Profits up at Cargill, Fueled by Bigger Demand for Meat

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14 Jul 2017 --- Cargill has reported strong financial results – driven by the demand for meat – for the Q4 and fiscal year ending May 31, 2017. In the second year of an ongoing transformation, Cargill raised earnings across all four business segments in both periods. It also advanced the capabilities, expertise and partnerships needed to be the leader in nourishing the world in the years ahead.

Segment Results

Food Ingredients & Applications was the second-largest contributor to earnings, with results up in both periods. The segment posted improved results across global ingredient portfolios in cocoa, and corn- and wheat-based products. Throughout the year, the segment focused on strengthening its operating efficiencies and commercial capabilities, including a modernized deployment of sales, marketing and technical resources to better serve customers’ changing needs.

Animal Nutrition & Protein was the largest contributor to adjusted operating earnings in the fourth quarter and full year. Segment results were up significantly from last year, lifted by exceptional performance in global protein, especially in the first half. In North America, the protein business continued to experience strong consumer demand in the fourth quarter for beef at retail and for egg products from foodservice customers. Export demand for beef also was brisk. Poultry posted higher earnings for the year, with increased exports of cooked chicken from Southeast Asia, higher fresh chicken sales in Europe and improved performance in China. Animal nutrition, which makes up the rest of the segment, saw earnings rise in the fourth quarter, as favorable trading and cost reductions offset the impact of environmental and market conditions that tempered feed demand in several countries. Full-year results in animal nutrition came in just above the prior year.

Full-year results:  

  • Adjusted operating earnings reached US$3.04 billion, up 85 percent from US1.64 billion in the prior fiscal year. Net earnings on a US GAAP basis were USUS$2.84 billion, a 19 percent increase year-on-year.
  • Revenues grew 2 percent to USUS$109.7 billion on higher sales of grain, oilseeds and metals.
  • Cash flow from operations climbed 38 percent to USUS$4.69 billion.

Fourth-quarter results:

  • Adjusted operating earnings were US$460 million in the fourth quarter, in sharp contrast to last year’s US$19 million adjusted operating loss. Net earnings were US$347 million, compared with US$15 million in the year-ago period.
  • Revenues rose 4 percent to US$28.3 billion.

“The past two years have seen significant work to improve performance and position the company for growth,” said David MacLennan, Cargill’s chairman and chief executive officer. “The structural improvements we’ve made, as well as favorable conditions in some markets, have yielded strong results. Although the environment continuously changes, we feel good about our underlying progress. By building a more integrated, focused and agile Cargill, we are creating the momentum for growth and success for our customers and partners.”

MacLennan noted that Cargill and its customers now operate in environments of much greater complexity. Mixed macroeconomic trends have left customers – from consumer branded and foodservice companies to farmers – looking for a partner with the expertise, reliability and forward-looking perspective that Cargill provides. “We want to be their most trusted partner in agriculture, food and nutrition. We’re in a stronger position today to deliver the solutions our customers seek.”

 

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More than simply a food ingredients supplier, Cargill deeply understands our customers' strategies, consumers, distribution channels and competition. We deliver solutions that help the food industry and beverage manufacturers drive growth through new product innovation and reformulation. Cargill helps reduce costs through supply chain and manufacturing process efficiency and managing commodity price risk. Cargill helps our food industry and beverage manufacturing customers create unique products that fill product pipelines and reduce time-to-market by connecting our diverse food ingredients supplier capabilities — marketers, research scientist, application experts, risk managers and manufacturing process engineers — and seamlessly delivering these resources to customers. As a service and solution-oriented food ingredients supplier, our broad portfolio helps our customers address their food product development needs across the spectrum of applications and categories. Cargill helps our customers safely manufacture products every day around the world by reliably originating and distributing grain, oilseeds and other food ingredient commodities and by processing a diverse food ingredients supplier portfolio that spans core and specialty ingredients, ingredient systems and finished food systems.

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