MINNEAPOLIS, MINNESOTA, U.S. — Net earnings at Cargill in the second quarter ended Nov. 30, totaled $1.39 billion, up from $784 million in the same period a year ago. Meanwhile, adjusted operating earnings in the second quarter were $574 million, down 13% from $657 million in the same period a year ago.
For the first half, net earnings on a U.S. GAAP basis were $1.9 billion, up from $1.21 billion, while adjusted operating earnings were $1.19 billion, down 7% from the comparable period.
According to Cargill, the major differences between adjusted and net earnings in the second quarter included gains on the sales of the U.S. pork business and Cargill’s interest in the North Star BlueScope Steel joint venture, as well as a charge related to a change in accounting treatment for Venezuela.
Second-quarter revenues fell 10% to $27.3 billion, reflecting lower commodity prices and weaker demand in some markets. Revenues for the first half totaled $54.8 billion.
“Cargill posted a solid second quarter against a strong comparative period in the prior fiscal year,” said David MacLennan, chairman and chief executive officer (CEO). “Within the segments, we saw performance gains in key global businesses, including animal nutrition, grain and oilseed processing, most of our poultry operations, and several food ingredients categories.”
MacLennan said he saw significant progress in reshaping Cargill’s portfolio during the quarter.
“We already see a stronger chocolate business emerging from the integration of our first-quarter purchase of ADM’s chocolate operations,” he said. “And we are delighted to welcome global salmon feed producer EWOS to Cargill, as it brings new markets and deep expertise in nutrition for cold-water species.”
In mid-November, MacLennan unveiled a new leadership team for Cargill, responsible for the company’s strategic direction and the performance of its business segments.
Looking at specific segment performance during the second quarter, Cargill said adjusted operating earnings for the Origination and Processing segment were down “moderately” from last year’s level.
“Within the segment, the grain and oilseed supply chain businesses were well ahead of last year on a combined basis, boosted by improved soybean crush results in most geographies and by good risk management amid declining prices in well-supplied markets for agricultural commodities,” Cargill said. “Earnings trailed the year-ago period due to normalized grain-handling levels in Canada after two very large crop years and weaker performance in cotton, soft seed crush and sugar.”
In Food Ingredients and Applications, adjusted operating earnings fell below last year, though efforts to strengthen operational and commercial execution “continued to make good progress,” Cargill said.
“Profitability in global starches and sweeteners pulled ahead of last year, as did cocoa and chocolate, and edible oils,” the company said. “Some of the staple foods units were hurt by weakening currencies and recessionary conditions in the emerging economies they serve. With an unseasonably warm start to winter in North America, results in road salt and deicing products trailed last year.”
Adjusted operating earnings in Animal Nutrition and Protein decreased slightly in the second quarter, with higher results in animal nutrition offset by a decline in animal protein, largely in red meat, the company noted.
“Effective market segmentation and favorable commodity costs bolstered earnings in global animal nutrition,” Cargill said, noting that areas of particular strength included the United States and Vietnam overall, and aquaculture nutrition in Latin America.
Within the Animal Nutrition and Protein segment’s animal protein businesses, poultry results in Central America, Europe, Thailand and the United States rose on strong operational and commercial performance, Cargill said.
Industrial and Financial Services' adjusted operating earnings “declined significantly” from last year’s level, reflecting in part the liquidation of certain hedge funds at an asset management subsidiary, Cargill said. Additionally, the company indicated that energy results were reduced by “muted volatility in petroleum markets” and by “mild temperatures in a period when cold weather usually drives demand for natural gas and power.”