August. 25, 2015

 

At 150, Cargill facing challenges

 

 

 

In a joint statement published in Cargill's 2015 annual report entitled "Cargill^@ 150", the company's president and executive chairman said "fiscal year 2015 did not meet expectations" as the company's earnings were down 13% to US$1.58 billion from last year. The statement added that sales and other revenues decreased 11% to $120.4 billion while cash flow from operations equaled $3.82 billion.

 

President and CEO David W. MacLennan and Executive Chairman Gregory R. Page, however, said that "even in a challenging year, several of our businesses generated record earnings" including global animal nutrition, Canadian farm services, Central American meats, US turkey and egg further processing.

 

Animal nutrition and protein particularly posted "a solid increase in profitability", they said. "The segment executed well, drawing on its global footprint, diverse products and services, and this year's lower feed input costs to generate earnings growth".

 

MacLennan and Page said the Russia-Ukraine conflict was costly as it forced the company to close its oilseed processing plant in the Ukrainian industrial city of Donetsk. They also lamented the "lost opportunities of a region in economic contraction".

 

Nevertheless, the two officials remained optimistic as "Cargill has a history of rising to challenges", pointing out that the company was focusing on five areas believed to be the most important for strengthening profitability and restoring growth. These are: operating with excellence; taking a common approach, where sensible; investing to serve customers; being the trusted partner; and tapping employees' full potential.

 

$3.43-billion investment

 

The two officials disclosed that during the past year, the company invested $3.43 billion "in capabilities and capacities important to our customers" including acquisitions/joint ventures and new/expanded facilities".

 

"We invested globally in animal nutrition to support the higher demand for animal protein that comes with income growth in developing countries," MacLennan and Page said in their joint annual report statement.

 

They said Cargill is also gradually growing its presence in sub-Saharan Africa, purchasing a grain-handling business in Kenya and soybean processing business in Zambia.

 

Cargill's new sunflower seed crush plant in Russia is likewise nearing completion, the officials added. "We also made changes to the portfolio. In the US, we closed a corn wet mill, sold a cattle feed yard, shuttered a beef facility and consolidated three meat packaging plants into two. We sold Cargill's interests in two joint ventures: Chinese specialty ingredients and Spanish olive oil. We exited cotton in Zimbabwe due to deteriorating business conditions there".

 

In China, Cargill accelerated the startup of its chicken further processing plant after a competitor's food safety scandal imperiled a company customer's local supply chain, the two officials said.

 

The company also "achieved our goals for 100 percent group housing of sows at Cargill-owned facilities and for the removal of growth-promoting antibiotics from all Cargill turkey flocks".

 

"As we celebrate our 150th year in business, we find Cargill's purpose--to be the global leader in nourishing people--to be more essential than ever", MacLennan and Page stated.