Cargill earnings fall 20% as food ingredients revenues decline

USA – The American grain trader has posted 20% decline in second-quarter earnings from US$924 million in the year-ago period to US$741 million with a decline in food ingredients segment.

Second-quarter revenues decreased 4% to US$28 billion while adjusted operating earnings were US$853 million, down 10% from the US$948 million earned in last year’s strong comparative period.

Earnings were boosted by significant contribution by the animal nutrition and protein segment, North America posting stronger results on robust demand for beef in both the domestic and export markets.

Sales volumes for salmon and shrimp feeds in the North Sea region and Mexico were up, but animal nutrition earnings decreased.

Lower hog volumes in China and Vietnam, and unfavorable dairy and poultry economics in the U.S impacted the results of the segment, in addition to challenges in Southeast Asia and Central America.

During the period, Cargill boosted its global poultry business with the acquisition of Colombian poultry products producer Campollo.

The deal complements the purchase of Colombia-based Pollos El Bucanero last fiscal year and advances the segment’s strategy to serve growing protein demand in emerging markets with world-class poultry products.

Dave MacLennan, Cargill’s chairman and chief executive officer said that Cargill was able to adjust rapidly to changing market conditions in the quarter guided by the sustainability agenda.

“Our teams executed in a world of uncertainty to bring the best solutions to our customers and the consumers they serve,” said Dave MacLennan.

“Now, we are pushing to ready our businesses for the future with continuous improvement, financial discipline and a disruptive mind-set.”

Starches and sweeteners recorded lower earnings in North America and Europe, offsetting strong cocoa and chocolate performance in other regions.

The company formed Avansya, a new joint venture with Royal DSM to produce zero-calorie sweetness solutions through fermentation.

Oilseed processing stayed strong in North America and Europe, bolstered by growing protein consumption that drove global demand for soybean meal for livestock feeds.

Cargill said grain exports from the U.S. and Canada, and biodiesel production in Europe also contributed to the strong quarter. 

In order to support farmers on grain marketing decisions, e-commerce and account management software, Cargill formed Grainbridge, a technology joint venture with Archer Daniels Midland.

Also, Cargill announced a collaboration with ADM, Bunge and Louis Dreyfus to investigate ways to standardize and digitalize global agricultural shipping transactions.

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