August 10, 2012

 

 

"Cargill's earnings performance was not up to our expectations, though with notable exceptions," Cargill Chief Executive Greg Page said in a statement. "We did not trade as well in this year's markets, which were driven as much by the economic and political environment as by the fundamentals."

 

Minneapolis-based Cargill, one of the world's largest privately held corporations, reported US$73 million in earnings from continuing operations for the fiscal fourth quarter ended May 31, down from US$404 million a year earlier.

 

It was Cargill's worst quarter since the second quarter of fiscal 1991 when Cargill earned US$71 million, a company spokeswoman said.

 

Cargill's full-year fiscal 2012 earnings fell 56% to US$1.17 billion from a record US$2.69 billion in the prior year, and were well below expectations, the company said.

 

Fourth-quarter revenues were US$34 billion, a 2% drop from a year ago. Cash flow from operations for the full fiscal year was US$3.51 billion, compared with last year's US$4.55 billion.

 

Cargill, a leading food processor, grain and meat exporter, and ethanol producer, is a top trader in dozens of commodity markets around the world. But it is subject to risks from weather-related supply problems, including the current ruinous drought in the US. Grain prices have soared to records this summer and those effects are likely to show up in fiscal first quarter earnings for June-August. Cargill did not cite any drought effects in its earnings analysis.

 

Page appeared on television last week to voice support for an easing of the US government's mandate to produce rising amounts of ethanol, saying the squeeze on corn supplies has added unnecessary volatility to soaring corn prices and squeezed livestock producers - like Cargill, a major beef producer.

 

Among the five main businesses, Cargill said its food ingredients segment was the largest positive contributor to company results in both the fourth quarter and full year.

 

Meat businesses were well below last year's record level due to the cyclical downturn in North American beef. The US-based meat units were short of last year's results, while results in Central America were up strongly for the year, Cargill said.

 

Commodity trading and processing results "were down significantly from last year's exceptional performance, due in part to losses in cotton and sugar," Cargill said. The business also had lower earnings among the grain and oilseed processing businesses, though with positive exceptions in the Americas.

 

Cargill said its agriculture services segment posted improved results in the fourth quarter, boosted by the growth in Cargill's global animal feed business. North American farm services were on par with the prior year's fourth quarter. But for the full year, the segment was down moderately from fiscal 2011.