Cargill reports results
(Posted on 27/09/19)
Cargill has reported results for the fiscal 2020 first quarter ended Aug. 31, 2019. Key measures include:
- Adjusted operating earnings were $908 million, up 3% from $883 million last year.
- Net earnings on a U.S. GAAP basis were $915 million, a 10% decrease from last year’s strong comparative of $1.02 billion.
- First-quarter revenues rose 1% to $29 billion.
“Our year started on a good note as we continued to help our customers navigate an unpredictable business environment,” said Dave MacLennan, Cargill’s chairman and chief executive officer. “Right now, we are focused on modernizing all aspects of our operations so we can effectively and efficiently provide our customers with solutions they value everywhere they do business.”
Adjusted operating earnings rose in two of Cargill’s four business segments: Animal Nutrition & Protein, and Industrial & Financial Services. They decreased in Origination & Processing and Food Ingredients & Applications. Notable results include:
- Global protein led the way, with strong results in North America as the business brought innovative solutions to customers to help them meet strong consumer demand for beef and eggs. Protein in Europe and Asia climbed due to good poultry performance in China, Thailand and the U.K. Similarly, protein in Latin America improved despite a difficult operating environment.
- Despite pressure from African swine fever, results improved in global compound feeds as the business combined an advantageous product mix with effective cost management. Aqua feeds also captured healthy results amid aquaculture’s high season.
- Starches, sweeteners and texturizers dropped primarily due to lower volumes in Europe and North America. Performance in cocoa and chocolate reflected a softening cocoa market in several regions and higher operating costs in chocolate in North America.
- Results declined for the company’s origination and processing businesses in most geographies, as trade- and weather-related disruptions continued to take a toll.
- The global trading business saw good year-on-year improvement, as it was well-positioned across commodities. The Asia-based metals business also used sound market reads and execution to gain over the prior year.
- Trade finance results were held back by fiscal deterioration in Argentina late in the quarter. In risk management, low prices and low volatility in agricultural markets decreased demand for hedging solutions.
During the quarter, Cargill expanded a joint venture and formed new partnerships:
- The company invested an additional $75 million in Puris, the largest manufacturer of pea protein in North America. This will help the firm more than double production by repurposing an existing facility in Minnesota to supply plant-based proteins, starches and fibers to food and beverage customers.
- Cargill formed a commercial partnership with InnovaFeed, a leader in producing protein for feed from insects, to jointly market these feeds as it seeks to support the growth of sustainable aquaculture worldwide. Similarly, an agreement with biotech company White Dog Labs provides Cargill with access to a fermentation-based protein for use in salmon feeds.
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