Cargill Reports Eight Percent Profit Jump, Boosted by Ingredients Performance
08 Apr 2016 --- Cargill has reported an eight percent lift in third quarter profits to $459 million, powered by a strong showing from its Food Ingredients & Applications unit which saw profits raise across edible oils, malt, starches, sweeteners and texturizers.
Salt for food applications also posted a strong showing in Cargill’s Food Ingredients & Applications unit but the warm winter weather in the US meant road salt performed less well than it did last year.
Cargill’s Food Ingredients & Applications unit is a global operation, spanning South America, Asia and Europe and makes everything from sweeteners and starches to sauces and oils.
Food Ingredients & Applications, which also benefited from a favourable financial comparison to the year previous is one of Cargill’s four reporting units, which also includes Animal Nutrition & Protein, Industrial & Financial Services and Originating and Processing.
Profits in its Animal Nutrition & Protein unit dipped “slightly” in the quarter, as it was impacted by a difficult beef business.
In particular, the high-cost of feeder cattle in North America, reduced cattle supplies in Australia, and cheaper pork and poultry prices at retail all impacted the unit.
Weak oil markets meant that Cargill’s Industrial & Financial segment lost money in the quarter.
An uplift in oilseed processing and grain handling in the US helped Origination & Processing show a moderate earnings increase.
Overall revenues in the quarter fell 11 percent to $25.2 billion, which was partly due to lower commodity prices and the strength of the US dollar against other currencies.
Operating earnings rose 13 percent to $476 million in the quarter.
Cargill, the biggest private company in the US which processes crops and meats and the world’s biggest food commodities trader, is looking to reposition itself by acquiring and divesting businesses under the leadership of David MacLennan after two years of falling profits.
It sold its pork plant last year and has begun making non-GMO corn and soybean products.
Commenting on the results, MacLennan said: “With agriculture and energy markets as tough as we’ve seen in a long time, we’re pleased with the gain in earnings achieved this quarter.”
“Barring weather events, we don’t anticipate a near-term improvement in market conditions for agriculture. In these kind of cycle, and we’ve been through them before, we focus on the levers under our control.”
Cargill is also looking to improve how it manages its supply chain and how it operates its plants.
MacLennan added: “The work we’ve undertaken this year is positioning us to better serve the changing needs of our customers and fulfil our purpose to nourish the world’s people.”
