Cargill Earnings Driven by Ingredients and Applications

13 Oct 2006

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With respect to growth, the food ingredients and applications, origination and processing, agriculture services and industrial segments all increased earnings from the first quarter a year ago.

13/10/06 Cargill has reported net earnings of $500 million for the 2007 first quarter ended Aug. 31, in line with last year’s record first quarter of $504 million.

Cargill’s first-quarter results were balanced among its five global business segments. Earnings were led by food ingredients and applications, and followed closely by proportional contributions from the origination and processing, risk management and financial, and industrial segments. With respect to growth, the food ingredients and applications, origination and processing, agriculture services and industrial segments all increased earnings from the first quarter a year ago.

“We are delighted with Cargill’s performance in the first three months,” said Warren Staley, Cargill chairman and chief executive officer. “June through August was a volatile period in many of the markets we serve. By drawing on the diversity of Cargill’s product and service strengths and our team’s ability to manage supply chains and price risk for customers and the company, we realized a strong start to the new fiscal year.”

The integration of Degussa’s food ingredients operations, which Cargill acquired in April 2006, is proceeding productively. Staley said Cargill is pleased with the depth of its team and the additional knowledge and technologies they bring to Cargill’s global texturizers and flavor systems businesses. Texturizers are used in food products to achieve desired consistency and body, enhance mouth feel, optimize flavor release, control viscosity and improve shelf life. They also are used in cosmetic and pharmaceutical applications. Flavors are incorporated in foods and beverages to help satisfy changing consumer tastes.

Cargill added further to its texturizers portfolio by purchasing its former joint-venture partner’s share of a xanthan gum production facility in Zibo in China’s coastal province of Shandong. Xanthan gum is used by food makers for many applications, including thickening sauces and binding salad dressings.

As announced in July and completed in late September, Horizon Milling G.P., a partnership between Cargill and Inver Grove Heights, Minn.-based CHS, purchased the Canadian grain-based food service and industrial businesses from a subsidiary of The J. M. Smucker Company. The acquisition enables Horizon Milling to expand operations into Canada, where it will seek to better serve the country’s food service, bakery and food manufacturing markets with flour, oat and baking mix products.