh its retail brands, including branded offerings of fresh bone-in turkey breasts and fresh whole turkeys raised without growth-promoting antibiotics, were rewarded by strong retail demand.
Earnings in Food Ingredients & Applications decreased from the year-ago period. Excluding a charge related to the announced closure of the Memphis, Tennessee, U.S., corn mill, segment earnings were up moderately for the quarter. Among the areas with improved operating performance were texturizing ingredients, staple foods in Brazil, and North American ethanol production, flour milling, and salt and deicing products. Though a significant contributor, earnings softened in global cocoa and chocolate. Results declined in refined edible oils in some regions.
Industrial & Financial Services results were mixed, but down in total from the year-ago period. Energy earnings rose on a combined basis, reinforced by effective risk management in volatile global oil markets. Ocean transportation and metals trading results strengthened in the second quarter but remained below the prior-year period. Asset management results trailed last year’s second quarter.
Cargill’s new cocoa processing plant in the East Java region of Indonesia began commercial operations in the second quarter. The $100 million facility helps meet fast-rising demand for cocoa and chocolate products in Asian markets. It also is creating more than 300 jobs in the nearby community of Gresik. Cocoa bean inputs for the plant are sourced primarily from the neighboring island of Sulawesi, where cocoa farming provides a livelihood for hundreds of thousands of families. Using Cargill’s field school model that has been so successful at helping cocoa farmers in Africa raise their yields and incomes while earning sustainability certifications, the company plans to train about 6,000 smallholders in Sulawesi.
Cargill completed two related projects in Asia designed to increase production of specialty oils for infant formula and foodservice customers. Located in Nantong, China, and in Port Klang and Westport, Malaysia, the new or expanded facilities combine added refining capacity with the flexibility to produce oils from different raw materials. In addition to supplying key customers, the plants also provide palm and coconut base stocks to other Cargill refineries around the world. An additional project in Brazil enhanced the capacity to produce specialty oils and shortenings at the company’s plants in Mairinque and Itumbiara; both serve demand from local food manufacturing and foodservice companies. The three projects represent a capital investment of about $100 million.
Cargill’s 150th anniversary celebration kicks off in January 2015. An anniversary website, www.cargill.com/150, debuts Jan. 12. It highlights the people, choices and innovations that built Cargill into the company it is today. The website also shares how Cargill helps customers and stakeholders thrive, and carries out its purpose to be the global leader in nourishing people.