April 5, 2017
Cargill reports fiscal 2017 third-quarter results
"We had strong results this quarter across our segments, evidence that we are on the right path forward," said David MacLennan, Cargill's chairman and chief executive officer.
MacLennan cited gains in food ingredients, animal protein and industrials, as well as the progress of teams around the company to bring customers the full benefits of what Cargill has to offer. "All 150,000 people who work here are focused on executing at a high level as we serve our markets in an integrated way. We are eager to keep pursuing the opportunities that we are seeing," he said.
Earnings in animal nutrition and protein rose significantly, lifted by strong performance in animal protein against a weak comparative period.
Although below the earnings pace set in the first half, the North American protein business continued to benefit from renewed consumer demand for beef, which pulled more boxed beef and case-ready volume through its supply chain. It also realised steady foodservice demand for egg products. The poultry business gave protein results an additional boost, with higher cooked chicken exports out of Southeast Asia and improved processing yields and fresh chicken sales in Europe. Elsewhere in the segment, third-quarter earnings in global animal nutrition were below the year-ago level. Despite good performance in bulk feeds and premix products in India, Vietnam and other countries, sales volume softened due to competitive pressure in China and Russia, an avian influenza outbreak in Korea, and disruptive or unseasonable weather in other countries.
Origination and processing earnings slightly lagged last year's third quarter. The North America-based business remained a large contributor to segment earnings, due to steady grain export volumes; oilseed crush volume decreased late in the period as South America approached harvest season. Performance in South America trailed the prior year as the business dealt with reduced farmer selling and slowed processing in Argentina due to excess rain, as well as decreased corn exports out of Brazil due to last year's drought. In contrast, segment earnings rose substantially in Asia Pacific, boosted by soybean crush activities in China, and grain origination and trading in Australia.
Cargill agreed to sell its 40% share in Allied Mills Australia, a flour milling joint venture, to Pacific Equity Partners, a Sydney-based private equity firm with investments in the bakery sector. With regulatory approvals in Australia received, the sale is expected to close early in the fourth quarter. Cargill remains committed to the food and agriculture sector in Australia, where it has played an important role since 1967.
Industrial and financial services put up a strong third quarter against a weak comparative period. Ocean transportation earnings rose sharply, aided by better market conditions in ocean freight, as well as in the mining and steel industries. Returns from asset management activities added to the segment's improved performance. The energy businesses also contributed to the rebound.
Early in the fourth quarter, Cargill agreed to sell its petroleum trading business to Australia's Macquarie Group, a global financial services provider based in Sydney. Pending regulatory review, the sale is expected to be completed in the first quarter of Cargill's fiscal 2018.