Railway delays, Chinese corn rejections hinder Cargill
by Jeff Gelski
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MINNEAPOLIS — The rejection of certain U.S. corn shipments to China and weather-related disruptions to railway service in North America affected Cargill results negatively as net earnings dropped 28% in the third quarter ended Feb. 28. A trading loss related to a price spike in U.S. power markets in late January, part of which has been recovered, also trimmed earnings, said David MacLennan, president and chief executive officer, when financial results were given April 8.
“External events affected our quarterly results, even as we saw operational improvements in key businesses,” he said.
Net earnings of $319 million in the quarter compared to $445 million in the previous year’s third quarter. Net revenues of $32 billion essentially were even from revenues in the previous year’s third quarter.
Third-quarter earnings in Cargill’s Food Ingredients & Applications business were moderately below earnings in last year’s third quarter, which included one-time gains from a trade-related claim and the sale of a cultures and enzymes business. In this year’s third quarter, lackluster consumer demand tempered results as did additional costs from recent acquisitions and new or expanding facilities.
Third-quarter results rose in Animal Nutrition & Protein. Earnings strengthened in Industrial & Financial Services. Earnings decreased in Origination & Processing because of costs related to China corn trade and limited opportunities in grain trading and storage.