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April 2, 2019

Cargill reports fiscal 2019 third-quarter results


Cargill has reported results for the fiscal 2019 third quarter and first nine months ended Feb. 28, 2019.

Key measures include:

- Adjusted operating earnings were US$604 million, up 8% from the US$559 million earned last year. This brought earnings for the first nine months to US$2.34 billion, a 2% decrease from the prior year;

- Net earnings on a US GAAP basis for the quarter were US$566 million, a 14% increase from US$495 million in the year-ago period. For the nine-month period, net earnings declined 3% to US$2.33 billion;

- Third-quarter revenues decreased 4% to US$26.9 billion, bringing the year-to-date figure to US$83.5 billion.

"Disruptions and uncertainty in the global business environment continued to present challenges during the quarter, but our teams captured greater efficiencies across the company," said Dave MacLennan, Cargill's chairman and CEO.

"We remain focused on our growth objectives. To achieve them, we are innovating what matters for our customers so they can win with consumers in local markets."

Segment results

Cargill's animal nutrition and protein segment was the largest contributor to Cargill's adjusted operating earnings. Within the segment, earnings in North American protein exceeded the year-ago period, boosted by continued strong domestic and export demand for beef as well as consumer demand for egg products. Higher production costs at Cargill's poultry processing joint ventures in the Philippines and UK contributed to a decline in global poultry results.

Two recently acquired value-added chicken processors – Campollo in Colombia and Konspol in Poland – both got off to a good start as part of Cargill. Increased sales volumes for salmon feeds in the North Sea region and functional feeds in North America improved earnings in aqua nutrition, but animal nutrition results in total trailed the prior year due in part to the outbreak of African swine fever in China and other countries, as well as unfavorable dairy economics in the US.

Earnings in Cargill's origination and processing segment reflected a challenging environment with ongoing trade tensions and other supply chain disruptions. In North America, soy and canola crush operations ran at high capacity, but the near absence of the Chinese market for plentiful US soybean stocks reduced profitability.

The trade turbulence also negatively affected soybean crush operations in China, as did lower demand for soybean meal for feed following the culling of hogs to control the spread of African swine fever. The segment's European and South American operations both posted higher profits over the prior year, with soybean and soft seed processing leading the way in Europe, and corn and soybean origination improving in Brazil.

Announced last quarter, Cargill completed the formation of Grainbridge with Archer Daniels Midland. The technology joint venture will begin developing a suite of digital tools to give North American farmers market data and information on their grain marketing activities in a single platform at no cost to them.

Innovative partnerships for sustained prosperity

Cargill is taking action to ensure the world has a food system that works for producers and consumers alike over the long term, while delivering on its commitment to deforestation-free supply chains.

During the quarter, Cargill launched updated policies to strengthen protections for forests and promote rural agricultural development across its supply chains, with the launch of a South America Sustainable Soy Policy, a Human Rights Commitment and an updated Forest Policy.

In conjunction with this, Cargill joined its fellow members of the Soft Commodities Forum in committing to a common framework for monitoring and reporting progress on transparent and traceable supply chains for soy in Brazil's Cerrado region.

In February, Cargill and the World Food Programme Innovation Accelerator accepted applications for the Global Innovation Challenge for Zero Hunger. Startups, private companies and NGOs submitted proposals for bold solutions to sustainably lift people out of hunger. Selected teams will participate in a May bootcamp in Munich, Germany, where they will receive support from industry experts, including Cargill leaders, with the potential to receive up to US$100,000 in equity-free funding for their projects. Cargill has committed US$550,000 in support of the WFP Innovation Accelerator, part of US$12 million that the company has provided to the World Food Programme over the years to improve the health and nutrition of people around the globe.

With the goal of benefiting 100 million people worldwide by 2030, Cargill is joining with Heifer International to launch the Hatching Hope Global Initiative. The programme will seek to raise the prosperity of small-scale women farmers with training that enables them to expand and improve their poultry production.

In addition to helping these farmers nourish their families, Hatching Hope will boost local economies and expand nutrition education. It will connect farmers to products, services and markets so they can become part of sustainable value chains in poultry. Cargill and Heifer debuted Hatching Hope at the 2019 Global Food Security Symposium hosted by the Chicago Council on Global Affairs in Washington, D.C., US.

"Our aim is to give farmers everywhere a leg up, so they can feed their children, send them to school, and lift their communities out of poverty," said Chuck Warta, head of Cargill's premix animal nutrition business and executive sponsor of Hatching Hope, who represented Cargill at the event.

- Cargill

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