In this file:
Cargill net drops 20 percent, revenues fall as trade fight bites
∑ Media Release: Cargill reports fiscal 2019 second-quarter results
∑ Cargill profit falls 20 percent in a swirl of changing food, trade and energy trends
∑ Cargill completes Konspol acquisition
Cargill net drops 20 percent, revenues fall as trade fight bites
By P.J. Huffstutter, Reuters
via KFGO - January 03, 2019
CHICAGO (Reuters) - Grains trader Cargill Inc on Thursday reported a 20 percent drop in its fiscal second-quarter 2019 net earnings, as global trade tensions hit the bottom line along with challenges in the Chinese hog sector and a struggling U.S. dairy business.
Three of the company's four business units reported results that were below the same period a year earlier.
While demand remained strong at the company's beef business in North America, Cargill said political and marketplace headwinds hurt many of units, particularly its protein and food ingredients divisions, both of which have been strategic growth areas.
Political instability in Central America and market challenges in Southeast Asia ate into its poultry efforts, the company said. Meanwhile, earnings for its starches and sweeteners business slumped as U.S. ethanol prices hit historic lows and raw material costs rose in Europe.
"We are pushing to ready our businesses for the future with continuous improvement, financial discipline and a disruptive mindset," said Dave MacLennan, Cargill's chairman and chief executive officer.
The privately held company said its net earnings on a U.S. GAAP basis for the quarter ended Nov. 30, 2018, were $741 million, a 20 percent decline from $924 million for the same period a year earlier.
Cargill's second-quarter revenues fell 4 percent to $28 billion, bringing the year-to-date figure to $56.7 billion. The company's quarterly adjusted operating earnings were $853 million, down 10 percent from $948 million.
One bright note...
Cargill reports fiscal 2019 second-quarter results
Cargill performs reliably in a dynamic, uncertain environment
via PRNewswire - Jan 03, 2019
MINNEAPOLIS, Jan. 3, 2019 /PRNewswire/ -- Cargill today reported results for the fiscal 2019 second quarter and first half ended Nov. 30, 2018. Key measures include:
∑ Adjusted operating earnings were $853 million, down 10 percent from the $948 million earned in last year's strong comparative period. This brought first-half earnings to $1.74 billion, a 5 percent decrease from the prior year.
∑ Net earnings on a U.S. GAAP basis for the quarter were $741 million, a 20 percent decline from $924 million in the year-ago period. For the half, net earnings dipped 7 percent to $1.76 billion.
∑ Second-quarter revenues decreased 4 percent to $28 billion, bringing the year-to-date figure to $56.7 billion.
"Our teams executed in a world of uncertainty to bring the best solutions to our customers and the consumers they serve," said Dave MacLennan, Cargill's chairman and chief executive officer. MacLennan referenced Cargill's ability to adjust rapidly to changing market conditions throughout the quarter and deliver safe, reliable and sustainably produced foods to their destinations. "Now, we are pushing to ready our businesses for the future with continuous improvement, financial discipline and a disruptive mindset."
Animal Nutrition & Protein was the largest contributor to Cargill's adjusted operating earnings, with results just below last year's strong comparative quarter. Performance in North American protein moved higher, as robust demand for beef and large supplies of fed cattle boosted beef production and sales to domestic and export markets. Demand for egg products also drove protein earnings. Continued political instability in Central America and market challenges in Southeast Asia reduced results in the segment's global poultry business. Sales volumes for salmon and shrimp feeds in the North Sea region and Mexico, respectively, were up, but animal nutrition earnings trailed the prior year due to adverse market conditions in several regions. This included lower hog volumes in China and Vietnam, and unfavorable dairy and poultry economics in the U.S.
Cargill expanded in Colombia with the acquisition of Campollo, one of the country's leading makers of chicken and protein products. 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.
Food Ingredients & Applications decreased on mixed results across the segment. Starches and sweeteners earnings decreased on historically low ethanol prices in North America and higher energy and raw material costs in Europe. Lower sales volume and higher operating costs in North America trimmed otherwise strong cocoa and chocolate performance in other regions. Good positioning helped lift edible oils above last year. Bioindustrial posted a solid gain, while salt earnings edged ahead as higher road salt production costs were offset by increased results in food and water quality.
The segment announced Avansya, a new joint venture with Royal DSM that will produce zero-calorie sweetness solutions through fermentation. These products, such as steviol glycosides Reb M and Reb D, will give food and beverage companies a more scalable, sustainable and cost-effective alternative to extracting them from stevia plants. Avansya will market these products under the EverSweetô brand. Subject to regulatory approvals, the venture is expected to launch in the first quarter of calendar 2019.
Origination & Processing earnings rose as the segment leveraged its global network to keep products moving while navigating volatile agricultural markets disrupted by trade turbulence. Oilseed processing stayed strong in North America and Europe, bolstered by growing protein consumption that drove global demand for soybean meal for livestock feeds. Grain exports from the U.S. and Canada, and biodiesel production in Europe also contributed to the strong quarter. Better-than-anticipated crops in Argentina supported a gain for the segment in South America.
Cargill announced two new projects to further digitalize the agricultural supply chain to the benefit of farmers and end users. With Archer Daniels Midland, Cargill agreed to form Grainbridge, a technology joint venture that intends to provide support to North American farmers on grain marketing decisions, e-commerce and account management software. The venture will consolidate information on production and grain marketing into a single digital platform for farmers at no cost to them. Cargill also announced a collaboration with ADM, Bunge and Louis Dreyfus to investigate ways to standardize and digitalize global agricultural shipping transactions, leveraging technology to the benefit of the entire industry. This will reduce time- and resource-intensive processes, lowering costs and increasing transparency for customers in supply chains. In late December, COFCO International joined the initiative. The companies are seeking broad-based industry participation to promote global access and adoption.
Industrial & Financial Services trailed the year-ago quarter, due in part to broader weakness in financial markets that negatively affected Cargill's investments in managed funds. The ocean transportation business lagged last year as freight markets declined sharply in response to weakening macroeconomic sentiment, the uncertain effects of trade conflict on commodity flows, and the hesitance of third-party charterers to contract vessels ahead of the implementation of new international rules on sulphur dioxide emissions. Elsewhere, the segment's metals and risk management businesses posted increased earnings for the period.
Sustainable nutrition in Asia Pacific
Recognizing Asia Pacific's growth, Cargill is convening expertise to help secure a positive future for food and agriculture in the region. Recently, Cargill brought together the shared insights of senior managers in Asia's food industry to understand the challenges of nourishing a regional urban population set to reach nearly 2.5 billion by 2030. These insights are being shared in an ongoing series of reports published by the Economist Intelligence Unit. And in November, 30 Cargill Global Scholars from China, India and Indonesia visited the company's headquarters in Minneapolis to collaborate with peers from other regions and receive mentoring from senior executives. These university students are studying in food- and agriculture-related fields and will one day be leaders.
Cargill employees in Asia Pacific also are directing their efforts toward sustainable nutrition. In connection with the U.N.'s World Food Day in October, teams in China and India donated almost 150,000 meals to school children and those in need. Added to the activities and volunteering of employees in other regions, Cargill reached hundreds of thousands of people for World Food Day with food donations, nutrition education and other community-focused efforts.
* This earnings release is published prior to the issuance of Cargill's quarterly financial statements.
Explanation of non-GAAP financial measure
Cargill reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). The company additionally reports adjusted operating earnings, a non-GAAP financial measure that management believes provides additional insight into the underlying financial performance of ongoing operations. In calculating adjusted operating earnings, Cargill includes earnings and losses attributable to non-controlling interests in consolidated companies, with the exception of those from its asset management business. Mark-to-market gains and losses on intercompany contracts between the Origination & Processing and the Food Ingredients & Applications segments also are included. Cargill excludes the following six items: timing differences related to inventory, derivatives and hedging; last-in, first-out (LIFO) inventory adjustments; amortization of intangible assets; gains and losses on changes in investment structures; asset impairment and restructuring charges; and gains and losses on disposals of businesses and other long-term assets. For more information, visit www.cargill.com/company/financial/index.jsp.
Cargill's 155,000 employees across 70 countries work relentlessly to achieve our purpose of nourishing the world in a safe, responsible and sustainable way. Every day, we connect farmers with markets, customers with ingredients, and people and animals with the food they need to thrive. We combine 153 years of experience with new technologies and insights to serve as a trusted partner for food, agriculture, financial and industrial customers in more than 125 countries. Side by side, we are building a stronger, sustainable future for agriculture. For more information, visit Cargill.com and our News Center.
Cargill profit falls 20 percent in a swirl of changing food, trade and energy trends
Slowdown in hog sales, low ethanol prices contributed to 20 percent earnings drop for the second quarter.
By Kristen Leigh Painter, Star Tribune
January 3, 2019
Cargill Inc. saw its net earnings drop 20 percent in its latest quarter on trade uncertainty, stock market volatility, lower hog volumes in China and challenges in the U.S. dairy and poultry industries.
The global agriculture behemoth, based in Minnetonka, also took a hit from near-record low ethanol prices and a reduction in export demand of the energy source, which the company makes at its corn processing plants across the Midwest.
Three of the company's four major business segments posted declines Thursday morning for its second quarter ended Nov. 30. Cargill was up against a strong comparative period from last year, which was the company's second best performance in its history for the September-November quarter.
"We strive for broad-based performance at Cargill, and that just didn't happen this quarter. It was a mixed bag," Lisa Clemens, Cargill's senior director of investor relations, said. "The environment is choppy, it's challenging. You are seeing large day-to-day market swings."
Cargill reported a net profit of $741 million, down from $924 million a year ago. Adjusted operating earnings, which the company believes shows more about the health of its operations, were down 10 percent to $853 million from $948 million last year.
Revenue was $28 billion, down 4 percent.
The privately held company, the nation's largest, is one of the few that provides quarterly financial updates publicly, though with less information than is required of firms listed on stock markets.
Animal nutrition and protein ó which includes the processing and sale of meat, eggs and livestock feed ó remained the company's largest segment in terms of operating earnings but was down slightly from a year ago. Demand for beef among U.S. consumers continues to grow while ranchers are providing a strong supply of cattle, a boon for Cargill's North American meat business.
But while Americans' appetite for all forms of protein buoyed Cargill's results, a challenged U.S. dairy industry as well as political instability in Central America dampened the segment.
Despite uncertainty surrounding global trade, Cargill's hallmark grain-trading business was its only segment with earnings growth in the quarter. As consumers eat more meat, Cargill sells more soybean meal to feed livestock raised for slaughter...
Cargill completes Konspol acquisition
By Aidan Fortune, GlobalMeatNews
Cargillís European poultry business has completed the acquisition of Polandís Konspol, strengthening its value-added offering.
The deal, announced in September and closed at the end of December, is designed to expand the companyís focus in poultry and providing value-added protein to global consumers.
Under the agreement, Cargill purchased the Polish assets of Konspolís food and fresh chicken business. Cargill also acquired Konspolís portfolio of products, including branded and private-label offerings, as well as its customer and supplier relationships. Cargill will acquire Konspolís feed mill, five broiler farms and two processing complexes. The acquisition increases Cargillís production capacity, export capabilities and proximity to existing customers to offer expanded value-added and poultry products.
Cargill will welcome Konspolís 1,700 employees, which will bring the total number of Cargill employees in Poland to more than 3,400, while Cargill Global Poultry has more than 35,000 employees across 14 countries...