MINNEAPOLIS — Net earnings increased 14% while revenue fell 4% at Cargill in the third quarter ended Feb. 28.
“Disruptions and uncertainty in the global business environment continued to present challenges during the quarter, but our teams captured greater efficiencies across the company,” said David W. MacLennan, chairman and chief executive officer. “We remain focused on our growth objectives. To achieve them, we are innovating what matters for our customers so they can win with consumers in local markets.”
Net earnings in the third quarter totaled $566 million, up from $495 million in the previous year’s third quarter. Adjusted operating earnings, meanwhile, totaled $604 million, up 8% from $559 million. Third-quarter revenues decreased 4% to $26.9 billion, bringing the year-to-date figure to $83.5 billion.
Cargill said operating earnings across all four business segments were below the year-ago level. The declines were offset by reduced spending on corporate functions and other cost reductions.
The Food Ingredients & Applications business delivered mixed results.
Starches and sweeteners earnings declined on low ethanol prices in North America, and higher energy and raw material costs in Europe. Lower sales volume and higher operating costs in North America reduced the cocoa and chocolate performance in other regions. Edible oils pulled ahead of last year on good positioning and operating efficiencies.
Earnings in the Origination & Processing segment were adversely affected by ongoing trade tensions and other supply chain disruptions.
“In North America, soy and canola crush operations ran at high capacity, but the near absence of the Chinese market for plentiful U.S. soybean stocks reduced profitability,” Cargill said. “The trade turbulence also negatively affected soybean crush operations in China, as did lower demand for soybean meal for feed following the culling of hogs to control the spread of African swine fever. The segment’s European and South American operations both posted higher profits over the prior year, with soybean and soft seed processing leading the way in Europe, and corn and soybean origination improving in Brazil.”
The Animal Nutrition & Protein segment was the largest contributor to Cargill’s adjusted operating earnings. Within the segment, earnings in North American protein performed better than in last year’s third quarter, boosted by continued strong domestic and export demand for beef as well as consumer demand for egg products. According to Cargill, higher production costs at the company’s poultry processing joint ventures in the Philippines and U.K. contributed to a decline in global poultry results.
“Increased sales volumes for salmon feeds in the North Sea region and functional feeds in North America improved earnings in aqua nutrition, but animal nutrition results in total trailed the prior year due in part to the outbreak of African swine fever in China and other countries, as well as unfavorable dairy economics in the U.S.,” Cargill said.