Cargill quarter earnings up $495 million
The company’s first-quarter earnings were led by its risk management and financial segment, especially value investing activities. Other large contributors included the origination and processing segment.
17/10/05 Cargill has reported net earnings of $504 million for the 2006 first quarter ended Aug. 31, up 2 percent from $495 million a year ago.
The company’s first-quarter earnings were led by its risk management and financial segment, especially value investing activities. Other large contributors included the origination and processing segment, which connects users and producers of grains, oilseeds, sugar and other commodities, and its animal nutrition, poultry processing and corn-based sweeteners businesses, all of which operate worldwide. Results also included a gain on the sale of Cargill’s futures brokerage business.
Cargill completed its purchase of the processing and related assets of Ontario-based Better Beef in early September. It is being integrated into Cargill’s meat solutions business, which serves both domestic and international markets. The terms of the acquisition were not announced.
“We are pleased with Cargill’s strong start to the new fiscal year,” said Warren Staley, Cargill chairman and chief executive officer. “Given the volatility in many of the markets in which we participate, it was a solid beginning to what promises to be a challenging year.”
Cargill’s agreement to purchase Degussa Food Ingredients, a business unit of global specialty chemicals company Degussa, was announced on Sept. 9. Degussa Food Ingredients is a provider of texturizing and flavor ingredients and solutions to the food and beverage industries. 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. For Cargill, the agreed, €540 million (US$670 million) purchase represents a cornerstone investment in its strategy to become a leading provider of specialty food ingredients and ingredient systems. The completion of the acquisition is pending regulatory review.
Addressing the new fiscal year, Staley said Cargill’s facilities in the Louisiana Gulf came through Hurricane Katrina, which made landfall three days before the company’s first quarter ended, and Rita, almost four weeks later, in relatively good shape. “Our team took preparatory steps before each storm struck and worked around-the-clock afterward to account for everyone’s safety, get our facilities up and running and re-establish service to customers both offshore and up the river.” Cargill is a part of the ongoing efforts by grain exporters, allied industries and many federal, state and local government entities to restore operations in the lower Mississippi River and Center Gulf region.
Staley also said Cargill is managing closely its exposure to costs for refined oil products and natural gas. Although a large buyer of energy worldwide, the company benefits from its global presence in energy trading, a centralized approach to managing energy procurement and price risk, many years of investing in improved energy efficiency at its facilities and an ability to generate energy from byproducts at some of its processing plants around the world.
