MINNEAPOLIS — Facing a difficult comparison to record earnings in the first quarter of fiscal 2013, net income at Cargill fell 41% in the first quarter of fiscal 2014. Still, net income of $571 million represented a solid start, according to the company. First-quarter revenues also were strong, holding steady with the $33.8 billion in sales recorded in the first quarter a year ago.
“Cargill did an excellent job managing the remaining effects of last year’s severe drought and smaller crops,” said Greg Page, chairman and chief executive officer. “Our agricultural supply chain and food ingredient businesses were focused on helping customers and the company to successfully manage their raw material purchases and inventories during the market uncertainty that precedes the transition to new crops in the northern hemisphere.”
Mr. Page said Cargill’s performance was balanced, with nearly three-fourths of its business units recording profits.
Cargill said earnings “rose slightly” in the Animal Nutrition and Protein segment in the first quarter. Global animal nutrition results exceeded last year’s profits, due in part to margin improvements. Meanwhile, U.S. beef processing operations benefited from increased slaughter plant efficiencies, the company said.
Providing the biggest boost to first-quarter earnings was the company’s Origination and Processing segment. Although year-over-year results were lower, Cargill said the segment was supported by “strong global analytics, sourcing, logistics and risk management.”
“The segment successfully navigated the uncertainty surrounding crop production in the northern hemisphere, including weather gyrations in North America,” Cargill said. “The segment’s South American-based supply chains performed well, utilizing the region’s big crops to serve strong export demand. Conversely, in North American farm services, the remaining impact of last year’s severe drought in the U.S. Midwest reduced grain handling opportunities in the first quarter.”
Earnings decreased modestly within the company’s Food Ingredients and Applications unit, which scored record results in the first quarter of fiscal 2013. Cargill said segment businesses closely managed the purchase and delivery of raw materials to processing facilities, which decreased the supply chain risks presented by choppy markets and provided for assured supplies to customers. The segment was the second largest contributor to company earnings.Cargill sustained a sharp drop in earnings within the Industrial and Financial Services segment, as energy businesses posted a weak performance due to the combined effects of mild weather, soft demand and low market volatility. Additionally, asset management results softened, largely due to rising economic pressures in emerging markets, Cargill said.