Cargill reported results for the fiscal 2019 second quarter and first half ended November 30, 2018. Key measures include:
- 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.
- 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.
- 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 CEO. 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.
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.