Investments, innovation fuel success at Cargill
by Eric Schroeder
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MINNEAPOLIS — By most accounts 2013 was a successful year for Minneapolis-based Cargill. In its annual report released in late August the company’s top executives said 60 of 69 business units were profitable during the year, with more than two-thirds exceeding fiscal 2012 earnings and 12 at record levels.
“Cargill regained its momentum in fiscal 2013,” Greg Page, chairman and chief executive officer, and David MacLennan, president and chief operating officer, wrote in an Aug. 20 letter to shareholders as part of the annual report, titled “Results across many dimensions.” “We increased earnings, made investments that reach further to bring us closer to customers, built responsible supply chains and delivered value-creating innovations and solutions. These actions support Cargill’s strategic intent to be the partner of choice to our customers.”
Net income at Cargill in fiscal 2013 totaled $2.31 billion, up 97% from $1.17 billion in fiscal 2012. Sales and other revenues increased 2% to $136.7 billion.
Nearly $15 billion invested since ‘09
In the past five years, Cargill said it has invested about $15 billion in acquisitions and assets that expand its global reach and capabilities, and that help keep plants safe, energy efficient and environmentally sound. Cargill said approximately 40% of the total has gone toward new and expanded facilities, 36% toward acquisitions and investments, and 24% in base spending.
Investments played a significant role in Cargill’s growth this past year as well. During fiscal 2013, the company invested $3.4 billion, with the largest share directed to a global round of new and expanded facilities.
Mr. Page and Mr. MacLennan pointed to the startup of primary processing at an integrated poultry complex in China’s Anhui province as “perhaps the biggest milestone.”
“When we reach full production in 2015, the complex will employ more than 3,500 people,” Cargill said. “In a country that consumes about a third of the world’s animal protein, we believe the product quality and integrity made possible through this model operation will help build confidence in China’s food supply.”
Also during 2013, Cargill opened a poultry further-processing facility in Russia and added capacity in Thailand. The company made several investments in liquid sweeteners and specialty fats in China, and began construction on its largest-ever feed mill, to be located in South Korea.
In cocoa, Mr. Page and Mr. MacLennan said Cargill expanded processing capacity in The Netherlands and broke ground on a new facility in Indonesia. The site in Indonesia marks Cargill’s first cocoa processing facility in Asia, and will produce cocoa powders from locally sourced beans for confectioners and other food customers in Asia. The plant is expected to open in 2014.
In the United States, Cargill plans to open a biorefinery campus in Iowa and a modernized multiseed processing plant in North Dakota later this year. The company also continues to move closer to the finalization of the Ardent Mills joint venture with ConAgra Foods and CHS.
“Together, we intend to serve bakery and food company customers even better than today,” Mr. Page and Mr. MacLennan said.
Cargill said it has $2.6 billion in agricultural, food and energy projects under construction in 14 countries (Australia, Brazil, Canada, China, Germany, Indonesia, Malaysia, Mexico, The Netherlands, Russia, South Korea, Thailand, United States and Venezuela).
Innovation efforts wide ranging
Just as impressive as Cargill’s investment record has been the company’s innovation efforts.
Cargill filed for 57 patents in fiscal 2013, had 287 patents granted in fiscal 2013 and currently owns 1,862 patents. The company now operates 16 food applications centers in nine countries (Belgium, Brazil, China, France, India, Malaysia, Mexico, Spain and United States).
The company’s innovation efforts have been wide ranging. In April, McDonald’s launched the Egg White Delight McMuffin, a 250-calorie breakfast sandwich featuring egg whites supplied by Cargill. Meanwhile, in China Cargill’s innovation center in Beijing helped develop a rich texture and smooth mouthfeel for a ready-to-drink milk tea for one of its customers.
“Working collaboratively, our applications specialists created a unique blend of ingredients that gave the drink the desired creaminess,” Cargill said of the R.-T.-D. milk tea innovation. “Our customer’s new drink quickly became popular, making its product launch a resounding success.”
Also in China, Cargill developed two new frozen yogurt products for Mengniu, one of China’s largest dairy companies.
A new food applications center opened in Delhi — the first of its kind in India’s food industry. The center supports the regional importance of flatbreads with expertise in artisan bakery, Cargill said.