Cargill Q2 profits rise but food segment results are weak
The company’s net earnings were $1.19bn for the quarter that ended November 30, which is up 25 percent from $954m in the same period a year ago.
Its earnings were largely buoyed by its investment in the fertilizer industry through its holdings in The Mosaic Company.
And results declined overall in the food ingredients and applications segment, with steady or improved performance in some food ingredient and meat units offset by weaker performance elsewhere.
Cargill, which is a privately held company, would not reveal figures for the segment because it said its policy was to report earnings on a consolidated basis only.
However, a spokeswoman told FoodNavigator-USA.com: “Some food units posted steady or improved results and others saw a softening in sales volumes or prices due largely to the slowdown in the economic environment.”
Cargill said that excluding earnings from its fertilizer industry investment, its second-quarter results were moderately below the previous year level and, in the first half, just under the same period a year ago.
Segment performance
Of its five business segments, results in the second quarter were led by its origination and processing segment and by its industrial segment - both of which increased earnings significantly from the second quarter a year ago.
Earnings in agriculture services decreased moderately.
The risk management and financial segment incurred a loss related to financial markets activities.
Greg Page, Cargill chairman and chief executive officer, said: “Cargill performed solidly in a period like no other.
“The global financial system was under significant stress, energy and agricultural commodity prices fell sharply, and recessionary risks took hold in developed economies in a worsening global economic environment.
“Because of Cargill’s focus on market fundamentals and risk management, we were able to work our way safely through exceedingly volatile conditions.”
Cargill’s spokeswoman said that the term ‘market fundamentals’ referred to understanding supply and demand of agricultural and energy commodities.
She added: “For example, when purchasing agricultural inputs for processing into finished products, we apply our knowledge and insight of supply and demand in world markets to determine strategies for keeping our input costs in a range that fits with our risk tolerance.
“We offer this same service to customers: helping them understand their exposure to risk, and then developing strategies that can diminish price volatility and keeping their costs within an established range that fits their risk tolerance.”
In the first six months, the company earned $2.68bn, up 43 percent from $1.87bn a year ago.
The 2009 financial year is from June 1, 2008 to May 31, 2009.
