January 8, 2019

Cargill reports fiscal 2019 second-quarter results

 

 

 

Cargill had reported results for the fiscal 2019 second quarter and first half ended November 30, 2018.

 

Key measures include:

- Adjusted operating earnings were US$853 million, down 10% from the US$948 million earned in last year's strong comparative period. This brought first-half earnings to US$1.74 billion, a 5% decrease from the prior year;

- Net earnings on a US GAAP basis for the quarter were US$741 million, a 20% decline from US$924 million in the year-ago period. For the half, net earnings dipped 7% to US$1.76 billion;

- Second-quarter revenues decreased 4% to US$28 billion, bringing the year-to-date figure to US$56.7 billion.

"Our teams executed in a world of uncertainty to bring the best solutions to our customers and the consumers they serve," said Dave MacLennan, Cargill's chairman and chief executive officer.

MacLennan referenced Cargill's ability to adjust rapidly to changing market conditions throughout the quarter and deliver safe, reliable and sustainably produced foods to their destinations.

"Now, we are pushing to ready our businesses for the future with continuous improvement, financial discipline and a disruptive mindset," he added.

Animal nutrition and protein

 

Cargill's animal nutrition and protein was the largest contributor to its adjusted operating earnings, with results just below last year's strong comparative quarter. Performance in North American protein moved higher, as robust demand for beef and large supplies of fed cattle boosted beef production and sales to domestic and export markets.

Demand for egg products also drove protein earnings. Continued political instability in Central America and market challenges in Southeast Asia reduced results in the segment's global poultry business. Sales volumes for salmon and shrimp feeds in the North Sea region and Mexico, respectively, were up, but animal nutrition earnings trailed the prior year due to adverse market conditions in several regions. This included lower hog volumes in China and Vietnam, and unfavorable dairy and poultry economics in the US.

Cargill expanded in Colombia with the acquisition of Campollo, one of the country's leading makers of chicken and protein products. The deal complements the purchase of Colombia-based Pollos El Bucanero last fiscal year and advances the segment's strategy to serve growing protein demand in emerging markets with world-class poultry products.

Origination and processing

 

Earnings for the origination and processing segment rose as Cargill leveraged its global network to keep products moving while navigating volatile agricultural markets disrupted by trade turbulence.

Oilseed processing stayed strong in North America and Europe, bolstered by growing protein consumption that drove global demand for soybean meal for livestock feeds. Grain exports from the US and Canada, and biodiesel production in Europe also contributed to the strong quarter.  Better-than-anticipated crops in Argentina supported a gain for the segment in South America.

Cargill announced two new projects to further digitalise the agricultural supply chain to the benefit of farmers and end users. With Archer Daniels Midland (ADM), Cargill agreed to form Grainbridge, a technology joint venture that intends to provide support to North American farmers on grain marketing decisions, e-commerce and account management software. The venture will consolidate information on production and grain marketing into a single digital platform for farmers at no cost to them.

Cargill also announced a collaboration with ADM, Bunge and Louis Dreyfus to investigate ways to standardise and digitalise global agricultural shipping transactions, leveraging technology to the benefit of the entire industry. This will reduce time- and resource-intensive processes, lowering costs and increasing transparency for customers in supply chains. In late December, COFCO International joined the initiative. The companies are seeking broad-based industry participation to promote global access and adoption.

Sustainable nutrition in Asia Pacific
 

Recognising Asia Pacific's growth, Cargill is convening expertise to help secure a positive future for food and agriculture in the region.
 

Recently, Cargill brought together the shared insights of senior managers in Asia's food industry to understand the challenges of nourishing a regional urban population set to reach nearly 2.5 billion by 2030. These insights are being shared in an ongoing series of reports published by the Economist Intelligence Unit.
 

In November, 30 Cargill Global Scholars from China, India and Indonesia visited the company's headquarters in Minneapolis, US, to collaborate with peers from other regions and receive mentoring from senior executives. These university students are studying in food- and agriculture-related fields and will one day be leaders, according to Cargill.
 

- Cargill