September 30, 2019
Cargill: Solid start to 2019 demonstrates focus on delivering for customers
Cargill reported on September 26 its results for the fiscal 2020 first quarter ended August 31, 2019.
Key measures include: adjusted operating earnings were US$908 million, up 3% from US$883 million last year; net earnings on a US generally accepted accounting principles (GAAP) basis were US$915 million, a 10% decrease from last year's strong comparative of US$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 modernising 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 and protein, and industrial and financial services. However, adjusted operating earnings decreased for origination and processing and food ingredients and 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 UK. 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.
- Results declined for the company's origination and processing businesses in most geographies, as trade- and weather-related disruptions continued to take a toll.
- 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.
New pathways to growth
During the quarter, Cargill expanded a joint venture and formed new partnerships. These included:
- Cargill's investment of an additional US$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's establishment of 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.
Changing what's possible, sustainably
Across its global businesses, Cargill is teaming up with a unique network of partners to advance the environmental, social and economic sustainability of food and agriculture.
For example, the company announced the BeefUp Sustainability program, which, by 2030, will reduce greenhouse gas intensity by 30% across its beef supply chain per pound of product by focusing on grazing management, feed production, innovation and food waste reduction.
Achieving the target will be the equivalent of removing two million cars from US highways for a year, Cargill said.
With partner Heifer International, Cargill and customer Distribuidora El Tio expanded the Hatching Hope Global Initiative to Mexico. Launched earlier this year, Hatching Hope will provide resources, know-how and market access to smallholder women farmers so they can sustainably increase poultry production and improve the lives of 100 million people by 2030.
To nurture breakthrough innovations, Cargill, Techstars and Ecolab debuted the second cohort of their Farm to Fork Accelerator. Hailing from across the US, as well as Canada, Israel and India, startups in the cohort are focused on advancing key aspects of the food system, including food security and safety, ag tech, consumer goods and supply chain management.
The University of Illinois at Urbana-Champaign's Research Park will house Cargill's newest Innovation Lab, where a team of data scientists and lab students will work directly with Cargill business leaders, operations teams and customers to find digital solutions to food and agriculture challenges.
"There is no one solution to creating resilient food systems. We are using the reach of our global businesses - as well as the expertise of our own teams and our partners - to find the many answers we'll need to nourish the world in a sustainable way," MacLennan said.
- Cargill / PRNewswire