Cargill reports higher profit on strong meat demand
Global commodities trader Cargill Inc reported a much higher quarterly net profit on Thursday, citing strong demand for beef and poultry and solid U.S. grain exports even as robust grain production posed a challenge.
The privately held company, which is in the second year of a restructuring, said results were higher in each of its four business segments, and revenue set a two-year high.
"The structural improvements we`ve made, as well as favorable conditions in some markets, have yielded strong results," Chief Executive Officer David MacLennan said in a statement.
The news came during heightened expectations for a wave of consolidation and partnering within the grain trading and processing industry following a string of weak results by some companies.
Minnesota-based Cargill said net income rose to $347 million in the fourth quarter ended May 31 from $15 million a year earlier. Excluding special items, operating earnings came to $460 million, compared with a year-earlier loss of $19 million.
Revenue rose 4 percent to $28.3 billion.
Agribusinesses like Cargill and rivals Archer Daniels Midland Co, Bunge Ltd and Louis Dreyfus Co, known collectively as the ABCDs of global grain trading, capitalize on moving commodities from areas of surplus to areas of deficit, but ample global supplies have limited those opportunities.
However, low crop prices have reduced costs for processing plants and boosted margins for meat producers.
Cargill`s profit from animal nutrition and protein increased for the fourth straight quarter, led by strong retail demand for beef in North America and brisk exports. This was the largest contributor to quarterly earnings.
The food ingredients and applications segment came in second, also reporting higher results for the fourth consecutive quarter.
Origination and processing results rebounded as slow crop sales by South American farmers helped to boost U.S. grain and oilseed exports.
Earnings in the industrial and financial services segment benefited from strong trading results in gas and power markets and improved global shipping market conditions.
Cargill said it had invested $1 billion and made $700 million in divestitures as part of its restructuring.
Most recently, Cargill completed the sale of its petroleum business last month and agreed to sell its power and natural gas business to Australian investment bank Macquarie Group Ltd. It also sold the last of its four U.S. cattle feedlots and a Canadian egg processor.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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