MINNEAPOLIS, MINNESOTA, U.S. — Cargill on Oct. 7 reported that net earnings for the fiscal 2016 first quarter ended Aug. 31 were $512 million, up 20% from $425 million in the same quarter last year. Net revenues were $27.5 billion, down 17% from $33.3 billion for the period last year.
“Cargill posted a productive start to the new fiscal year, led by solid performance globally in grain and oilseeds processing and animal nutrition,” said David MacLennan, Cargill’s chairman and chief executive officer. “Our team ably navigated the quarter’s weather-driven agricultural commodity markets, as well as the effects of more volatile emerging markets, currency fluctuations and other macroeconomic uncertainty. Across the company, we made good headway on operational improvements aimed at strengthening business performance. The integration of ADM’s chocolate business is proceeding on target, and we are excited to welcome EWOS, a global leader in salmon nutrition, to our company.”
The Origination & Processing segment made the largest contribution to Cargill’s first quarter, with adjusted operating earnings up slightly from a year ago. Within the platform, combined results for the grain and oilseed supply chain businesses rose considerably, based on effective positioning in agricultural commodity markets distinguished by persistent downward trends and occasional sharp price reversals, the company said. Soybean crush results strengthened globally, boosted by improved capacity utilization in South America and an unusually long processing season in North America. Performance in North American farm services lagged last year’s strong first quarter, reflecting a return to more normalized levels in Canada after two very large crop years.
Adjusted operating earnings in Animal Nutrition & Protein decreased in the first quarter, with increased results in animal nutrition offset by lower earnings in animal protein. Global animal nutrition earnings exceeded last year’s solid start due to higher sales volumes of customer-aligned products and services, and good cost management. Areas of particular strength included the U.S. and Vietnam, and aquaculture nutrition in Latin America. Within the segment’s animal protein businesses, poultry results in Central America, Europe and the U.S. rose on strong operational and marketing performance. Unseasonable pressures in cattle and beef markets led to a weaker quarter in North American beef. Cattle costs remained high, and continued high beef prices caused consumers to seek less expensive alternatives such as pork and poultry.
Results in Food Ingredients & Applications were down slightly from last year’s first quarter, though efforts to reduce costs and improve performance showed good progress across the segment. Profitability in starches and sweeteners was pressured in Europe by historically low sugar prices, and in North America by the impact of low crude oil prices on markets for corn-based ethanol..
Industrial & Financial Services’ adjusted operating earnings declined as hedge fund closures at a Cargill-owned asset management subsidiary overshadowed a good start in the industrial units. The energy businesses posted a solid first-quarter profit due to effective trading strategies in more volatile, downward trending markets. Metals and ocean transportation also posted better results in challenging markets.