Earnings for Cargill’s Animal Nutrition & Protein segment were down slightly
Cargill reported an 8 percent increase in net earnings for the third quarter of fiscal year 2016, as well as a 45 percent increase in net earnings for the first nine months of the fiscal year. Both periods ended on February 29.
The company reported that its net earnings equaled $459 million in the third quarter and $2.36 billion in the first nine months of the fiscal year, compared to $425 million for the third quarter of 2015 and $1.63 billion for the first three quarters of 2015.
However, Cargill’s revenues in the third quarter decreased 11 percent to $25.2 billion, reflecting lower commodity prices, the strength of the U.S. dollar against other currencies, and the sale of Cargill’s pork business in the second quarter.
“With agriculture and energy markets as tough as we’ve seen in a long time, we’re pleased with the gain in earnings achieved this quarter,” said David MacLennan, Cargill’s chairman and chief executive officer. MacLennan said that prices and volatility in agricultural commodities remain low, as a series of big harvests have built global stocks. “Barring weather events, we don’t anticipate a near-term improvement in market conditions for agriculture. In these kinds of cycles, and we’ve been through them before, we focus on the levers under our control.”
Animal Nutrition & Protein segment
Adjusted operating earnings in the Animal Nutrition & Protein segment decreased slightly in the third quarter, mostly due to conditions in the beef industry. Prior purchases of high-cost feeder cattle in North America, drought-reduced cattle supplies in Australia, decreased U.S. beef exports due to the strong U.S. dollar, and less expensive pork and poultry choices at retail all worked to hold results below the prior year.
Earnings rose in animal nutrition, led by operations in the U.S. and Vietnam.
Additional strong performance in U.S. turkey and value-added proteins boosted segment earnings close to the year-ago level.
Originating & Processing segment
Adjusted operating earnings in the Origination & Processing segment increased moderately from last year, even as the segment contended with large global stocks, weak prices and low volatility in agricultural commodity markets. Within the segment, grain handling and oilseed processing in the Americas were up on a combined basis, with an additional contribution from world trading operations.
While U.S. producers’ sales of corn slowed due to low prices, Argentina’s re-entry into agricultural export markets under its new administration boosted corn shipments from that country.
Food Ingredients & Applications segment
The Food Ingredients & Applications segment was the largest contributor to adjusted operating earnings in the third quarter, with results up appreciably from a weak comparative period.
The segment’s ongoing efforts to strengthen commercial and operational execution lifted earnings broadly across edible oils, malt, starches and sweeteners, and texturizers. A warm winter in North America kept road salt and deicing products below the year-ago level, but salt for food applications posted strong results.