October 16, 2007

 

Grain processing boosts Cargill's earnings

 

 

US agribusiness giant Cargill Inc on Monday (October 12) said first-quarter net earnings rose 83 percent due to its origination and processing segment which processes, markets and distributes agricultural commodities.

 

Minneapolis-based Cargill, which provides food, agricultural and trading services, said net earnings in the quarter ended August 31 rose to US$917 million from US$500 million a year earlier.

 

The results marked the first quarter with Greg Page helming as chief executive of the second-largest privately held American company. Page became Cargill CEO on June 1, replacing Warren Staley, who retired as chairman on September 11. Page has also assumed that position.

 

In a statement, Page said: "June through August was an extraordinary period, with growing demand for agricultural commodities against tightening supplies and a long-anticipated but dramatic reduction in liquidity and leverage in financial markets."

 

Cargill's food ingredients and applications and industrial segments also outperformed last year's earnings.

 

Results at the agricultural services segment were slightly ahead of year-ago figures while results at the risk-management and financial segment were below year-ago levels. The risk-management and financial segment includes some of Cargill's energy and financial activities.

 

According to spokeswoman Lisa Clemens, the first quarter turned out to be an "extraordinary period" as the company saw big swings in the agriculture, energy and financial markets.

 

Grain prices soared during the quarter, led by wheat, which hit an all-time high of US$9.61-3/4 per bushel on the Chicago Board of Trade, the benchmark for world grain prices. At the same time, global financial markets gyrated from troubles stemming from the US subprime mortgage sector as defaults rose.

 

During the first quarter Cargill began purchasing the remaining shares of Agrograin, a Hungarian grain company in which it bought a minority interest and formed a joint venture in 1995.

 

Cargill also announced plans to double the capacity of its canola processing plant in Clavet, Saskatchewan, to capitalize on strong US demand for healthier cooking oil. Canola oil is trans fat free and low in saturated fat.