Cargill’s First-Quarter Profits Off by 26 Percent

MINNEAPOLIS (Minneapolis Star Tribune/MCT) -

Cargill’s quarterly earnings dropped 26 percent over a year ago, as its grain and food-ingredients businesses — two of its biggest operations — fell short on the profit front.

The Minnetonka, Minn.-based agribusiness colossus said Tuesday its fiscal first-quarter earnings were $425 million, down from $571 million a year ago. Sales for the quarter ending Aug. 31 were $33.3 billion, down 2 percent over last year’s first-quarter.

“Although Cargill’s first quarter was not as strong as last year, we had several areas of good performance and are optimistic about the opportunities ahead,” Cargill CEO David MacLennan said in a press statement.

“This year’s big crops, not just in North America but across agricultural production areas worldwide, will enhance food security after several years of weather disruption. Our company is well positioned to connect these new supplies to growing demand.”

MacLennan also noted that Cargill’s first quarter “was marked by a great deal of geopolitical uncertainty.” Cargill, one of the world’s largest privately held companies, has operations in 67 countries.

The company’s grain origination and processing business, which accounts for about 40 percent of Cargill’s earnings, posted first-quarter results slightly below the same time a year ago. Cargill’s food-ingredients business, which includes everything from brewers’ malt to cocoa and chocolate, recorded moderately lower earnings over a year ago.

The food-ingredients operation, which accounts for roughly 37 percent of Cargill’s profits, experienced softer sales volumes, hurt by sluggish economic conditions in a number of countries, the company said. However, Cargill’s ethanol business, which is housed in its food-ingredients division, had a good quarter due to strong demand.

Cargill’s animal-nutrition and protein business, which includes its animal-feed and meatpacking operations, posted a moderate rise in profits during the first quarter. Meat led the way, with good beef-business results in North America and Australia. The company’s global poultry business — stretching from Thailand to Latin America — also fared well.

Cargill’s earnings in its animal-feed business were down slightly during the quarter. But that was because Cargill booked a gain on the sale of a milling business in Europe during last year’s fourth quarter, making for a tough comparison.