Salt and Sweetener Sales Contribute to Cargill’s Robust Third Quarter Results
31 Mar 2017 --- Agricultural commodities merchant Cargill has posted extremely strong third quarter results with its food ingredients & applications segment the largest contributor to adjusted operating earnings which were were US$715 million in the third quarter, a 50% jump from US$476 million in the same period a year ago, while net earnings for the quarter on a U.S. GAAP basis were US$650 million. That is a 42% increase from last year’s US$459 million.
Sales increases were partially down to increased sales of sweeteners and salts for food applications, and Cargill’s revenues rose 8% in the quarter to US$27.3 billion.
“We had strong results this quarter across our segments, evidence that we are on the right path forward,” said David MacLennan, Cargill’s chairman and chief executive officer. He cited gains in food ingredients, animal protein and industrials, as well as the progress of teams around the company to bring customers the full benefits of what Cargill has to offer.
“All 150,000 people who work here are focused on executing at a high level as we serve our markets in an integrated way. We are eager to keep pursuing the opportunities that we are seeing.”
Food Ingredients & Applications segment was the largest contributor to adjusted operating earnings in the third quarter.
Apart from the significant gains in sweeteners and salts globally, plant-based bio-industrials in North America also contributed. Meanwhile cocoa and chocolate earnings rose on the strength of the European business, supported by origination in West Africa. The segment’s Asia-based business rebounded from a challenging year-ago period, lifted by good performance in corn-based starches and sweeteners in China and edible oils in India.
Origination & Processing
Earnings here slightly lagged last year’s third quarter. The North America-based business remained a large contributor to segment earnings, thanks to steady grain export volumes; oilseed crush volume decreased late in the period as South America approached harvest season. Performance in South America trailed the prior year as the business dealt with reduced farmer selling and slowed processing in Argentina due to excess rain, as well as decreased corn exports out of Brazil due to last year’s drought.
In contrast, segment earnings rose substantially in Asia Pacific, boosted by soybean crush activities in China, and grain origination and trading in Australia.
Meanwhile third-quarter earnings in global animal nutrition were below the year-ago level. Despite good performance in bulk feeds and premix products in India, Vietnam and other countries, sales volume softened due to competitive pressure in China and Russia, an avian influenza outbreak in Korea, and disruptive or unseasonable weather in other countries.
In its financial results posting, Cargill also said that it has agreed to sell its 40% share in Allied Mills Australia, a flour milling joint venture, to Pacific Equity Partners, a Sydney-based private equity firm with investments in the bakery sector.
Regulatory approvals have been received in Australia and the sale is expected to close early in the fourth quarter.
“Cargill remains committed to the food and agriculture sector in Australia, where it has played an important role since 1967,” it adds.
