Cargill's profits squeezed by oversupply of corn, soy

04.01.2018

Quarterly decline in net earnings seen as speed bump for fiscal year's second half

A worldwide glut of corn and soybean supplies put pressure on Cargill Inc.’s second-quarter profit, but robust sales growth and continued improvements in the market for beef signal a strong second half to its fiscal year.

Net earnings for the Minnetonka-based company dropped 6 percent to $924 million in the quarter that ended Nov. 30, as oversupply of these key crops led to lower prices and fewer trading opportunities. The company said it also saw declines in its global poultry business.

Operating earnings, which company executives said provides a clearer indication of performance, fell 8 percent to $948 million. Revenue rose 8 percent to $29.2 billion, driven by an increase in the sales volume of metals, grains and oilseeds.

Cargill CEO David MacLennan said the company’s efforts to better integrate its operations are helping to even out varying conditions across its global markets.

During the quarter, the agribusiness giant announced more than $1 billion of acquisitions, joint ventures and investments in facilities in the U.S., Brazil, South Africa and the United Kingdom. The company attributed the spending to rising demand for meat and efforts to improve animal health and food sustainability.

The company’s animal nutrition and protein segment remained its largest contributor to profits, narrowly exceeding last year’s strong second quarter. Retail demand remains strong for beef, and turkey sales were strong through the Thanksgiving holiday, Cargill reported.


startribune.com

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