Cargill income climbs 35% in fiscal 2011

by Eric Schroeder
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MINNEAPOLIS — Cargill posted income from continuing operations of $2.69 billion in the fiscal year ended May 31, up 35% from $1.99 billion in fiscal 2010. The gain came despite a 7% decrease in earnings during the fourth quarter, when earnings from continuing operations slipped to $404 million from $435 million.

The company said income from discontinued operations was $1.55 billion during fiscal 2011. Cargill also recognized a one-time accounting gain of $11.49 billion on the May 25, 2011, distribution of its Mosaic shares, which were exchanged for Cargill stock and Cargill debt. During the fourth quarter, Cargill recorded an additional $359 million from discontinued operations — income attributable to Cargill’s former majority investment in The Mosaic Co.

Revenues for the full year were $119.5 billion, up 18% from $101.3 billion in fiscal 2010. Fourth-quarter revenues were $34.8 billion, up 32% from $26.3 billion in the year-ago period.

“The past year presented a challenging operating environment for Cargill and our customers,” said Greg Page, chairman and chief executive officer. “From weather-related supply shocks in food commodities, grain export restrictions and rising energy prices to the uneven global economic recovery, looming sovereign debts and deficits, political unrest and natural disasters — the uncertainty led to volatile prices across a range of raw materials. Cargill sought to be a ‘port in the storm’ for our customers, sourcing food and feedstuffs from multiple origins, handling the logistics, managing the risk and delivering reliably.”

Three of Cargill’s five business segments increased earnings in the fourth quarter, and four of the five improved results in the full year.

Origination and processing led Cargill’s fiscal 2011 earnings, with results up for the quarter and the year.

“The segment used its global sourcing and risk management capabilities to deliver reliably to customers while meeting challenges posed by weather-related crop production problems in key growing areas, changing trade flows and fluctuating commodity prices,” Cargill said.

Despite a softer fourth quarter, the food ingredients and applications segment increased earnings from the year-ago period. Cargill said the segment benefited from a mix of factors, including higher sales volumes, effective risk management, improved yields and more value-added offerings.

Agriculture services, which provides crop and livestock producers with farm services and products, posted a strong fourth quarter and year. Cargill said the unit relied on its risk management and grain marketing skills to handle rising input costs and help customers do the same.

Industrial earnings also rose in the fourth quarter and full year, boosted by favorable demand and operating efficiencies.

Results declined in risk management and financial for the quarter and the year due to lower earnings among the energy businesses, Cargill said.

During fiscal 2011, Cargill invested more than $3 billion in acquisitions and new or expanded facilities. Among the acquired businesses were the AWB commodity management business in Australia, Unilever’s shelf-stable condiments business in Brazil, Indonesian starch and sweetener maker PT Sorini Agro Asia Corporindo Tbk, Royal Nedalco’s potable alcohol operations in Europe, a Chinese port facility, a Canadian grain facility and a U.S. corn wet mill ethanol facility.

Additionally, Cargill said it is building new or expanded plants in several countries, including animal feed mills in Russia and Vietnam, poultry processing operations in Thailand, a sweetener facility in China and food innovation centers in Brazil and the United States.

On May 25, Cargill and The Mosaic Co. completed the closing of the transaction in which Cargill divested its approximately 64% stake in Mosaic by exchanging approximately 286 million Mosaic shares for Cargill stock held by the company's family shareholders, including the Margaret A. Cargill charitable trusts, and for Cargill debt held by third parties.

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