USA – Cargill’s net earnings in the 2019 third-quarter rose 14% as starches and sweeteners declined on low ethanol prices in North America, and higher energy and raw material costs in Europe.
Adjusted operating earnings were US$604 million, up 8% from the previous year, bringing the earnings for the first nine months to US$2.34 billion, a 2% decrease from the prior year.
The period was characterized by uncertainties in the global market, impacting on third quarter revenues which decreased 4% to US$26.9 billion.
In the Food Ingredients & Applications segment, strong cocoa and chocolate results were offset by lower sales volume and higher operating costs in North America.
Edible oils recorded significant improvements as a result of good positioning and operating efficiencies while sales of salts for food and water quality applications also contributed to improved performance.
To strengthen its capabilities in specialty ingredients, Cargill has acquired the Belgium based chocolate products firm, Smet with the transaction expected to close in the first half of 2019.
Animal Nutrition & Protein was the main contributor to Cargill’s operating earnings with strong performance in North American protein business.
The segment was further boosted by strong domestic and export demand for beef as well as consumer demand for egg products.
Poultry results declined due to higher production costs at Cargill’s poultry processing joint ventures in the Philippines and U.K.
Animal nutrition was low compared to the prior year although higher sales volumes for salmon feeds and functional feeds in North America improved earnings in aqua nutrition.
The decline was blamed partly on the outbreak of African swine fever in China and other countries, as well as unfavorable dairy economics in the U.S.
Cargill said the two recently acquired value-added chicken processors; Campollo in Colombia and Konspol in Poland were on track to perform well.
Low earnings in the Origination & Processing were partly blamed on very low soy and canola crush operations in China, offset by high capacities in North America.
Soybean and soft seed processing were high in Europe and corn and soybean origination improving in Brazil.
Looking ahead, Cargill said it is focusing on ensuring a sustainable food system right from producers to consumers while delivering deforestation-free supply chains.
“Disruptions and uncertainty in the global business environment continued to present challenges during the quarter, but our teams captured greater efficiencies across the company,” said Dave MacLennan, Cargill’s chairman and chief executive officer.
“We remain focused on our growth objectives. To achieve them, we are innovating what matters for our customers so they can win with consumers in local markets.”
During the quarter, Cargill completed the formation of Grainbridge joint venture with Archer Daniels Midland to develop digital grain trading systems for farmers in North America.